SPY Inside day after last Thursday coming within a few ticks of filling the gap that was left on the island top day July 7. That gap gets filled at 134.88. After strong volume on Thursday, Friday's volume was extremely light. As mentioned before, low volume corrections during bull trends are postive. Now, provided intraday support at 133.80 holds up, once it crosses 134.82, especially if volume comes in, 136 area next resistance.
QQQ Took out the recent high 59.36 made on July 7 and closed above that on a weekly basis. Some resistance at 60.35 area but overall target now 66.
IWM inside day Friday. Now, above 84.40, should see move to 87. 83.10 now key support.
With 2 of the 3 indexes putting in inside days with low volume, Monday could be an interesting day. Typically, following the way the trend breaks after an inside day is the advised strategy. However, I would be relunctant to short under Friday's low, rather wait out the possible correction for a buy opportunity. However, following the trend to the upside is recommended. Looking at the VIX, it is certainly nowhere near a state of irrational exuberance indicating rather a relative calm at these levels. With the August 2 deadline approaching concerning the debt ceiling decision, clearly the indicators are telling us that a deal is more likely than not. Imagine the havoc if that doesn't happen?
Featured ETFS:
GLD after two inside days, Friday had a narrow range, closing above the previous highs but not clearing the all-time high at 156.58. Provided Friday's low holds, a move above the recent all-time high, 165 next target.
SLV broke from the wedge and closed just above. Would continue to be a buyer of dips especially if it continues to hold above 38.80. Otherwise, wait to see what happens around 37.75, the fast moving average. Recent high 39.69, all-time high 48.35.
EWC Inside day. Sill have target at 33.20.
XRT nearly an inside day, taking out Thursday's low by one tick. Now, 54.45 is critical support as that is the low of the last couple of days and the fast moving average. Under that level we could see a dip down to 53.70 area. Above 55.45 next resistance at the all-time high 56.
IBB acted well but could not clear 109.47. Once it does looking for a move up to 113. In the meanwhile, buy dips.
SMH traded above the 200 day moving average but could not quite fill the gap up to 34.03 with Friday's hi 33.93. The 50 day moving average comes in at 34.08. Once it fills the gap and gets through the 50 day, especially on a closing basis, next resistance up to 35.36. Now, the 200 day moving average at 33.44 is key support.
IYR the high on July 7 was 63 and last Friday it came real close with a high of 62.95. Once this clears the all-time high, projected move up to 68. Another one to be a buyer of dips.
IYTa bit worrisome in that it is lagging behind the other leading sectors and groups. Had an inside day on Friday and held the fast moving average at 97.03. A move beneath the fast moving average and the declining 50 day moving average is just below at 96.58. If that breaks could mean trouble for transportation stocks. Above Friday's hi and R1 at 98.22 would be a good sign of strength.
Note to subscribers:
First I want to thank those of you who stuck it out through the trial and are now paying customers! And of course I want to thank my existing subscribers, some of whom have been with me for quite some time. It is no easy task to teach, answer questions and trade with transparency all at the same time. I do it with joy, passion and gratitude.
On Friday, I left you with not only a list of trades to consider, but also with a tool chest of strategies that we use over and over again such as looking at strong stocks with two days under the floor trader pivot, buying strong stocks on opening range reversals and looking at weaker stocks that are oversold and holding key support then breaking out over 30 minute opening ranges.
Had you employed all three of these strategies using the list not only from Friday but from the entire week, here are some of the trades you could/should have put on whether or not I was there to tweet you through it. Any of these were fine daytrades, some were miniswing with initial profit taking at .5 ATR, and others were swing trades with good risks.
1. CMG-two days under the floor trader pivot, opens above the FTP and then has an amazing breakout above the 30 minute opening range which coincides perfectly with R1 and previous day high. Purchase price should have been about 332, had a high of 336.66 and closed at 335.52.
2. AMD-opened up above 6.62, a great candidate for a two minute opening range buy with an extremely tight to risk or over the 30 minute opening range at 7.34. High 7.79. CLosed 7.75.
3. NTES held the 10 day moving average and previous day low, could have bought on the 30 minute opening range or more conservatively above R1 at 48.95. High was 49.71. Closing price 49.38
4. Opening range reversals-IBM, CF, AMZN, QQQ, SPY, SGY, FXI, EWC, GLD
5. Classic 30 minute opening range coinciding with R1 breakout.-AAPL, GOOG, SLV
Plus, there are several existing positions that we have been very vocal about such as WYNN, LVS, GPRO (took 1.5 ATRs profit), POT in addition to several ETF's.
I mention this not because I want you to feel badly if you took the day off or missed these trades. I mention this because I want you to understand that the years that Keith, Geoff and I have spent trading and refining these strategies have been documented for the very purpose of teaching how to be successful as traders. I also hope to dispel concern that many have expressed about the necessity to be doing this full time. Most of the trades that I've mentioned above could have been done in the first hour of the day. And, even if you don't have a full hour to devote to trading in the morning, you can easily watch how the market opens and then place stops or limit orders accordingly.
Longs: With many stocks extended and lots still waiting to report, watch the Condition 1 stocks for opening range reversals rather than buying strength, especially if the risk is too much.
I know many traders are afraid to buy big stocks. The list for Monday has several big stocks and a couple of smaller stocks. Others I have recommended lately, have already made big moves and the risk is now out of whack with such small ATRs such as in MGM and AMD. That is one reason why I always include ETF's as they are excellent for traders who prefer smaller ATR's. But, try to get over the fear of the big ones because as long as you know the risk and adjust your position size accordingly, the return is much greater. For example, an account with 25,000 can risk a half percent on any given trade which means a risk of $125. Translate that to a stock with an ATR of 2.00 or more and you are risking 1/3 ATR or approximately $.70 which means one can buy 75 shares.
BIIB reports July 26. Three inside days. That means compression so close to the all-time high. Now, If holds 104.85, and gets through 106.05 R1, could see a run before earnings possibly up to 109. Daytrade with exit before it reports.
ACOM**reports July 28. Now two days under the floor trader pivot and a Condition 2 stock. The FTP comes in at 43.30 and the fast moving average at 43.52. Would use Friday's low 42.79 down to S1 at 42.66 as a risk. Depending on how it opens, look at a five minute opening range above the FTP, however it must also clear 43.80 where R1 is, so if it opens very close to that level could wait for it to get through it. All-time high in May at 45.78. It is possible to could catch a nice rally before earnings. Day to mini.
APA reports August 4. An example of one to buy on an opening range reversal, especially if it holds the FTP at 127.95. Had an inside day on Friday. Above 128.84, all time high at 134.13 with some resistance on the weekly by the Bollinger bands at 132.45. Day to mini.
NFLX daytrade only from the long side if it holds the FTP at 275.20. Would use a daytrading risk of a third of an ATR maximum. Use a two or five minute opening range breakout if it opens up above the FTP. Resistance at 279.90 R1. Could make a run by the end of the day to 285 if volume and momentum are there. Daytrade only
JVA*already reported. Now two days under the floor trader pivot and a Condition 4 due to the negatively sloping overhead 10 day moving average at 22.45. The FTP is at 21.35. A mini swing risk is Friday's low 20.63. Also needs to clear 22.08 where R1 is. Made a huge run three weeks ago and with this recent selloff, has worked off all of its overbought condition. If interested in swing trading would use the last swing low 18.54 as a risk. If it can clear the resistance points and the fast moving average, next significant overhead resistance at 26.80. All time high 30.98.Day to swing. Note-GMCR also two days under the floor trader pivot, but earnings July 27.
OVTI**reports August 25. Weekly chart looks better than daily. Had two inside days in a row last Thursday and Friday with a trendline coming down from the highs which crosses above 33.45, confirming on a closing basis. The FTP is stacked positively coming in at 33.13. Would only risk to Friday's low 32.65 for a mini swing looking for a move up to 36. Swing traders can use 31.96 as a risk. All-time high made in April at 37.04. On the weekly chart there is an inverted head and shoulders that goes back to 2004. A weekly close above 36, the neckline, and this could see much higher prices. Day to swing.
SINA*coming into Friday had two days under the floor trader pivot. It traded above but did not get very far since it could not cross R1. Now, if it holds 111.96 S1 and takes out 114.35 the FTP, that also will be a return move over the fast moving average. Depending on how it opens, might have been possibility of buying this big stock with a tight risk. Ultimately though, it must cross R1 at 116.70 along with Friday's hi 116.75. Then, it has the potential to run up to last week's time 125.37 and next major overhead resistance at 139. Day to swing Reports August 1.
Shorts: As the market continues to firm, don't see many great short setups right now.
MET*reports July 28 negative pivots coming in at 41.72. Either look to sell on an opening range high failure with a risk to 42.09 or on weakness below the FTP and S1 at 41.38. Next support down at 39.13. Day to mini.
Have a great Sunday!