In keeping with the theory that the trading range beginning August 25th through the high established last week, is the range to break before we can see next direction clearly, Monday’s session was another notch in the belt of staying within those boundaries while confusing many active traders.
Furthermore, we came into this week with 3 possible scenarios in mind- gap higher-close your eyes and follow, Around unchanged, look for support at the floor trader pivots and gaps lower, consider that equally decisive and watch for short hedges.
Clearly scenario 2 played out as IWM, QQQs and DIA touched their floor trader midpoints (SPY broke it and came back through), and all closed above those pivots.
TLTs remain weak and are getting extremely close to failing the 50 DMA after putting in an island top. As I have written time and time again, rising rates will have positive and negative results depending upon where you look. For example, good for banks, certain retail, not so good for commodities and perhaps real estate.
Our Market Tone indicator signaled short term slightly positive, intermediate term or 10-20 days out bullish.
S&P 500 (SPY) 199.39 a solid low now clear support level. 200 pivotal and 201.58 the magic number to clear. Subscribers: Positive Pivots in all
Russell 2000 (IWM) Over 166.95 a great start. Otherwise, the 50 DMA at 114.95 an important level to hold
Dow (DIA) Needs to clear over the recent highs 171.56
Nasdaq (QQQ) 99.00 super important support to hold with 100.34 a great area to clear
XLF (Financials) Like that this closed green-23.58 the high to clear
KRE (Regional Banks) Once more push gets this through the 200 DMA
SMH (Semiconductors) Resolved to the upside
IYT (Transportation) A rest near the highs
IBB (Biotechnology) Looks poised to clear 274.25, a good sign
XRT (Retail) Looks better over 89.35
IYR (Real Estate) 76.21 is the 2013 high
ITB (US Home Construction) Not my first choice but sure would be nice if this plays along
GLD I would feel even more comfortable selling rallies
USO (US Oil Fund) Gapped close to the low area of 2014 but turned around and closed with a possible reversal
TBT (Ultrashort Lehman 20+ Year Treasuries) 58.44 is where the overhead moving average is
EWP (Spain) Subscribers: Watch to see if holds today’s lows
FXI (China Large Cap Fund) Inside day near the highs
BAL (Cotton) Subscribers: Another possible slingshot with the 50DMA on close watch
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
Dear Subscribers,
Our ability to do a thorough analysis of picks was hampered by major internet issues. I will add anything new to the list on twitter in the morning. Thanks for your patience.
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:
JBLU 2 inside days and really needs to hold today’s lows and clear 12.54 then today’s highs
Category 2: (Pipeline) 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)
RHT Holding the 10 and risk no more than today's lows. Overall chart looks poised for higher
INTC If you didn’t get in on the 5 minute opening range, now have to wait for an ORR to control risk
HCA Near the highs and maybe a bit overbought so here for a day to miniswing trade
THC Under the 10 DMA but making a good comeback as one of the favorite pick for 2014. If holds today’s low, like for an ORR or breakout over 60.10 CYH Same group over the 10 DMA if holds today’s lows-another candidate
Category 4: (Rip Tide) N/A
Phase Change:
LEN Over today's high clears the 200 DMA with a good risk to today's lows. Swing
YOKU Ran to the 50 DMA and looks poised for a move higher if holds today’s lows.
PNC 85.79 is R1 to clear with the 50 DMA (84.78) a great swing risk
AMZN If today’s low holds, see a good trade over R1 then the 200 DMA
SFM confirmed phase change to recovery. Should hold around 31.00 and over today’s highs breaks a trendline
SBUX Inside day right under the 50 DMA-over 77.97 breaks it with risk today’s low
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
AXP Unconfirmed phase change to distribution. Risk the 200 DMA and today’s high 89.83. Has to break today’s low
SCCO Unconfirmed warning phase if stays below 32.55. Has support at 31.00 for a miniswing trade
Category 6: White Cap-N/A
Bye for now!
