Folks at home will hear the reports that the Dow closed up 118 after trading much higher intraday. It closed very close to the intraday lows, but also held the gap way better than any of the other indexes did. Yes,NASDAQ looks particularly nasty, especially given its ginormous bearish engulfing pattern-one that engulfs almost entirely, the trading range from last week. But not quite! 77.59 is last week’s low. Going back to DIA, a couple of interesting patterns. First, it was the last index to cross the 50 DMA to change to a bullish phase. Second, after it did so, its move including Monday’s, was the most dramatic. Third, it held the gap but failed to clear the 2013 high from early August. The small caps made a run in the first 30 minutes to make new 2013 highs only to drift lower the rest of the session. Ditto with the S&P 500 (although also held the gap). That leaves us really focusing mainly on QQQ and DIA then. Will NASDAQ find us sinking in quicksand, or will the Dow throw us a life preserver in the form of driftwood? Active investors took profits early,tightened stops and looked for shorts. Logically, the answer to the market’s next direction may not come until after the FED meeting-til then, all we have is the trend.
S&P 500 (SPY) The volume pattern registers as an accumulation day. Not so bad really, provided it doesn’t gap lower and sell off much more on Tuesday Subscribers: positive pivots.
Russell 2000 (IWM) 104.50 a good level to watch for a hold Subscribers: Positive pivots.
Dow (DIA) With the failure to cross the old 2013 high, big focus here. If the Monday gap holds, good sign, if not, a warning sign for sure Subscribers: positive pivots.
Nasdaq (QQQ) When I look back at what I have written since I returned from the summer vacation, I see that I noted this was the leader of this entire move up. If that’s the case, today put a halt to that for sure. Now, we are asking if we should take its lead or notch this one up to a rotten AAPL Subscribers: positive pivots.
ETFs:
XLF (Financials) Gap above the 50 DMA for an unconfirmed phase change back to bullish provided the 50 DMA holds up
SMH (Semiconductors) New high close for 2013-even with the sell off
XRT (Retail) 80.40 is the 50 DMA to watch
IYT (Transportation) Possible double top-but only a possibility at this point
IBB (Biotechnology) Then there’s this-new high close even with the sell off
IYR (Real Estate) Had a chance to clear the 50 DMA but closed beneath by a decent margin. Rates will impact this for sure
XHB (Homebuilders) 30.00 would be good to hold
GLD With all its pressure, the island bottom from June remains intact
USO (US Oil Fund) The 50 DMA very close indeed
OIH (Oil Services) over 47.76 still looks good
XLE (Energy) Second failure of 84.00 which means one to watch for short possibilities.
XOP (Oil and Gas Exploration) Like QQQ, a nasty bearish engulfing pattern and reversal from new highs.
SGG (Sugar) Subscribers: If this drops to 59.00-58.50 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) N/A
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)
MAS Only logical risk is today’s low and over 21.65 still looks good
PRU Provided this holds 80.00 still worth watching
JBL 23.40 is the low to hold here-also still a contender
CIEN Risk now is 25.07 as it made new highs today
CSIQ 13.85 should hold with now 3 months holding the 80 monthly moving average.Like to see 14.60 clear
F If this clears 17.70 could go to 25.00-26.00. Risk is now 17.20
COST Inside day after 3 day correction and positive pivots. Risk is116.91
CTRX Improved in condition. Only give this a little room to the 50 DMA 53.94
MET Doji day above the moving averages-has to hold 48.60.
OI 31.00 now key as this held up better than the others end of day. Today’s low good risk
Category 4: (Rip Tide)N/A:
Phase Change:
USG 26.63 pushes it over the 200 DMA and R1. Provided it holds today’s low
ALK this held up better than the others end of day and still looks good if holds 60.60
PETM 72.16 is the 50 DMA support and risk with a move over 73.00 good reason to think we will see 2013 highs or higher
GE Still looks good now if the 50 DMA holds
X As long as this holds the 200 DMA, still is in gear for more potential upside
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
BID Not a bear phase, but definitely a nasty reversal candle. 47.36-47.75 is the resistance it needs to stay beneath
MPC Strong move down and if breaks 66.65 could see another move down to 60.00
Bye For Now
