Indeed Friday caught us by surprise-because it defied logic based on the technical analysis we do each and every day. So, although not happy about a 140 point drop, at least in the Vulcan world of trading, logic is restored. The 5/29 high became a distant memory after an initial pop above. Now, S&P 500, NASDAQ 100 and the DJ Industrial Average are about to test their fast moving averages. All in strong warning phases except the weak sister Russell 2000, which went back into an unconfirmed Distribution Phase.
S&P 500 (SPY) 10 DMA 131.05 to hold. Then 130. Subs: Negative Pivots now.
Russell 2000 (IWM) Let's see what happens at 74.65 Subs: Pivots Negative so would require a move back over 77.00 to undo the damage. Otherwise, with all the indexes, looking now at OR high failures to short.
Dow (DIA) 123.40 the fast moving average to hold then we have 122.75 the 200 DMA Subs: Pivots negative.
NASDAQ 100 (QQQ) Bearish engulfing pattern. But some might say a right shoulder forming on an inverted head and shoulders potential. That means once the shoulder low 60.75 breaks, could seal the fate. At least down to the 200 DMA or until more FED talk. Subs: Pivots negative
ETFs:
GLD Subs: Pivots Positive and back above the fast moving average. Working on the possible double bottom confirm again
XLF (Financials) 13.80 (recent low 13.70) is the number to hold. Would have loved to see it back over 14.30. My original analysis this year was that no rally would be sustainable unless the financials firm.
IBB (Biotechnology) Been writing about the topping action since end of last week and now, it broke the 50 DMA.
XRT (Retail) Also showed some topping action last week. Under today's low and the 200 DMA is next
IYR (Real Estate) 60.00 is support. Needs a close over the 50 DMA for any chance of a recovery
OIH (Oil Services) Subs: Great short today if followed the evening watch instructions to sell under the 10 DMA. Now, approaching oversold
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: Remember my note about my concern on that hiccup?
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:
BIIB Has to hold 131.60 the 10 DMA and then clear the FTP at 133.05 and then R1 134.10
AMZN Has to hold 214.40, clear the pivots 217.53 then R1 219.85
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:
YOKU 23.44 perfect S1 risk. Can look at strength or reversal
TLT 124.96 max risk and 126.53 the 10 DMA to clear
FDO Inside day so must hold today's low and clear the all-time high
TRIP Has to hold 42.55 clear the pivots 43.44
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
Other: KLAC Positive pivots. Has to hold 45.69 for a true swing. I will start with the 200 DMA. PX Although under the 200 DMA, max risk is Friday low103.90 and should clear 105.59 positive pivots CF Also, Friday low max risk 164.20 and has to clear168.88 the positive FTP
Shorts: Lots of short setups now
Slingshot possible on new highs: WFM ROST. If the market is toast, this has to break the 10 DMAs to confirm
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
VMW Cannot cross 93.36-look for OR high failure
SOHU Cannot clear 46.02
SNDK Cannot clear 35.64
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
LNKD Should not cross 95.27
HUM Cannot cross 79.36
MAKO After huge gap down has 5 days over pivots. Must break 24.85 and not clear 26.62
SLB Cannot cross 65.17
Goodnight!