We had better than average volume today, which considering SPY was marginally up, could be perceived as a good sign. But let's not confuse this with an Accumulation day in volume. QQQ closed unchanged with light volume. And of course the whole world watched as it tested and held the 200 day moving average of 54.47. To reiterate the importance of the 200 day moving average, first let's say that it is sloping upward which means the longer-term trend is still positive. Second, you would need two closes beneath the 200 day moving average in order for us to confirm the next phase after warning which is called Distribution phase. Third, it is very likely that we could see a move down to the spike low made on March 16 at 53.77 and then proceed to turn back up above the 200 day moving average. IWM still has a bit of a ways to go to test its 200 day moving average. All of the indexes except for DIA are still in oversold territory on the short term indicators. At this point, I would be less concerned on whether or not QQQ break the 200 day moving average and more concerned with how the other indexes act considering they held up better.
The US dollar weakened today although the Euro has resistance around 1.44 to 1.45. Last week's decline seemed to follow the strengthening of the dollar. Now, the Euro below 1.42 could bring more pressure into the market whereas above 1.45 an easing of the pressure.
ETF's: XRT had an inside day. There is a tremendous amount of resistance overhead around 51.25 so I wouldn't get too excited about a big rally in the retail sector. Note that the slope on the 50 day moving average is slightly down which means if we cannot get above today's high 50.11, rather than wait for more rally, we will probably see it begin to roll over and breakdown further.
IBB** is at a critical point. The slope of the 50 day moving average is still pointing up, the 2 day RSI is oversold, it broke beneath the 70 day exponential moving average today, and the 10 is resting and threatening to cross beneath the 50 day moving average. If you put that all together, it looks like any firming tomorrow above 103.35 and I would still prefer to go to this sector and group before most others for buying opportunities. However, if we cannot get above 103.35 and see further deterioration, then most likely the slope of the 50 will neutralize, the 10 will cross beneath the 50, and we will be looking at an old gap left from March 29 down to 97.85 most likely to be filled.
SMH is oversold and similar to the chart pattern of the indexes, has a bit of a way to go down to the 200 day moving average at 32.46.
XLF is another reason we saw the market hold up today. If it can continue bouncing from the lows and close above 15.10, then I would anticipate a move first to 15.45 and then possibly back to retrace to the 200 day moving averages 15.64. That would at the very least, give us an opportunity to catch some momentum to the upside, but certainly does not mean that more than a temporary bottom is in place. Plus, it now needs to hold today's low 14.80.
Last week I covered my short in IYR. The slope on that is still neutral and the recent move down at this point, was not enough to get it to test its last swing low on April 14th to 57.94 which corresponds perfectly with the 160 exponential moving average at 57.93. Today was a DOJI day, so will be watching very carefully to see what happens around the pivotal area of 58.58.
As expected OIH and XLE were the weaker sectors. SLV closed down nearly 4%.
In summary, to keep the market stable, energy, the metals and the financials cannot breakdown further. But at this point, those areas are looking oversold therefore I wouldn't be shorting any of those sectors even if they do breakdown further but rather would look to the ones that have been holding up better such as biotechnology, retail, and real estate for the better short opportunities as those areas are not oversold.
And, if the market continues to firm, there should be opportunities not only in the sectors and groups that have been holding up, but in the commodities as well since they are indeed looking oversold.
Picks:
MA**today had a narrow range and an inside day, plus the 50 day moving average is firmly on an upward slope even though the 10 day moving average is declining. Furthermore, it is resting right on the 70 day exponential moving average at 267.47. I also like that after two days under the floor trader pivot, the FTP comes in tomorrow around the same level or at 267.65. Would consider buying above the FTP and using today's low 266.29 or S1 at 266.13 for a day or mini swing trade. The 50 day moving average comes in at 273.66 a good first target with the possibility of seeing a rally up to 277. Day to mini
NUVA**this had an inside day today plus tested and held the 10 day moving average at 33.30. On the weekly chart, it is trading beneath the 200 weekly moving average but has pretty decent underlying support at 30. Last week it made two attempts to get through 34.27. Now, if it does anticipate a rally up to the 200 weekly 36.60 and possibly to the last swing high made in November at 37.87. Last Friday, when everything fell apart, this gapped higher and held up well. That low is 33.29 and today's low 33.36. Tomorrow the pivots will be stacked slightly negative, so will be watching for the most sensible entry, risk, and target. Day to mini
CPT*if the real estate ETF and the markets stay firm, this one had an inside day and is hugging the 10 day moving average at 63.97 with today's low 63.35. In fact, this looks a lot like the AVB chart. I will say that I have my concerns about buying strength especially since MACD on both have turned down. But I'm posting these tonight since they are still two of the better looking charts around. Since neither of them are oversold or overbought, I don't have a strong handle on specific entries so will be watching these on the opening. Pivots are positive on both of these stocks tomorrow making OR reversals more feasible. Day to mini
PLL*still holding a gap that was left from January 31. Has been finding support over the last week and a half at 52.75. If this is indeed consolidating at these lower levels, a move above today's high 53.70 along with the 10 day moving average should give it some momentum up to the 50 day moving average overhead at 56. The bigger overhead resistance is up at 59. The pivots will be positive tomorrow making this a good one to watch for an opening range reversal. Day to mini
NOV making the list because I want to include a stock in this sector and is holding a key moving average for us to trade from. The exponential moving average is at 68.21 with today's low 68.05. After two days under the FTP, it must clear 69.59 which is roughly half an ATR in risk for a mini swing trade. On these weaker stocks with negative pivots must buy strength and not weakness. Overall, this has the potential to rally up to 73.35 where the 50 day moving average is and possibly 75 which is resistance on the weekly chart. Day to mini
NVDA I exited this on the close although nothing has changed. It is holding the 200 day moving average at 16.69 and the 200 weekly moving average at 16.51. But will have another chance tomorrow if it's good since it now has nine days under the floor trader pivot. The FTP comes in tomorrow at 17.07. Day to mini.
ORLY made a little contribution in this today. Now tomorrow, the pivots are positive so will consider a reentry either above 59.52 or if it has an opening range reversal with a stop using today's low which corresponds perfectly with S1 at 59.15. If this can get above today's high 59.89, see potential move up to 61. Day to mini
BIIB never got into this one, but still has a very positive upward slope on the 50 which it held today with the low of 91.08. Now has two days under the floor trader pivots which will be negatively stacked tomorrow. So if buying on weakness must use a stop under today's low 91.08 otherwise, buy above the FTP at 91.72 to see if it can get up to the 10 day moving average now at 93.34 and beyond. Day to mini.
CMG has a neutral slope on the 50 and even though its trading beneath it, it did hold the 70 exponential moving average today at 269.15. Now with six days under the floor trader pivot, could see a rally if gets above the FTP at 271.57 to at least test that 50 day moving average at 276.27. The pivots are negative so will not be looking to buy weakness necessarily. Day to mini
Note: Goldman Sachs, MS and WFC already made their moves, now watch PRU which held the 200 day moving average and ended today with an inside day. PNC same deal. Another one to watch is AXP which will have positive pivots and held the exponential moving average today 47.94.
Shorts: I don't see much that isn't already oversold. If the market weakens tomorrow look to sell those stronger ETF's mentioned in the beginning of the watch.
IBM** the 50 day moving average slope is neutral, it is trading beneath both that and the 70 exponential moving average which is sloping down and the 10 day moving average has crossed the 50 and is approaching a cross beneath the 70. 163.44 is the floor trader pivot which if it comes in lower than, considering that it is negatively stacked, might give you a good opportunity to go short in anticipation that it will take out today's low 162.73 and test 160 as a first target. Plus, if the market gets weaker, could stay short this for a swing trade looking ultimately for a move down to 152. Day to swing
Goodnight!
