I really do not want to see what I have been writing about all week come to fruition. The Dow as the laggard catching up with its move over the 50 DMA (confirming a bullish phase) as the other indices with overbought conditions and none except NASDAQ clearing the old 2013 highs, as the last gasp of this recent run up. I gasp just writing that long winded sentence! Certainly, we continue to look friendlier than not considering the velocity of the bullish phases (upward slopes on key moving averages) and that SPY and QQQ really just finished unchanged when all is said and done. What, though, should one do if this is indeed more than adigestion/time compression rest after the stellar week? For one, tighten stops on any existing longs. Secondly, make cash your main position as the shorts, especially on stocks that have been beaten to a pulp all year, come with risk unless you are an experienced short seller. Third, don’t try to pick a bottom if Friday the 13th brings out the devil. Let the market tell you how far and wide this correction can go, especially withFED speak coming up, and Syria far from resolved. Remember, this rally did not reverse the topping candles from early August in the small caps (Russell 2000). So, pick up your favorite black cat, break some glass and walk under every ladder you see. Then, use common sense and not common superstitions to guide your decisions!
S&P 500 (SPY) 168.26, Tuesday’s gap low is important to hold. Subscribers: Slightly positive pivots.
Russell 2000 (IWM) 104.20 good support level to see hold. Otherwise, looking at 103. Subscribers: Negative pivots.
Dow (DIA) Confirmed phase change to bullish. Giving it some room, 151.77 is the key support to holdSubscribers: positive pivots.
Nasdaq (QQQ) Over 78.26 negated the possible topping action and Thursday’s high is 78.25. Doji candle to boot so really, anything can happen and the case for bullish remains intact. Subscribers: positive pivots.
ETFs:
XLF (Financials) Unconfirmed phase change to warning as it crossed back under the 50 DMA. Tomorrow should be key
SMH (Semiconductors) As long as this holds 39.18, the gap from Tuesday stays in place and today’s action looks more like a rest
XRT (Retail) 80.00 is a pivotal area Subscribers: If holds 80.00 considering a swing long with relatively tight stop
IYT (Transportation) Today’s action looks more disconcerting than just a correction as the 2013 highs eluded this group. 116.50 needs to hold
IBB (Biotechnology) Resting still
IYR (Real Estate) Still see bottoming formation, especially if it can get back above 64.37
XHB (Homebuilders) Inverted hammer and doji candle-that’s special.
GLDNasty day in its primary trend-hates peace and taper talk it seems
USO (US Oil Fund)If 38.84 area holds, very possible this can be getting ready for more upside.
OIH (Oil Services)46.75 really should hold here
XLE (Energy) Marginally stayed above 84.00
XOP (Oil and Gas Exploration) Wouldn’t chase now, but give it some time to see what it does from here
TBT (Ultrashort Lehman 20+ Year Treasuries) Subscribers: TLTs got out with profit, now positive pivots but kind of dangerous for more than daytrade until after FED
SGG (Sugar) Subscribers: If this drops to 58.50 or so, we will have another opportunity
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:
CBST Only if today’s low holds and it clears pivots then R1. Otherwise, the candle from 2 days ago could be a slingshot
Category 2: (Pipeline) N/A
Category 3: (Double Up) Positive Phase, Condition 1 through 4, Positive Pivots which means can eitherbuy 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)
TRIP Another inverted hammer candle on the 10 DMA. If today’s low holds, still looking good
ALXN Inside day. Over 114.79 looks good for move to 120 or so. Risk today’s low-more miniswing trade
HCA Long for a swing. Waiting for it to clear 40.00 and continue to hold the 50 DMA
FOSL Almost an inside day. Now, has to clear 117 and hold 115 area
Category 4: (Rip Tide) N/A
Phase Change:
USG Inverted hammer so watch the 200 DMA again to clear
JBLU 6.27 or 6.09 good stop and if it clears back over 6.42 looks better
CCUR Watch for a move over the 50 DMA with risk to 7.50 for longer term move
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
WSM 56.60 resistance and really should break S1 and prior day low
KMP Inside day. Like today’s high as risk. Target 78.00 for now
MJN 2 Inside days and sitting right on the moving averages-the way this breaks follow up or down.
DE Unconfirmed phase change back to bearish. 84.00 good resistance.
Category 6: N/A
Bye For Now
