A sleepy rally in the indices with pockets of excitement mainly in thefinancial sector. Semiconductors kicked into gear along withTransportation and certain Healthcare equities; yet overall, the day turned out better defined by glaring divergences.
Perhaps the major culprit of these divergences points to the small caps, which wins the distinction of failing to unnerve the blue chips, while arresting much follow through in so many other sectors and groups.
NASDAQ came so close to the 2014 highs and couldn’t find the juice to punch to or through it. IWM took out Wednesday’s highs by a few ticks and had it continued up we might have seen a 200-300 dollar move. Instead, it retreated then tried to catch up into the close holding its bullish phase and keeping hope alive.
SPY and the Dow though-where the fun lives for now. And of course, nothing parallels the buzz over the Alibaba IPO, at least not since the cache the Twitter IPO had in late 2013.
Rates eased a tad a day after the FOMC talk which could mean that certain oversold commodities can have some bounce. That easing may also underscore the vote in Scotland, which other than a lot of jokes about kilts, plaid and Scotch, appeared muted in terms of US Equity impact.
Otherwise, look for the end of this week welcoming lots of weary active traders with perhaps some healthy digestion (maybe I am projecting) so when we start the following week, these highs won’t feel so, well, high.
S&P 500 (SPY) New high close Subscribers: Positive Pivots in all
Russell 2000 (IWM) Needs to move away from 115.50 now or the thorn in the bull”s side
Dow (DIA) Another new high and now a bit overbought on the 2-day Relative Strength Indicator-makes the case for the digestion call
Nasdaq (QQQ) Inches from the 2014 highs
XLF (Financials) Overbought and oh so pretty!
KRE (Regional Banks) Confusion over as it cleared the 200 DMA. Now, 39.46 key support to hold for trend up to continue
SMH (Semiconductors) Semis did not disappoint with their new 2014 highs
IYT (Transportation) Inside day near the highs
IBB (Biotechnology) Still has a battle to the highs which means if the market turns down, good place to look for weakness
XRT (Retail) Looks good up here but not as tidy a chart as some of the other sectors
IYR (Real Estate) Reacting to the higher rates, slump in housing starts, but holding the week lows so far going into Friday
ITB (US Home Construction) Inside day right on the 200 DMA
GLD 2013 lows in its midst if cannot clear back over 118.07
USO (US Oil Fund) Weak oil prices-good for filling up your car
XOP (Oil and Gas Exploration) Subscribers: Really has to hold around 73.15
TAN (Guggenheim Solar Energy) Subscribers: 43.60 a good point to hold if good
TBT (Ultrashort Lehman 20+ Year Treasuries) Inside day
UUP (Dollar Bull) Amazing move this year and now, only looking like the beginning should 22.00 area hold
IFN (India Fund Inc.) Big day
EWP (Spain) Subscribers: Took a small long position to see if holds these major moving averages
FXI (China Large Cap Fund) 40.00 key support
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: (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:
ODP Support 5.66 and today’s low. If holds now, see R1 a good point of entry 5.78
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)
Some daytrades to watch: PANW MNK
INTC At this point, 34.75 is all I would give this but still a long term fave
ESRX Made a big move on September 5th and has spent the last 9 days in that range. 73.00 max risk with today’s move over the 10 DMA for a condition improvement
HPQ Made a good end of day move and now like more on an ORR
FB Narrow range day and over 77.38 good risk to today’s lows
FSLR Inside day. Like if holds 70.94 and over 72.42 clears the outside day
CAH Inside day good for a miniswing risk to 74.69 if clears 75.74
Category 4: N/A
Phase Change:
T Sitting on the 50 DMA and if holds todays lows then has lots of room to the upside
RIO 2 inside days and holding 52.65 max risk if moves over 53.24 R1
AMZN 3 Inside days-rare-be prepared to follow today’s range break long or short
TEVA Trading just under the 50 DMA and holding the 10 DMA. Max risk 51.75 with a move over 52.58 good
PM Held the moving averages so keeping it here and like better now over 85.34 for a swing to today’s lows
MRVL Got in for swing inside day-back over 13.95 much better
Shorts: Will look to daytrade for the shorts: Focus List ANF KMB JCI FCX
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
CAM Weakening and looking for a clean daytrading risk to enter unless it clears 71.51
Category 6:N/A
Best Best wishes for your trading,
Michele Schneider
