I remember the period of time a couple of years ago when the market rising or falling 100 points in any given day made big headlines. Now, quoting Max Bialystock, “Too Deep? This is nothing!”
I’ll see your 100 points and raise you another 100-150 points! Up or down 200 points plus, is the new up or down 100 points.
Coming into last Friday, here were my comments: “First off after the open, the mid pivots (of the indices) must clear. (With the gap higher that’s a yes.) Secondly, the resistance levels aforementioned (IWM 110 QQQ 98 SPY 197 DIA 169) must clear. (IWM no, QQQ yes, DIA yes, SPY no). Finally, those levels must hold.” (QQQs and DIAs yes, SPY and IWM no.)
See a pattern here? When the market is strong go to NASDAQ and the Dow (back in an unconfirmed bullish phase). When weak, go to the small capsand the S&P 500. Count on more diversion as the major theme of 2014, not to mention contrarian moves and fragile oil, gas and metal prices.
I do believe I gave enough head’s up on the power of the Biotechnology sector? Friday’s gain of over 2.7% and hold of 272 in IBB was key!
It’s in that spirit we begin this week. Watch those key levels as the market opens. The first 30 minutes of Monday’s session can pretty easily set the tone for the first part of the week. An unchanged or higher open that sustains, with little trouble we could see SPY over the 50 DMA, QQQs over 99.00, DIAover 170 and IWM over 110.50. IWM has lots of overhead resistance, but should continue to let us know if it plans to run up to the 50 DMA or stall long before it gets there.
In that case, if the market opens lower and cannot reverse back up in the first 30 minutes of the session, quoting JK Rowling in Harry Potter,
“For those who take, but do not earn,
Must pay most dearly in their turn.
So if you seek beneath our floors
A treasure that was never yours..”
S&P 500 (SPY) 197.85 the 50 DMA or bust Subscribers: Positive Pivots in all
Russell 2000 (IWM) Not only couldn’t clear 110, but couldn’t clear the fast moving average
Dow (DIA) 169.00 now has to hold up by days end
Nasdaq (QQQ) 97.75-98.00 key support to hold for multiple reasons not the least of which is the 50 DMA
XLF (Financials) Unconfirmed bullish phase with 23.05 pivots
SMH (Semiconductors) Gotta do more than this and hold 50.00 to be convincing
IYT (Transportation) Nice gap over the 50 DMA and worth watching this week
IBB (Biotechnology) Where it’s at provided it holds 272
XRT (Retail) A move or open over 86.15 will be strong. Otherwise, just a rally to the 50 DMA resistance
IYR (Real Estate) Marginally made it over the 200 DMA which now, has to hold
ITB (US Home Construction) Maybe double bottom-like to see more evidence
GLD Took out the 2013 and 2014 lows
USO (US Oil Fund) Inside day on the lows for the year
FCG (First Trust ISE Reserve NatGas) Subscribers: Really really oversold so will watch
TAN (Guggenheim Solar Energy) Could be triple bottom, could be double top-I hope for the former
TBT (Ultrashort Lehman 20+ Year Treasuries) Relentless drop of rates and commodities still weak-I find that worrisome
UUP (Dollar Bull) That’s it, planning a trip to Europe to spend my strong US money!
IFN (India Fund Inc.) Subscribers: Holding the 50 DMA
EWW (Mexico) Subscribers: Over 68.30 better if holds 67.15 and an inside day
FXI (China Large Cap Fund) Want to see one more day over 37.80 for confidence
CORN (Corn) Subscribers: The 10 DMA to clear
BAL (Cotton) Subscribers: Bottoming formation
SGG (Sugar) Subscribers: Really like if futures takes out 17.00
Longs: On categories: Gap higher days we go to all categories and choose ones with lowest risk that break the opening range. On weaker days, we look at Category 3, especially if the picks hold S1, previous day lows or a major moving average and have a good risk on the reversal. The difference between Category 1 and 2 is the stock condition-a Condition 1 is strongest stock and more likely to make a parabolic move.
Note: Anything that is on this list is a candidate for a swing trade-(of course market condition is a factor) -use the max risk mentioned along with an opening range stop using fudge factor and time confirms. I suggest you decide on 1 or 2 that have a risk you like and then position size accordingly
Category 1: (Aloha) Positive Phase, Condition 1, 2 days under the FTPs, Risk to Previous Day low, Can buy ½ over FTP and ½ over R1, Target- Day to at least 3 ATRs from entry:
MU We added and subtracted the add on Friday-still in good shape though and with a small core position worth watching especially if holds over 33.50
ETR With ½ position like to add it back over 78.35 with new risk under 77.52
Category 2:N/A
Category 3: (Double Up) Positive Phase, Condition 1 through 4, Positive Pivots which means can either buy a opening range breakout or candidate for Opening Range Reversal, with Risk S1 or previous day low, whichever is lower unless noted differently, Target- Day to at least 3 ATRs from entry: (Opening range reversals are good on anything above S1)
T One looking to break 35.50 for an add and 35.00new risk point
KSS Over Friday’s high new miniswing trade with risk to 61.15
CELG Over 96.00 have an extended miniswing risk to 94.00
Category 4: (Rip Tide) Oversold (2 or more days under FTP), Condition 4, Needs to clear R1, Risk previous day low unless noted differently, Target- Day to at least 3 ATRs from entry:
CSIQ If holds 33.77 the 50 DMA has room to grow
Phase Change:
HSP Good move Friday clearing the 10 DMA-like on a ORR or breakout over 52.35
CBST Like on an ORR against Friday low with possible move over the 200 DMA
PM Friday’s low is the 50 DMA to hold
SWI-Doji hammer candle on the 50 DMA-if Friday low holds, see good upside
LEN Over the 200 DMA making new risk Friday’s lows to hold
BXP Only interested now if clears 117
P 24 close support. Like ORRs in this one to control risk
Shorts: On Focus List: AAPL CAT
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
WNR Unconfirmed distribution phase if breaks 40.28 and risk is to 40.96 the 200 DMA
Category 6: N/A
Best Best wishes for your trading,
Michele Schneider
