For nearly 2 weeks since my return after Labor Day, we have been watching the trading range in the indices established from the lows on August 25th to the highs made on September 4th.
Tuesday the market dropped nearly 100 points only to make up ½ of that loss on Wednesday. Do the lows put in Tuesday, now negating the lows from August 25th, in spite of the meager bounce on Wednesday mean that the breadth of the overall market is declining nonetheless?
Clearly the two main indices in juxtaposition to one another areNASDAQ and the Russell 2000s. NASDAQ had an inside day, remains close to the highs and never violated the trading range low at 99.00. In fact, it closed well, clearing the fast moving average. The Russell 2000s, touched the 50 DMA and bounced. However, 116 remained elusive for the day with the overhead resistance palpable.
At the sake of sounding like a broken record-wait a minute-talk about an anachronism-who listens to records? Regardless, seems the market likes this range give or take a few cents here and there thereby deserving no further query until volume comes in either direction or we see a confirmed phase change in the small caps.
And for the record, I had 3 ETFs I began to write about in July as featured picks-China-had its move and now leaving a potential island top, Solar-in what seems to be in its infancy stage of potential and Regional Banks-KRE, which finally cleared the 200 DMA for an unconfirmed phase change to Accumulation.
Last thought-interest rates-the TLTs broke the 50 DMA. That too has to confirm as a warning phase.
S&P 500 (SPY) 200 definitely pivotal. 198.75 not only support but the lows and now we have a new low of recent range to holdSubscribers: Positive Pivots in all except IWM slightly negative
Russell 2000 (IWM) Tested the 50 DMA and now must clear 116 to go back to a chance for higher
Dow (DIA) Like to see this follow suit and clear 170.80 level and hold 170 now
Nasdaq (QQQ) Inside day-big eyes here
XLF (Financials) 23.16 the bottom of the recent trading range and an inside day
KRE (Regional Banks) Phase change as noted above
SMH (Semiconductors) 51.44 lows to hold and 52.02
IYT (Transportation) Held the 10 DMA and now over 153.35 looks better
IBB (Biotechnology) In a range like everything else but good close
XRT (Retail) Like over 88.75
IYR (Real Estate) Higher rates and this gives it up as expected
ITB (US Home Construction) In a tight range making this worth a watch for a break either way
GLD 120 support for now
Metals and Mining (XME) Oversold on the 200 DMA
OIH (Oil Services) Possible bottoming candle
XLE (Energy) Possible bottoming candle
XOP (Oil and Gas Exploration) Worth watching on the 200 DMA after it popped
FCG (First Trust ISE Reserve NatGas) Subscribers: Also good place for this to stop if good
TAN (Guggenheim Solar Energy) Inside day on support
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs failed the 50 DMA and now has to confirm
UUP (Dollar Bull) Inside day near the highs
EWP (Spain) Subscribers: Worth a follow over 40.90 with risk to under today’s low 40.31
BAL (Cotton) Subscribers: Cleared the 50 DMA and now has to confirm the recovery phase
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:
SCTY If holds today’s lows and clears 71.88 good one for a swing
INTC If holds today’s low R1 is 35.21 to clear for another leg up
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)
THC Inside day and slightly negative pivots so today’s low has to hold
SWK 91.36 max risk with over R1 92.41 could see new highs-like these for miniswings
CYH Inside day and 53.35 max risk for a miniswing trade
NFLX Inside day and some of my daytraders could be holding ½. If not, look for a move over 487.07 and a hold of 482 for a miniswing
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:
KSS Looks like 2 IDs which means we are out under today’s low with fudge or we are golden over 59.35
Phase Change:
CBST Over 69.13 clears the 200 DMA with a risk to whatever the low is should that happen
TXT Nice reversal off the 200 DMA and has to hold todays low and clear 38.06 good swing risk
CCL if holds today’s low like this over 39.02 for a swing
LEN Reports before the open September 17th. Unconfirmed phase change to accumulation and good for a miniswing if holds the 200 DMA
WMT Still like this with a stop under 76.18- Has to clear 76.94
Shorts: Many are oversold and so now we have to wait for new setups.
Category 5:N/A
Category 6: N/A
Best Best wishes for your trading,
Michele Schneider
