Based on Geoff Bysshe’s weekend notes “Look to follow the direction on Wednesday that takes place relative to what happens Tuesday, especially if that range extends outside the range of last week,” NASDAQ is our best example with the Russell 2000s a close second. Both extended the range from Tuesday’s session on Wednesday by taking out the lows and closing lower.
Apple was a huge component in the NASDAQ, but why IWM? Logically, that has lagged behind in spite of its run over the moving averages. Although underlying support remains at the moving averages, the fact that it hasn’t come close to the 2014 highs is a fact to reckon with.
The other part of Geoff’s comments relates to Friday and the jobs report. He suggests, “Take note of whether Friday’s data reverse or extends the week’s trend.” Therefore, if you add those two points together, one can surmise that Wednesday’s session suggests further weakness testing lower level support, but not necessarily a game changer unless Friday’s session extends those losses.
My comment on rates: TLTs did indeed confirm an island top. However, there is support all the way down to 115. Perhaps today’s bounce will provide a better opportunity to short against 117.50 level. I would wait now until Friday guessing that the aforementioned advice will elucidate the next direction that rates will move in as well.
S&P 500 (SPY) 199.39 last week’s low is support level. 200 could hold up as well. Otherwise, it is possible, Wednesday was a key reversal-but as always, need confirmation. Subscribers: Negative Pivots in QQQ IWM Positive in SPY DIA
Russell 2000 (IWM) 115.51 last week’s low. Interim at 116 and back over 117 much better
Dow (DIA) Reverse from new highs but with support at 170
Nasdaq (QQQ) The leader gave us the best indication for a possible reversal. Bearish engulfing, decent volume (not blow off though) and new highs close on the lows. Again, will look for confirmation with last week’s low 99.08
XLF (Financials) Closed red with the pressure in the market but overall, not a bad looking chart
KRE (Regional Banks) Needs to do more work-if holds the 50 DMA much better and still needs to clear the 200 DMA
SMH (Semiconductors) Good day although there is the possible 2 shooting stars scenario-I say possible
IYT (Transportation) Correction but not looking like a reversal here
IBB (Biotechnology) Consolidating near highs
XRT (Retail) Another day down and this could have been a reversal from the highs
IYR (Real Estate) Looks good but has to clear the mid-August highs to look better
ITB (US Home Construction) Not a good day here and ominous for an important domestic sector Subscribers:
GLD Possible brick wall bottom if confirms over today’s high. Still like in the yellow metal it seems
Metals and Mining (XME) Another down move after the bearish engulfing day but no real harm done yet on the daily chart with major support at 42.45
USO (US Oil Fund) It’s all about two areas-34.50 and 36.20-in between noise
OIH (Oil Services) Inside day with major support from early August to defend
XLE (Energy) Inside day here under the 50 DMA
XOP (Oil and Gas Exploration) Inside day pretty much on the 50 DMA and looking like potential over 78.90
TAN (Guggenheim Solar Energy) Subscribers: Had an ORR which looked good, now has to hold 43.50
EEM (Emerging Markets) Subscribers: Would have preferred to see a runaway gap but this gap definitely helps clearing a 3 year base if holds
IFN (India Fund Inc.) New highs
EWP (Spain) Subscribers: Over 41.20 gives you a little more than 2 ATRs of risk down to the 200 DMA
EWW (Mexico) Subscribers: New 2014 highs
FXI (China Large Cap Fund) Gapped over lots of work and clearing that 3 year base handily
BAL (Cotton) Subscribers: Once it clears the 50 DMA we might have something to sink our teeth into
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:
INTC Inside day with a tight risk to under S1 or 34.39 area if clears 34.91-a swing risk
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)
CCI Made its range in the first 30 minutes. Now, over 80.52 as great but can also look at an ORR against the 10 DMA. Really like this chart longer term
JBL Inside day over 21.74 clears the highs for a swing to miniswing risk to today’s lows. Longer term looks like it can go another 1.00 higher
CLR 2 inside days with good miniswing risk to 158.18 and like over 160.74 R1-made new highs on Friday
KOG Inside day over the 10 DMA with a good Miniswng risk to under 15.80 if clears 16.13
SCCO Has to clear 33 but if does, good risk down to the 50 DMA 32.24 for a swing
RHT Another chart I really like longer term but to control risk, look for 61.00 to hold-candidate for an ORR as well
KSS We kept ½ and will add that back over 59.90-clearing a 7 year base and cannot argue with that! Risk now is under S2 58.49
MFC We are in for a true swing-stop under the 50 DMA until we get 2 ATRs
PG Neutral pivots and with our ½ position will look to add back ½ over 83.49-also like our stop now at 82.57-note an inside day today
Category 4: N/A
Phase Change:
PM Like over 85.90 R1 for swing with now a risk to either 85.20 or 84.77 for a wider stop-inside day
PNC confirmed phase change to bullish which means 84.99 has to hold -good for swing
CCL 38.33 is the 200 DMA with a miniswing risk to today;s low if clears
GE Since this is over the 80 monthly after years, and it closed green today I am putting this back on list if clears 26.11 for a swing
MRVL Like that it has cleared the 80 monthly moving average and now, 13.75 is the big area of support.
Shorts: Focus list picks: TRIP POT
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
SINA OR high Failure now best to control risk
FTI Confirmed warning phase-we are short and looking for a break of 59.50 and a risk now over 60.91 area
Category 6:N/A
Bye for now!
