Ms. 200 points is the new 100 points move in the market sure did not disappoint!
Lunar eclipse, blood moon, deflation and recession fears, start of earnings season, a REAL correction, gratification in having a smooth equity curve well outperforming the market with no heroics, FOMC minutes on Wednesday, matched record high on the long bond ETF-TLT, all indices in strong warning except for IWM, the harbinger when it went to bearish-if I could clean up this list and make it rhyme-I would have one heck of a rap song.
I wish I could tell you that the volume merited a possible blow off on Tuesday. Alas, I cannot since it measured as average to slightly above in all indices. A blow off requires 2-3 times the normal average daily volume.
What we have here is a failure-plain and simple. The phases in a cycle of decline as I have been writing about and regretting seeing since September when IWM could not make new highs.
Some folks go short, buy puts or ultra-short ETFs. Some choose to sit on the bench and raise cash. Others try to pick a bottom. Others still, daytrade or scalp and care little of market direction. Professional stock pickers lurk, waiting to strike when the iron is hot and the risk is minimal. If you’re as rich as Buffet, Soros or Icahn, you can afford to ride the elevator to the ground floor.
Sadly, many have no power to do anything at all but watch their buy and hold investment accounts deteriorate.
Regardless, we can count on selling rallies from here on in-or at least until something substantial changes.
“I'm waking up, I feel it in my bones
Enough to make my systems blow
Welcome to the new age, to the new age..” Imagine Dragons
S&P 500 (SPY) 192.35 last week’s low and 190.55 August low. Subscribers: Negative Pivots
Russell 2000 (IWM) 106.94-107.27 are recent lows (going back to February) Therefore, a close above and we might see some relief. I am looking here for any signs of a bottom first.
Dow (DIA) Seriously, 166.43 was last week’s low and we are not close to the 200 DMA or August lows-but then again, reason to see a rally to sell
Nasdaq (QQQ) 97.75-98.00 was the high not surprisingly. 95.97 ast week’s low then its hello 94.00
XLF (Financials) 22.74 last weeks low
SMH (Semiconductors) 48.90 the low from last week-a gap below more damage in store. If holds and clears 49.50-a stretch, but anything is always possible
IBB (Biotechnology) Closed just beneath the 50 DMA. If there is a place to go long, even for a shorter time frame on a firming of the market, it’s here
XRT (Retail) It’s only October and already this looks like the Grinch who will steal Christmas.
IYR (Real Estate) This gets through 70.00 we can talk.
ITB (US Home Construction) Maybe double bottom-like to see even more evidence
GLD Over Tuesday’s highs 116.63 and expect a better rally at least to 118
FCG (First Trust ISE Reserve NatGas) So oversold and getting into 2013 prices-worth watching
TAN (Guggenheim Solar Energy) Subscribers: Put your limit order to buy at 33.15. Remind me if I forget
TBT (Ultrashort Lehman 20+ Year Treasuries) Matched record high in TLT
UUP (Dollar Bull) 22.65 is the low of the most recent runaway gap
FXI (China Large Cap Fund) Outperforming so still watching
CORN (Corn) Subscribers: Nice run now too close to resistance
BAL (Cotton) Subscribers: Cleared the 50 DMA
SGG (Sugar) Subscribers: Like to see 42.40 hold
JO (Coffee) Subscribers: Possible reversal but after the gaps up has to prove that out
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: N/A
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)
ETR We are out but with positive pivots have to keep it on the list-77.15 key support to hold
TSLA Slightly negative pivots and has to hold today’s low and clear R1 262.10
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:
GILD The 50 DMA is right below today’s price and if holds and clears today’s high 105.30 and R1-they line up
Phase Change:
PM 83.80 must hold to keep me interested in this
Shorts: Many shorts are pretty beat up- On Focus List (have picks across different sectors): MMM DISH JNJ OXY SBUX TTM AXP UPS
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
SWKS 55.00 resistance with room to the downside to 43.00
Category 6: N/A
Best Best wishes for your trading,
Michele Schneider
