The FED gave stocks a temporary intraday reason to party with the now confirmation we needed for the phase change in the small caps, while the Dow ran for its second day to new highs.
However, many individual equities and certain ETFs rallied into resistance or to the top of the recent trading range making today’s announcement of keeping interest rates low very hard to chase for new longs. In fact, the action typified this whole year thus far-looks great, sell, looks horrendous, buy!
Also interesting is that in spite of the FED’s statement that economic growth will remain below expectations (GDP), the interest rates (Short Bonds) firmed creating the expected havoc in commodities (gold in particular) while the stronger dollar helped the cause of other instruments (financials and certain retailers that have goods produced in the United States).
This is probably a good time to look at Utilities, certain Consumer Staples and severalTelecommunications Companies that could fare well given the slower growth prediction with Fed maintaining forcibly low interest rates while they continue to wind down the Bond buying.
And if you read that last sentence aloud and find yourself crinkling your brow thinking WTF-me too!
S&P 500 (SPY) After all said and done this had a doji day (open and closing prices virtually the same). Good news is I get to write that 200 remains pivotal Subscribers: Positive Pivots in all
Russell 2000 (IWM) Confirmed the bullish phase but the daily chart does not wow here
Dow (DIA) Eked out another new high close
Nasdaq (QQQ) Also a doji day here with 99 pivotal and a move over 100 better odds for new highs
XLF (Financials) New highs as expected
KRE (Regional Banks) Looked a bit confused-On the 0200 DMA but has to make some tracks now above to look convincing
SMH (Semiconductors) I would like to see this hold Wednesdays lows
IYT (Transportation) New highs not unexpected especially with FedEx strong earnings
IBB (Biotechnology) Like SMH, want to see this hold today’s lows
XRT (Retail) I like the consolidation here if can break the range
IYR (Real Estate) If market believes rates will be higher, this looks heavy
ITB (US Home Construction) Crossed over the 200 DMA but stopped right at the August highs-very good spot to watch which way it goes from here
GLD Sold off and now 2013 lows in its midst if cannot clear back over 118.07
Metals and Mining (XME) Confirmed a reversal off the lows in contrast to the gold. Has the 50 DMA to clear if real
USO (US Oil Fund) Inside day with 34.77 important to hold
OIH (Oil Services) After Tuesday’s bounce to resistance, Wednesday it retreated from that point and looks vulnerable
XLE (Energy) Inside day
XOP (Oil and Gas Exploration) Subscribers: Really has to hold around 73.15
FCG (First Trust ISE Reserve NatGas) Subscribers: Like this with Thursday’s Natural Gas Report worth waiting for
TAN (Guggenheim Solar Energy) Subscribers: Let’s call 43.60 a good point to hold if good
TBT (Ultrashort Lehman 20+ Year Treasuries) Last year many talked about a bubble in rates in spite of the FED action-maybe coming soon
UUP (Dollar Bull) Amazing move this year and now, only looking like the beginning should 22.00 area hold
FXI (China Large Cap Fund) Looking at 40.00 again especially after an inside day on the 50 DMA
SGG (Sugar) Subscribers: 40.85 this months low-last gasp to hold if has any chance
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)
INTC At this point, 34.75 is all I would give this but still a long term fave
ODP Inside day and negative pivots but keeping it here provided it holds 5.66
ESRX Made a big move on September 5th and has spent the last 8 days in that range. 73.00 max risk and like over today’s highs
HPQ 36.30 is all I would give this now but again, over the 80 monthly so worth keeping on list
FSLR Condition improvement if holds today’s lows and since I like the solar sector, this seems setup the best.
WHR Risk around 152.70 and over recent 154 resistance making this look good to around 160 or higher
ETR Inside day neutral pivots and has to hold today’s lows on the 10 DMA-like the 80 monthly chart
Category 4: N/A
Phase Change:
PCG Inside day and unconfirmed phase change to recovery. Like over 46.54 risk to today’s lows for swing
PM 84.50 is now my max risk if holds and clears today’s highs
MRVL Got in for swing and now that it could not hold the OR breakout, will see how it behaves around 13.64
PHM Too bad it was Fed day since it had an ORR during the announcement time. Now, has to hold today’s lows to continue
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
CAM Inside day on the 50 DMA which means under S1 and today’s low good short to try again
BID Inside day. Breaks the lows and could see 37 or lower
Category 6: White Cap-Having a 2-3 Day correction over the pivots.. In a Negative Phase, Positive Pivots. Can sell an Opening Range High Failure if happens below R1 or previous day high whatever is higher and/or weakness if breaks S1 and prior day’s low
MON If cannot clear todays highs, under S1 can see a lot more downside until next support 110-108
Best Best wishes for your trading,
Michele Schneider
