The FED showed some true colors in its internal dissention on keeping quantitative easing in place. For quite some time now, we have talked about these low rates as unsustainable. This is why I have bought TBTs on weakness and more recently, the US Dollar. In keeping with the possibility that the FED pulls back, the key to trading this year will be following sectors and groups and individual stocks that will benefit from a firmer dollar and shorting the ones that enjoyed a good run because of the artificially low rates. What this means for the overall market remains to be seen. For now, the improved phases are intact although some near term concern with new highs in Russell 2000 ending near but not on the intraday lows.
S&P 500 (SPY) Could not break out over the 146.50 resistance while 145.25 level good support to hold. Corrections can occur in price and/or time. Ideally want to see January 2 lows hold. Subs: Pivots positive
Russell 2000 (IWM) Made a new high and closed near the lows which means just as this index was the best clue for the recent run, could also be the best clue for how much correction we could be in store for. Subs: Pivots Positive so watch S1 86.26
Dow (DIA) Doji day and only index to close green. Another one like to see the gap low hold. Subs: Pivots Positive
NASDAQ 100 (QQQ) Could make the case for a reversal on the close after a new multi-month high and weaker close. Follow through to the downside will take this index down further maybe to around 65.66. Otherwise, will have to get above today's high to see 71.00. Subs: Pivots more neutral AAPL already short from a good place 550, but still looking vulnerable
ETFs:
GLD Landed on the 200 DMA which means if breaks from here, 158 is next area of support
XLF (Financials)17.12-17.20 is the 2011 high with 16.70 now support to hold
IBB (Biotechnology) Expectation is this will trade in line with market and not outperform like it did in 2012
SMH (Semiconductors) Happy about the breather this took since unless it breaks 32.65 still a fave for 2013.
XRT (Retail) Inside and doji day. Subs: Will follow the range break especially if fails S1
IYT (Transportation) 101 is the target. 96.00 should hold.
IYR (Real Estate) 66.25 resistance. Seems like its resting
USO (US Oil Fund) Tested Wednesday's low at the end of the session which means, a good place to look for a short. Subs: 33.64 S1 which has to break
XLE (Energy) Subs: 73.39 is the slingshot high that either has to clear, or a place to look for shorts
TBT (Ultrashort Lehman 20+ Year Treasuries) Called for a bottom last month-looks like the FED making that happen
XOP (Oil and Gas Exploration) Subs: 54.55 should hold now
UUP (Dollar Bull) Closed over the 50 DMA. Subs: Sitting long with no loss stop now
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: Will eliminate anything with an RSI over 92.00. An asterisk * means it's a 2013 pick.
Category 1: (Aloha) N/A
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:
COG Inside day. Holding the 50 DMA. Just about improved in condition. Swing risk 47.71 if takes out today's high.
FDX Inside day. Sideways action throughout 2012. Through 95 could be poised to see 100 and higher. Today's low good risk.
TROW Over 67.00 if holds today's low, could see move to 70.29 and beyond the 2011 high
DVA* Like to see it clear today's high also the 50 DMA and hold today's low
EQT* Inside day. Over today's high takes out the 50 DMA and has to hold today's low
DO* 70.15 is the overhead 80 monthly moving average to clear but for now, looks good with 69.00 good area to hold (long already)
JNJ* Like to see 70.00 hold. 72.00 good target for now
AMZN Tested and held the 10 DMA, now max risk. Could run to 2012 highs
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:
LNKD* Inside day. Has to hold 110 and clear 112.50 then R1 113.43
Phase Change: SLB* phase change if holds 70.45. Like to see it eventually get through the 80 monthly at 72.07 INTC* Right at the 80 monthly moving average with 21.00 max risk. FCX (no phase change but if 34.35 holds, island bottom.) KLIC Inside day pause change bullish. If holds today's low, like over today's high.
Shorts: Slingshot highs to watch: RAX
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
IACI* Today's high now good risk
COH Inside day. Follow the range break down of also breaks S1. Risk 55.60
ESRX 55 good risk now if continues in weakness
FIO Landed near recent lows. Looking heavy but to control risk, look for an Opening Range High Failure against 23.00
CLF After a slingshot high Wednesday, followed through today. 38.90 now good risk with support at the 10 DMA 36.55
SOHU After a slingshot high Wednesday, followed through today. 48.25 good risk with support 45.55 at the 10 DMA
CMG* Under today's low breaks S1 and could see drop to 285. Risk 302 area
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
CLB Brick wall possible. 112 good risk. Like to see it break S1 to stick with the trade.
Bye for Now!
