Hi everyone! I am back from a long and wondrous break. First, big shout out to Geoff Bysshe and Matt Mullins for filling in for me so exquisitely. Thank you so very much!
Now, the market-ahh, the market. Before I left I wrote a lot about the divergences between the indices and the salient sectors and groups-particularly real estate and financials. I am also fond of noting howsemiconductors, although not a measure of economic growth per se, need to be at the party. Obviously, those of you involved in the market for the last 3 weeks have seen how divergences come home to roost with the indices now in more negative phases. Of course, the market hates uncertainty as we know; however, the divergence predates the recent concerns over Syria and should be duly noted as an incredible “crystal ball.” Rested and unbiased, I see more trouble ahead as the S&P 500 is in its confirmed warning phase which looks as though it is accelerating. The small caps (Russell 2000) which peaked on August 5th, showed a clear topping pattern just 2 days later. Now, it too is in a confirmed warning phase as we head into the new month. The only holdout is NASDAQ, which also shows a topping pattern after the peak high from August 26th, but remains solidly above a rising 50 day moving average.
S&P 500 (SPY) Would look for a sell opportunity against 164.35 if that area remains resistance Subscribers: Negative pivots in all indices.
Russell 2000 (IWM) 100.00 has some technical and psychological support, but beneath could see 97-98.00 next
Dow (DIA) 145 is next underlying support, then the 200 DMA. Over 149, well, that would be a game changer
Nasdaq (QQQ) Support down to 74.20 and a key to watch for leadership. With all peak tops, those areas have to clear for any sustained rally.
ETFs:
XLF (Financials) The ultimate area to hold is around 18.75
SMH (Semiconductors) That 13 year channel I watched hawkishly has been violated. 37.50 pivotal on a monthly chart. On the daily 35.75 is key support
XRT (Retail) 77.00 has been a support area since June.
IYT (Transportation) My other favorite “tell” is transportation. Right now, best bet to hold these lows but certainly not banking on it just yet. Longer term charts intact which gives this more room to the downside without major damage.
IBB (Biotechnology) In the best shape as it holds the 50 DMA. 192.50 support and 197 resistance for now
IYR (Real Estate) Getting real close to longer term support around November 2012 lows 60.84. Subscribers: There was a slingshot low pattern made on August 20th which means 60.92 is key to hold. I would watch here for any signs of strength over 62.85
GLDFriday’s low is also the 10 DMA and important support for the shorter term uptrend
USO (US Oil Fund)See a topping pattern from August 28th at 39.46 with Friday’s low close to the 10 DMA support at 38.13
OIH (Oil Services)Close to the 50 DMA and a long term monthly moving average-eyes here.
XLE (Energy) Subscribers: Good 2-day pattern against support at 81.35. Like over R1 and Friday’s high
XOP (Oil and Gas Exploration) Not bad looking at these levels Subscribers: Good 2-day pattern against support at 61.35 the 50 DMA. Like over R1 and Friday’s high
TBT (Ultrashort Lehman 20+ Year Treasuries) 76.30 the 50 DMA and just below Friday’s close is a good level to watch to hold.
UUP (Dollar Bull) Subscribers: Sitting at the 50 and 200 DMAs which means clearing 22.25 will look bullish
EWG (Germany) Subscribers: 25.31 an area to watch for support now
**Note to Subscribers: Again, I thank Geoff and Matt for doing such a fine job and all of you for hanging with me while I got the much needed rest. I feel great and ready to swing!! As of Tuesday, you will no longer have access to the daytrading room as I will be in full twitter gear!
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:
HAL Corrected to and held the 10 DMA. Watch for a breakout or reversal over R1.
AMGN Corrected to and is holding the 10 DMA. Watch for a breakout or reversal over R1, which lines up with Friday’s high.
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)
RAX Inside day holding the upward sloping 10 and 50 DMAs. Friday’s high needs to clear and Friday’s low needs to hold.
TRIP Holding the 10 DMA with positive pivots. A good tight risk is around 72.80 area should it take out Friday high.
BMRN Inside day. Watch for a breakout or reversal over Friday’s high. Friday’s low must hold.
MCK Inside day and is compressed between the 10 and 50 DMA. A breakout over Friday’s high will clear the 10 DMA.
CI Inside day, holding the upward sloping 10 DMA.
ACT Watch for a breakout or OR reversal against the 10 DMA.
Category 4: (Rip Tide) N/A
Phase Change:
SRE Cleared the 50 DMA to bring this into an unconfirmed bull phase. Watch for a breakout or reversal against the 50 DMA.
CSIQ Moved into an unconfirmed bull phase. Watch for a breakout or reversal against the upward sloping 50 DMA.
Other:
CBST Inside day holding the 10 DMA. Friday’s high needs to clear and Friday’s low needs to hold.
PXD 2 inside days. Watch for Friday’s high to clear and Friday’s low to hold.
KSS Cleared the 10 DMA and has overhead at the 560 DMA but long term charts (monthly, weekly) are intact.
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
SPN Fell into an unconfirmed distribution phase today.23.61 is next support.
NBR Confirmed its bear phase on Friday. Watch for a breakdown or OR high failure. 15.18 is next support.
HUN Moved into an unconfirmed Bear phase on Friday. Watch for a breakdown or reversal against the 50 DMA.
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 lows
FCS Watch for a breakdown or OR high failure under the 10 DMA.
BZH Under three converging moving averages. Watch for a breakdown or reversal under the 200 DMA.
Best wishes for your trading
