Today, if you were prepared with a plan to focus on a couple of stocks and ETF's that were oversold and had short-term trading patterns, the oversold condition that we talked about yesterday gave you, at the very least, good daytrading opportunities and in some cases possibly another day of momentum to the upside. Today's video pointed out how to use the floor trader pivot and the five-minute opening range breakout with very low risk in SPY, how to use the 30 minute opening range breakout in conjunction with previous day high in XLE and how to buy the 30 minute opening range reversal against the floor trader pivot in GLD. We also came in long VHC which gave us an opportunity to take some profit at half an ATR and short IYR which also gave us an opportunity to take some profit at a half an ATR.
Now, SPY worked off its oversold condition closing up .8% on lighter than average volume. At this point, the 50 day moving average continues its downward slope. Unless we see the slope on the 50 neutralize and or an Accumulation day of volume, we will continue to see today's rally as short-lived and an opportunity to go short, especially in those instruments that have been trading beneath key moving averages. But, for now, 131 still seems like a reasonable target.
QQQ matched yesterdays range almost to the tick. That makes NASDAQ a bit more readable for tomorrow since it had an inside day. We will look at either a break above 55.77 to see if we can get more upside at least back up to the 10 day moving average at 56.60 or if we break 55.23, another leg down to the 200 day moving average below at 54.36.
IWM also had an inside day. And, with all of the moving averages sloping down, the last vestige of support is the upward sloping 200 day moving averages. It does appear to be a matter of time before the indexes drop to test the 200.
Therefore, we are still in an accelerating warning phase, need a lot more work with volume and price to return to a bullish phase, and quite possibly could see further erosion if the indexes break the 200 day moving average and begin to enter a distribution phase.
ETF's: two nights ago I wrote that the dollar would most likely gain some strength since FXE was overbought. Now, there is a possibility that the gap from June 7 left a temporary Island top. Today FXEstopped right above the 10 day moving average at 144.04. But it gapped open lower from yesterday. Initially, I was calling for a correction to the 50 day moving average now at 143.49. However, if we have indeed put in an Island top from the rally that began on May 23, it would not be surprising to see the decline to the 70 day exponential moving average right now at 141.90. Typically, this would indicate a rise in treasuries and interest rates.
TBT bounced from last week's low. The weekly chart shows it's oversold. There was a death cross in theTBT's on May 31, but with such oversold conditions and tremendous weekly support down by 30, it looks like a weekly close above 35.20 and we could indeed see higher interest rates which would correspond with lower prices in the indexes.
IBB closed for the first time since March beneath the 50 day moving average. Although the slope on the 50 day moving average is still pointing up, even if we get a confirmed warning phase, we will have to consider that a weak warning phase for the time being. I wrote last night that IBB was starting to look toppy. But, would not be looking to go short at this time given the conflicting signals until we see the 50 day moving average begin to neutralize or slope down. Also, look for the 10 day to cross beneath the 50. Until then, this looks more like a correction.
SMH** had a DOJI day and closed just above the 160 day exponential moving average. It also closed another two days in a row under the floor trader pivot. Everything lines up tomorrow: today's closing and opening price, the 160 day exponential moving average, and the FTP at the 33.65 area. That means, we can use the FTP as pivotal anticipating more rally if it holds and breaks out on opening range basis or more selling if it breaks and confirms on an opening range failure.
The financials were the first to breakdown, along with energy and oil. Real estate is now beginning to break down, biotechnology still in a correction phase along with retail; and semiconductor's fate hangs in the balance. I am watching very carefully not only the direction of the dollar and interest rates, but also how the leading sectors and groups continue to fare.
Picks: Once again there are many inside days to look at. Lot of last nights picks made their move in the first 30 minutes. When that happens, do not buy strength unless you are buying an oversold condition. Rather, wait for an opening range reversal or pass as the risk to reward becomes skewed. BBBY is a perfect example. After the first 30 minutes it had little follow-through beyond that too much risk and wound up closing back within 30 minute opening range. It never had an opening range reversal. GMCR on the other hand, did have an opening range reversal giving you an opportunity to buy against S1 and sell at half an ATR just beneath R1. Overall, market still in state of flux and I see better short opportunities than long ones for now.
CCL is under every single moving average except for the 200 weekly which tested and held so far at 35.35 with yesterdays low 35.48. Had an inside day today. This is another one I would only be looking for some sort of bounce off of the 200 weekly moving average. Tomorrow R1 lines up perfectly with today's high at 36.40. That is just a little bit over one ATR to the 200 weekly moving average as risk so to decrease risk, can use today's last half an hour low at 35.93 which should line up with the one day pivot low. Day to mini.
TSLA not crazy about the Spike Hammer top made on June 3, but it did drop to the 50 day moving average yesterday which is still sloping up, and followed up with an inside day today. Today's high also lines up with R1 at 28.11 tomorrow. The 50 day moving average comes in at 27.08 with yesterdays low 27.02. Tighter risk would be tomorrow's FTP at 27.60 which corresponds perfectly with the low of today's last half hour of trading. Initial Target would be the 10 day moving average at 28.84, but this could be a consideration for a swing trade should the market stay firm. Day to mini.
WLT now has three inside days in a row and continues to hold the 160 day exponential moving average at 116.99. I still see this having the potential to rally or drop from here. But with three inside days, one thing is clear. It is paused and seeking next direction. Either has to clear 120.53 or fail 117. Day to miniswing.
GMCR* today this had an opening range reversal and an opening range breakout. But at the end of the day failed to close above the FTP which it now has eight days beneath. The FTP comes in at 76.23. Today's low is 75.43. Also rallied up to R1 and failed so will want to see it get through R1 tomorrow at 77.03 slightly below today's high at 77.10. The overall daily chart formation is still strong with upward sloping 50 and 200 day moving averages, oversold condition, but a downward sloping 10 day moving average which is a good first target at 79.33. Day to mini and possible swing if market firms.
WYNN only reason why this is making the list is because this is oversold and has an upward sloping 50 day moving average although it is trading beneath the 70 day exponential moving average currently. This is more of a day trade recommendation considering it has now closed seven days under the FTP which comes in tomorrow at 134.86 giving you a really decent risk to today's low 133.70. But it does have to get back above the exponential moving average first at 136.40 and then we have a reasonable shot of getting to its next target at 140. That makes the risk reward worthwhile to look at. Day trade
CMG**today this tested and held the 50 day moving average at 276.31 with today's low 273.62. The slope of the moving average is still pointing up and has four days under the floor trader pivot. The FTP comes in tomorrow at 276.93. That means I will try to use somewhere around the floor trader pivot and the 50 day moving average as a risk to keep it under control. Has overhead resistance at the 10 day moving average at 284.78 and a good first target. This is a wild thin stock, but when it sets up, could be fun to trade. Day to mini
Shorts:
HOC**beneath the 50 day moving average which is sloping down and today, the 10 crossed below it. Has two inside days in a row and is resting on the exponential moving average 57.09 with today's low 57.01. If it opens above 59.45 do not go short but if it opens in trades beneath 57, can either use today's high of 58.32 as resistance or the FTP at 57.88. Reasonable target is down at 50.60 the Spike low made on May 5. Day to swing
NOC**trading beneath all moving averages. The 50 crossed beneath the 200 and today the 10 crossed beneath the 200. Has been consolidating at these levels with recent low 62.89. Therefore, would sell a breakdown beneath 62.89 and can use either the floor trader pivot at 63.56 as a risk or if want to swing trade, the 200 day moving average at 64. Spike low in April 59.87. Day to swing.
DO**resting right on the 200 day moving average at 68.97. The floor trader pivot is just beneath at 68.93 which means if it comes in lower would sell against that number and use the 200 day moving average as a tight risk. There is some support down at 67.60 area but if that breaks we could see much lower prices especially if the stock market stays weak. Day to swing.
PRU rallied to the 160 day exponential moving average and closed beneath. Good resistance at 60.52 so if it breaks the FTP tomorrow at 60.04 could go short in anticipation that it might roll over and take out the 200 day moving average at 58.89 and continue lower with the first target of 56.40. Day to mini
NTAP beneath all moving averages with an inside day today. Weekly close beneath 50.08 breaks the 50 weekly moving average which should bring this back down to test 45. Can use 50.50 to 50.70 as a risk and if it comes in lower the floor trader pivot is at 50.06. One caveat, the slope of the 50 day moving average is still positive so if this comes in above 50.70 tomorrow would not go short.
Still watching PNC and MGA for breakdowns.
Goodnight!
