The great small caps hope-or shall I say, where my focus began during today’s session, and where my focus remains at the end of today’s session. IWM or Russell 2000 has the clearest technical pattern right now. For one, it closed green while the other indices did not. Secondly, it closed with a doji candle-when the opening and closing prices are the same or real close together. Third, it held the fast moving average. Fourth, it had an accumulation day in volume on a down day in the Dow. Fifth, this correction has helped it to work off any overbought conditions. Sixth, it is holding the prior 2013 highs made in the beginning of August. 6 reasons to let this one tell the tale going into Tuesday. Or is that 6 Degrees of Separation?
S&P 500 (SPY) Has to clear Monday’s high to bring back buyers. Also, has to hold the 50 DMA supportSubscribers: Negative pivots in all indexes
Russell 2000 (IWM) Much better looking which brings me back to hope-watch this for a failure of 105.75-105.50 or a move back over 107.00
Dow (DIA) Wrote over the weekend that this has the closest trip if continues south, to the 50 DMA. Good news is the slope on the 50 DMA is still pointing up!
Nasdaq (QQQ) AAPL sure prevented this index from falling apart closing basically unchanged. One could say that that is a significant underperformance to AAPL and thereby deduce that if AAPL falls from here,QQQ could as well only harder.
ETFs:
XLF (Financials) Unconfirmed return to warning phase with 20.11 recent support (September 13th low) to hold
SMH (Semiconductors) 39.78 good underlying support to hold and still looking ok longer term
XRT (Retail) After failing to take out the old 2013 high, look at 81.55 then 81.00 as key levels of support or a move over today’s high a good sign
IYT (Transportation) Like to see today’s low hold
IYR (Real Estate) Besides IWM, I am looking here to gauge how much confidence there is in the market to hold up from these levels. Monday’s low super important.
XHB (Homebuilders) 29.80 its support area
GLD Subscribers: Although we took a teeny loss, I like the hammer candle and will continue to watch it from here
USO (US Oil Fund)confirmed warning phase
OIH (Oil Services)47.00 next area of support
XOP (Oil and Gas Exploration) Closed unchanged. Long term still friendly here
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs got an unconfirmed phase change to recovery
EWG (Germany) Good correction to start watching for an entry point
FXI (China) Inside day. Subscribers: Like over R1
EWW (Mexico) Subscribers: Inside day on the 10 DMA-like this over R1
SGG (Sugar) Subscribers: Inside day. Over Friday’s high is good
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:
LO If holds today’s low, has to clear R1 to keep going
AFL Today’s low max risk with over R1 clearing today’s high. Still looks like 70.00 area possible
CVX Looks good if holds 124.85 and clear R1
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)
PETM inside day and like to see it clear R1 for this to continue and hold 73.16 the 10 DMA
BIDU New high close but a bit high on the RSI for weekly and monthly. Therefore, good for more day to miniswing trade risk 148.00
GE Inside day. Like over R1 and if holds today’s low
BBY Inside day the 10 DMA and over 39.20 looks like new highs again
ALK Over Friday’s high 63.35 could see a move to 67.00 area with risk 62.00
FOSL Has one day negative pivots so has to clear R1 which lines up with today’s high. Risk today’s low
Category 4: (Rip Tide) N/A
Phase Change:
MCD Converging moving averages which means squeezed between the 10 and the 200 DMA-like the range break either way
GCI If holds today’s low as max risk, like over R1 for swing to see if can get ba k up to 28.00 or higher
WMT Unconfirmed phase change to bullish provided 75.64 the 50 DMA holds.
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
ETE Phase change to warning confirmed. Still looks weak
CCI if cannot cross Monday’s high, then could see more south especially if breaks 69.99
K 60.53 max risk or R1 and under recent lows has room to 58.40 or so
EXPE 52.75 max risk. 51.53 some support, then 50.00
Bye For Now
