Admittedly, Friday took us by surprise. We began with a negative bias, but even when it became obvious that the market would firm, we stood by. The 200 daily moving averages remain intact. Although volume was light, the broader market managed an accumulation day in volume. The indexes are still in strong warning phases which means proceed with caution, especially since the S&P 500 now approaches overbought on the daily relative strength index and shenanigans in Europe are from from over. Last week's big up day has established a light resistance area to clear. The overhead 50 DMAs are far more significant. Equally significant is Friday's low as support to hold.
S&P 500 (SPY) Friday low 131.15 to hold. Number to clear 133.93 5/29 high. Then 136 next. Subs: Pivots slightly positive
Russell 2000 (IWM) Stopped at 5/29 high last week and landed on the 200 DMA and held. Now, 77.50 is the weekly moving average before we look again at the 50 DMA overhead. And that is provided the 200 DMA keeps holding. Subs: Pivots Negative
Dow (DIA) After showing up as the best performer going into last Friday, it held the crucial 124 support and ran up closest to the 5/29 high 125.92, closing just shy of it. Bullish engulfing pattern as well. Volume was light. It's possible that this could be first to run to the 50 DMA albeit with continued light volume.Subs: Pivots positive
NASDAQ 100 (QQQ) 63.15 level is the 5/29 high. Possible it will gap above right out of the gate. Again, low volume, but has eked out 3 accumulation days. That is positive. Like the others, remains in a strong warning phase, but the attraction to the overhead 50 DMA could be strong, unless it breaks Friday's low Subs:Pivots positive
ETFs:
GLD Double bottom from 2011 and 2012 intact although phase remains bearish
XLF (Financials) I began 2012 looking here for a lead. First 4 months delivered. Now, a gap over 14.30 would be compelling. Otherwise, 13.80 is the number to hold.
IBB (Biotechnology) I know this is premature, but looking at the best performing sector for the first ½ of 2012, recent activity suggests it could be forming a top. Time will tell.
SMH (Semiconductors) 31.80 needs to clear or 31.00 to hold. IN the middle currently
XRT (Retail) As a strong performer of the first ½ of 2012, another important sector to remain firm and tackle that 50 DMA or will begin to see this as toppy.
IYR (Real Estate) It appears that the worst is over in this arena. Can it lead the market higher?
OIH (Oil Services)Subs: If cannot cross 35.60, the 10 DMA remains a place to go for shorts
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: Hesitant to give picks that were up all last week since one hiccup in the market could be costly.
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: 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: Note: Lots with positive pivots so narrowing down to those that closed above R1 and are not approaching overbought.
EW and FDOare right at all-time highs which must now clear
PPG Must hold 102.70-pivots neutral R1 104.38 to clear
SPG Has to clear 150.65 level and hold 149.15
EQIX Needs to hold 164.00 and can go to new highs
AMZN Negative pivots so must clear 219.67 hold 216.90. AOL same-has to hold 27.35 clear27.65
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
Changed from Distribution to Warning: CF Positive pivots. Has to hold 168.00 PX Positive Pivots Has to hold 105.43
Other: PNC Like to see 59.87 clear KLAC Positive pivots. Has to hold 46.90CRM 2nd test of 200 DMA and hammer candle. Should hold 134.80 and clear 138.27
Shorts:
Category 5:Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
VMW Cannot cross 94.67 Break 92.30
APA Cannot cross 83.50
SOHU Cannot clear 45.84
OAS Cannot cross 25.42
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
CLF Cannot clear 49.24 and should break today's low
SLB Cannot cross 65.92
GD Cannot cross 64.20
Other: REGN has negative pivots and under S1. 127.80 is the 50 DMA to watch for a break
Have a great Sunday!