Go ahead and celebrate an amazing end to the week and month (we sure did), then, come with me into volume world. No doubt, the recent rally has been fueled by the sectors I have been writing about since 2012 began-financials, real estate, biotech, transportation; but what has to happen now to sustain this move? Statistically, the market stays firm into a presidential election when an incumbent is running. Second, the European situation has been like the buying opportunity gift that keeps on giving. Third, although not as robust as some would like, the economic indicators have shown U.S in the lead as far as a recovery goes. Some economists are saying that commodities are down due to a low demand which in turn means an economic downturn. But not only do I not see that in the market, it's a diversion from the old formula (gold and US market have to run in tandem) that we called right from 2012's onset that continues to play out.
So, what about volume? Friday had a significant accumulation in volume in S&P 500, Russell 2000 and the DJ Industrials. What did not, NASDAQ 100. Can you guess where I'm going with this? That's right, the leaders that need to lead. So as this week begins (and I suspect it'll be slow with the U.S holiday on hump day this year), watch those leaders. Volume was light in NASDAQ, although the price action outperformed the other indexes. That screams "Watch ME now!" All Indexes back to unconfirmed Bullish Phases
S&P 500 (SPY) 136.25 high from June 19th (last swing high) has to clear to continue. Could also see some correction or digestion ahead of the holiday
Russell 2000 (IWM) Cleared 78.00 handily, which is now support.
Dow (DIA) As long as 126.80 holds, looks good
NASDAQ 100 (QQQ) Big eyes here next week. Has to hold 63.20, better yet, 63.50 and if so, then clear 64.57 for new leg up.
ETFs:
GLD This metal has lots of traders confused. Touched the 50 DMA. Under 154 could be low risk short
SLV Subs: Closed on the 10 DMA with a DOJI. If opens above 26.70 would be inclined to look for a long. If opens under Friday low, a short. Inflection point
XLF (Financials) First close over the 50 DMA since early May. 14.45 level now has to hold Subs: Closed out the add portion, holding the core
IBB (Biotechnology) Resilient. But still has to clear last Wednesday's high
SMH (Semiconductors) Interesting candle. Let's see what happens at around 32.10
XRT (Retail) I am still holding out on any long positions here and maintaining my stance as the go to short if market rolls over. 58.90 level pivotal
IYT (Transportation) Long term, looks great. Short term, have to wait for some digestion if not already long Subs: Long for swing from 90.05
IYR (Real Estate) Up, up and away. Only nothing goes straight up. Watch for a dip and/or digestion.
USO (US Oil Fund) If this runs to 34.50 will be a great short.
OIH (Oil Services) 36.75 resistance here
XLE (Energy) Nice. Could dip, but looks like the worst is over
TBT (Ultrashort Lehman 20+ Year Treasuries) To me, it's all about 16.12
NOTE to Subscribers (Subs): I will be off Monday and Tuesday, return Thursday. Geoff will be with you on twitter and will make the video on Monday only, with an evening watch for Tuesday, then one for Thursday. See you when I get back.
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: Harder to find until we get a correction. Nothing with an RSI over 92 on list and even the picks not overbought, looking at tight risks right now.
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: N/A
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:
ARNA Max risk 9.81 and needs to clear 10.13 the FTP, then Friday high to look better
ROSG 5 days under the FTP. Has to clear 11.38, then 11.77 R1 and hold 11.00
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:
IMAX MUST hold Friday low
PPG Reversal preferred to control risk against Friday low
ALGN Reversal preferred but did change to a condition 1. Has to hold 33.00
ALXN Narrowest range in 33 days. Has to hold Friday low for tightest risk
DDD Inside day. 32.23 max risk the 10 DMA. Also has to clear the recent highs 34.98
EQIX Has to clear 177.45 area and hold 174.70 tightest risk
SYK Return to condition1 so 54.37 the 10 DMA max risk. Also has to clear 55.25 to stick and see another leg up.
EBAY Rather see it clear the 10 DMA at 42.30 but since pivots ok, should hold 41.70
TRIP Has to hold Friday low. Had a DOJI day-one that could really run but is for now, going sideways
Category 4: (Rip Tide) Oversold (2 or more days under FTP), Condition 1-4, Needs to clear R1, Risk previous day low unless noted differently, Target- Day to at least 3 ATRs from entry: N/A
Phase Change, Positive Pivots: AAPL Now has to hold 578.90. Has room. TSLA Not a phase change but still bullish provided the 200 DMA holds at 30.78 with some slippage to 30.62 ULTA Back to bullish phase. Has to hold 90.70 and clear the 10 DMA at 94.75 VECO Back to bullish. Has to hold 33.15 max risk YUM Held the 200 DMA with a bullish engulfing pattern and possible slingshot. Like to see 62.35 hold
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
YOKU Inside day which means great short only if breaks Friday low and stays beneath the 200 DMA
RRC Cannot clear 63.20. Negative pivots and if breaks, should fail them at 61.45
WYNN Underperformed. Has positive pivots so cannot cross 103.87 and should break S1.
HUM Been on and off list. Down 3% Friday and now, cannot cross 80.29
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
EQT Got to top of a channel and closed with a potential slingshot right on the 200 DMA. Cannot cross Friday's high and should break down under the 200 DMA53.20. Then could see a miniswing target
RIO Touched the 50 DMA so if cracks from here (under Friday low), that is your risk point.
Have a Great Sunday!