A red close all around with Russell 2000s finally giving it up under the fast moving average, while NASDAQ, although under pressure, outperforming the rest of the indexes. I have been writing about the S&P 500 and its near term overdone internals, which hopefully gave you ample time to take profits on longs-some of which were initiated the start of the year! To rewrite: Tops are typically made one of four ways: Blow off rally with huge volume, slingshot patterns, Island tops or, 2 or more tops made at resistance areas. Today, we see the possibility that IWM met with resistance, SPY with a slingshot, DIA a double top but still an inside day and QQQ, doing its sideways dance.
S&P 500 (SPY) First distribution day in volume in quite some time. Under 149.70 would be more defensive, but let's not confuse that with bearish. Phase still well intact. Subs: Pivots Negative
Russell 2000 (IWM) A good selloff to clean out longs for sure. Now, with a strong up phase intact, yet a long way down to a major moving average, caution yes. Subs: Would consider 89.25 the pivots an important area to watch for resistance or clearance above
Dow (DIA) Double top possible but also an inside day.
NASDAQ 100 (QQQ) Continuing to go sideways, has best shot for firming right now if can clear 67.50. Subs: Interesting that the pivots are positive-only index
GLD Closed above the 200 DMA for an unconfirmed phase change to warning. Subs: Today's low a good place to hold.
XLF (Financials) 2 inside days in a row-now that's interesting
IBB (Biotechnology) Been writing about the toppy action and now, broke the fast moving average. Subs: Brick wall in this last week. But since I could not short, have to stick with stocks in this sector. GILD possible second slingshot.
SMH (Semiconductors) Outperformed today. Looking how 34.00 holds up Subs: Did not add today since we did not get an opening range breakout.
XRT (Retail) 66.00 an area that is important for this to defend or could see some more selling coming in.
IYT (Transportation) After 3 shooting stars, we are out of our long from 90.00. Thanks transportation! Subs: Perfect example of a chandelier exit from the highs.
IYR (Real Estate) After the inside day, broke Tuesday low and stopped on the fast moving average. Gave up the last 5 days of work in one shot.
USO (US Oil Fund) Subs: High RSI, but hanging touch. 35.65 some resistance and should hold 35.00
OIH (Oil Services) Could have been it for now especially since it did not clear a monthly moving average going back to mid 2011
XLE (Energy) Subs: Possible slingshot here too
TBT (Ultrashort Lehman 20+ Year Treasuries) FED announced no change to rates. Watching to see where this finds support since that might be unsustainable. Subs: Possible slingshot
XOP (Oil and Gas Exploration) Subs: Slingshot possible here too
XHB (Homebuilders) Looks toppy
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.
*Note: Today's live coaching covers how to use this evening watch in depth. I strongly advise you to review it once it is posted on the site.
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:
URBN Held Tuesday low and has slightly positive pivots. But under today's low would avoid
TRIP If holds 44.96, could look at a move over pivots for ½ with an add over R1.
SNDK inside day. Like it over today's high if holds 48.59 the 10 DMA
Category 2: (Pipeline) Positive Phase, Condition 2-3, 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:
FCS* If can hold 14.72 and clear 15.05 could still have a shot.
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)
BAX* Probably one of the better setups if can hold today's low and can get through 68.22
EQT* Had an opening range reversal and yielded ½ ATR. Now, has to hold 601.12 the 10 DMA
TEL Inside day.Held Tuesday low at 38.77.Now has to clear 39.17 to get going
SWK* Had a hammer candle so if today's low holds, look for a continuation
Category 4: (Rip Tide) Oversold (2 or more days under FTP), Condition 4, Needs to clear R1, Risk previous day low unless noted differently, Target- Day to at least 3 ATRs from entry:
NSM Has to hold 33.79 and clear 34.81 R1
Phase Change: RHT A bit insane, but did hold the 200 DMA which means 54.33 a great stop and had an inside day. PNC Inside day and 3 highs at 62.39 to clear MSI* If 58.59 holds, like it over 59.00 and R1
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
COH 52.14 max risk with recent lows 50.47 and some support a the 200 weekly moving average 49.78
ESRX 54.23 max risk and like to see a break of today's low
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
ALXN Reports before open 2/7. Provided it stays under 95.52 the 50 DMA, could be setting up for a bear flag.
IACI 41.30 max risk with 38.20 recent lows
Bye for Now!
