Not so fast on that sacrificial lamb metaphor you might be thinking to yourselves. There’s a reason that lamb had its throat slit this week.
Not to be too macabre, (poetic license if you will), the Market action at the start of this year 5775, according to the Jewish calendar, washardly filled with fruit and honey.
However, with both the Dow and NASDAQ ultimately defending the 50 DMA, once again we call on the laws of contrarian to say that perhaps, just perhaps, Thursday was another healthy flush to the lower end of the August range.
Be that as it may, we took profits using trailing stops in the bank stocks we owned and are gone, have a couple of safety plays on, otherwise, super tight stops using major moving averages as our line in the sand, with our major position-cash. By the way, in US dollars, that’s not too shabby right now!
Small caps held 110-case for range bound until that breaks. SPYwent into an unconfirmed warning phase-needs another day of closing beneath the 50 DMA. QQQs and DIA could lead the way and bounce decidedly off the 50 DMA OR gap beneath thereby giving high probability to sealing the fate of the longest amount of time since the S&P 500 touched the 200 DMA (last time was November 2012).
S&P 500 (SPY) Now, the 50 DMA is at 197.80 and the price below. In order for the confirmation of the warning phase, has to close the week below. Subscribers: Negative Pivots in all
Russell 2000 (IWM) Really likes 110 for now. If it breaks good chance this will see 105
Dow (DIA) The 50 DMA is 169.17. That means if holds and clears 170 good sign. Otherwise, has room to 164 area next
Nasdaq (QQQ) The 50 DMA is 97.83. 95.00 could be beckoning unless this clears and closes back over 98.05
XLF (Financials) Express train to the 50 DMA. 23.00 is the area now to hold
SMH (Semiconductors) On the 50 DMA at 50.53 and still in best shape since it held 9/16 low 50.62-fornow
IBB (Biotechnology) New high first thing then bang. But as with SMH, best place to look for strength
XRT (Retail) No surprise this is back in an unconfirmed warning phase
IYR (Real Estate) Support at 67.65 on monthly chart
GLD New reversal candle? Let’s say maybe
USO (US Oil Fund) Under 34.00 more downside expected
FCG (First Trust ISE Reserve NatGas) Major support right here on monthly moving average so worth watching
TAN (Guggenheim Solar Energy) Subscribers: Defensive move to sell ½ end of day-yet this held the 200 DMA. Big eyes to see if holds and moves back up over the 50 DMA
TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs right back over the 50 DMA-I figured the rates have to stay low
UUP (Dollar Bull) 22.75 is resistance and tested early on today
FXI (China Large Cap Fund) Held the July lows in spite of its drop
SGG (Sugar) Subscribers: I want to get excited but we have seen false bottoms this year-maybe if holds 40.50
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)
ANN Actually didn’t do too badly and has neutral pivots. 41.06 max risk and will watch a set up over pivots
PAYX Inside day and a rare positive pivots. Tight risk it to 43.05 S2 and over 44.06 clears R1-minisiwng
DUK 73.40 area max risk. Like on an ORR or breakout over 74.25
MNK Good relative performance on an absolute basis with slightly negative pivots. Has to hold 87.60 and clear 89 the pivots to get interesting
Category 4: N/A
Phase Change:
IPG Now a 2-day pattern on the 200 DMA-inside day-Can look at a 30 min OR breakout over the FTP at 18.10 then a stop to the lows 17.89
IGT If holds 16.80 look for an OR breakout over 16.95
Shorts: On Focus List: CRM DIS LNKD DKS
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
KRFT Inside day and under the 200 DMA on an unconfirmed phase change to distribution. Under 55.95 good risk to 56.46 for a miniswing
XL Inside day under the 50 DMA on an unconfirmed phase change to Warning. Under 33.22 risk is to the 50 DMA 33.36-tight
ANF under the 200 DMA on an unconfirmed phase change to distribution. Longer term bearish this company and so look for a low risk entry against today’s highs
OXY Inside day and under the 200 DMA on an unconfirmed phase change to distribution. Like under 96.19 with stop over today’s highs
PSX confirmed phase change to warning. 84.40 max risk and see this as topping out on the weekly chart-need to get short on best risk-probably miniswing
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
DTV Not a bear phase but closed weak. If cannot clear 87.10 looking at a day to miniswing short
Best Best wishes for your trading,
Michele Schneider
