Before we start claiming that the top is in, considering that the recent trading range made yet another new low on Friday, the holdout remains NASDAQ. Until it gives up 99.00 with volume and with no coming back the next day, we analysts have to consider that a trading range can expand on low volume and without a significant phase change, which by the end of a week, could be considered more noise than anything else. Especially, if said trading range is only violated intraday and the closing price keeps it intact.
Such is the case in SPY which broke 198.77 intraday but closed out Friday above there, and DIA, which broke 169.71 and closed above. The small caps or IWM, didn’t break it’s week low of 114.71, but I wouldn’t exactly cheer the weak close with a declining slope on the underlying 50 DMA in its midst.
NASDAQ remains best hope coming into this week. Very possible what we saw last week was a time correction rather than a substantial price correction.
With that said, the ever rising rates of last two weeks have created havoc just as we had anticipated they might. But not everywhere, again, as we also anticipated. Commodities, real estate, cost of goods dropped hard while banking stocks and select retail chainsfared well.
With FED week coming up, expect a relatively muted start, but once that’s squared away, that muted start could lead to an explosive finish given the tightening coiling prices of the indices in their current trading ranges.
S&P 500 (SPY) Gun at head going to say we are setting up for that coiling up. What would change that is a break of the 50 DMA. Subscribers: Negative Pivots in all
Russell 2000 (IWM) 115 key support held on Friday. Now, has to get away from here over 117 or still vulnerable
Dow (DIA) Similar to SPY could be coiling.
Nasdaq (QQQ) Watch the bouncing ball and get ready for a major break one way or another
XLF (Financials) Range bound but solid
KRE (Regional Banks) Might have to do some consolidation here but nice week
SMH (Semiconductors) The 2014 leader on a rest which is just fine
IYT (Transportation) Good week in a range
IBB (Biotechnology) In a range here too
XRT (Retail) Held up after a good retail sales number but still in its range too
IYR (Real Estate) Ugly but oversold
ITB (US Home Construction) Also possible coiling action on the 50 DMA
GLD As one of the few bears all year, I’m not short but that’s ok-I’m not long either
XOP (Oil and Gas Exploration) Subscribers: 72.88 is the big number to hold if this has a chance of holding the 200 DMA with more gusto and put in a bottom
TAN (Guggenheim Solar Energy) Subscribers: Still in its infancy and just waiting for a turn up in the market to enter against 45 area
TBT (Ultrashort Lehman 20+ Year Treasuries) Overbought now on a 2-day RSI-in time for a dip ahead of FED which could be the ultimate buy.
UUP (Dollar Bull) Consolidating
IFN (India Fund Inc.) Could be getting ready again
EWW (Mexico) Subscribers: I am very interested in this for this week as it held and showed some muscle over the 50 DMA with now a good risk to Friday’s lows
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: (Pipeline) Positive Phase, Condition 2-3, 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:
INTC Looks like an orderly correction therefore keeping it on list against the 50 DMA 33.77 and has to clear 34.85 R1
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)
SWK Still in the range and could be coiling although note this has negative pivots and has to clear 92.25 area
LMT If holds around 173.50, can look at for a minsiwng trade now that it is holding on the 10 DMA
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:
HPQ Inside day and close enough to the 50 DMA. Has to clear R1 36.77
AA 16.44 max risk with its move over the 80 monthly moving average this year worth watching now over R1 16.95
Phase Change:
RPTP If holds Friday low still has a shot over 11.56 the 200 DMA to clear
SFM Tracking this since Advantage is in it and has a good looking wedge. Over 31.00 looks a whole lot better for a swing trade
PXD Like this a lot for Monday as an inside day and positive pivots . 201 good point to hold
Shorts: Nothing great but do have FLS V WFM on focus list
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
BID 39.87 is the 509 DMA resistance with room to the downside and next major support around 36.00
Category 6:N/A
Best Best wishes for your trading,
Michele Schneider
