A very welcomed trading day today with the gap higher, follow-through and an opportunity take profits long the way with very little pain. But where does that leave us now? SPY closed up 1.3% but without an Accumulation day in volume and certainly worked off its oversold condition. On the daily chart, it rallied right up to the 10 day moving average closing just beneath. On ETF's and indexes we like to use the adaptive moving average so it is possible that we could trade above 129.50 again tomorrow and get up to the adaptive moving average resistance at 130.76. Today's rally did nothing for volume pattern nor for the slope of the 50 day moving average which is still decidedly negative. In fact, it sloped down further than where it closed yesterday.
QQQ had a nice bounce off the 200 day moving average and did indeed post an accumulation day in volume, which makes a better case for a possible continuing rally albeit with the knowledge that overhead resistance exists first at the adaptive moving average at 56.38 and then continuing up to 56.50. QQQ also has an accelerating downward slope of the 50 day moving average.
IWM also had an accumulation day in volume and also has overhead resistance beginning at 80.75 to 81.00.
DIA which was our strongest index yesterday today disappointed with less volume and only a 1% gain rather than the 1.3% gain as in the other indexes and in the case of IWM a 2.3% gain.
ETF's: XRT after an inside day gapped higher then rallied not quite up to the overhead resistance now at 51.19. One bit of good news is that the 50 day moving average slope turned from slightly negative back to completely neutral. Now we can say that this is in a neutral warning phase which means anything can happen from here. If you cannot take out the adaptive moving average at 51.19 then I will begin to become suspicious and look for a short opportunity.
IBB interestingly enough, did not have the same percentage gain but did see the slope of the 50 day moving average turn even higher. Therefore, biotechnology still holds the greatest promise for any continuing rally. However, that too can become vulnerable if we cannot see a move above 104.80, the first level of resistance and ultimately a move above 105.90 where the 50 day moving average is.
IYR went to a neutral slope on the 50 day moving average.
GLD has remained in a bullish phase ever since February. Today it had an inside day and underperformed the market. Now, we should begin to see its true colors in that it will either continue to hold above 146.90 and take out today's high 148.73 to move up or take out today's low at 147.48 and test the 50 day moving average.
SLV** also had an inside day today. If I were to short a metal, I would much prefer to short this one rather than GLD. Now, if it breaks beneath yesterday's low 33.69 we should see a move down to test the 200 day moving average right now at 30.
The US dollar weakened against the Euro once again today but could not penetrate the resistance at 1.44 to 1.45. Therefore, I would continue to watch how this performs tomorrow which should continue to have a direct impact on the overall market. Below 1.42 should bring pressure into the market and above 1.45 and easing of any pressure.
Looking at the energy and oil sectors, appears to be more of a short covering rally than anything else. Plus, whereas they were oversold prior to today, they now have completely worked off any oversold condition. Looking at XLE if it cannot clear today's high at 74.07 and fails the floor trader pivot at 73.63, especially if the dollar strengthens, then I would not be surprised to see renewed selling.
At this point, looking at today's rally as one that could get a bit more follow through, but the overall phase continues to indicate an accelerated warning and a possible opportunity to look once again at establishing short positions. The question will remain on whether or not we have another day of upward momentum to test that overhead resistance or we begin to roll over right away.
Quite simply, I would look for opportunities to short SLV, energy and oil, and real estate. Otherwise, other than looking for individual stocks that have good daily chart setups with minimal risk to buy, I would not be chasing any of the indexes or ETF's to the upside right now. I'd rather wait to see if selling comes in, how much and then, if we hold recent lows, use short trem trading patterns to re enter from the long side.
Picks: Last night's picks for the most part performed extremely well. There were a lot that had inside days today even with the big rally. Therefore the picks are either the best that still have a buy opportunity and the best that present for a sell opportunity. As we are still in this accelerating warning phase and worked off the oversold conditions on many instruments, I am more friendly to the short side for now.
HLF**had an inside and narrow range day. Resting right on the 10 day moving average at 54.41 with today's low exactly at the same place. If 54.41 continues to hold up and it gets through today's high at 54.98 we do have overhead resistance, but with such a low risk you'd be playing it for a move up to the all time high made on June 2 at 57.37. Day to mini
VRX*inside day today and held the 10 day moving average with today's low at 52.84. Does need to clear recent high at 55 in order to keep going up to test the all time high made in 2010 at 65.21. The floor trader pivot comes in tomorrow at 53.62 which will give you a half an ATR risk to under today's low and the 10 day moving average. Otherwise, have to wait for 55 to be taken out before establishing the long position. Day to swing
COH had an inside day. Although the 10 day moving average slope is down, the 50 is decidedly up. A move above the 10 day moving average at 60.15 using the floor trader pivot at 59.66 as a close risk for a mini swing or day trade, and we could see a move back up first to 61.45 and then possibly up to 62. Day to mini
CF had an inside day today. I would prefer to buy this one on an opening range reversal rather than strength, but the overall chart formation is strong and if it can close above 155, will be a new high close. The recent daily high is 158.42 made on May 31. Day to mini
AMGN also an inside day stopping just shy of the 10 day moving average at 58.78 with today's high of 58.79. Would buy above today's high and use today's low at 58.31 as a risk unless you want a swing trade in which case you can use the 50 day moving average at 57.61. Definitely has overhead resistance, but also looks like one of the stronger stocks around. Day to swing.
AVB if this continues to hold above 131.10, would love to buy on an opening range reversal. The overall daily chart formation still looks very positive and the next hurdle to cross is the high from last week 133.84. Projected target around 137. Day to mini
NVDA couldn't follow-through to the upside, but did test and hold the floor trader pivot. Remember this is a trade off of the 200 weekly moving average so at this point, for a new entry or a reentry would like to see a hold above the FTP tomorrow at 17.24 and risk only to today's low 17.07. Then, if you can clear 17.50 we should see follow-through. Day to mini.
Shorts:
CNX had an inside day today and ran right up to the 10 day moving average at 49.18 settling closer to the 160 day exponential moving average at 47.97. Plus it remains beneath the 200 weekly moving average at 48.97. If it cannot rally above the 10 day moving average and trades beneath the floor trader pivot 48.50, use that with an opening range failure for a low risk short, especially if the market starts to weaken. 200 day moving average comes in at 45.84. Day to mini
WLL**this also had an inside day and worked off some of its oversold condition. The 10 day moving average continues to move lower. It closed just on the 50 weekly moving average at 56.70. The floor trader pivot comes in at 57.02 with good overhead resistance at today's high 57.74. There is some weekly support down by yesterday's low at 55.32 so if that does not break I would probably not stay short. But if it does, then our next chart point of support is as low as 48.50. Day to swing
XEC**had an inside day. If you cannot get above 85.96 tomorrow and begins to break down beneath today's low 85.32, still see this heading lower to around 79.50.
MOS today was an inside day with two conflicting signals. The 50 crossed beneath the 200 on the daily which now puts this in a death cross. On the weekly the 50 crossed over a month ago and today it closed right on the 200 weekly moving average at 67.18. I would either be looking for a move above today's high at 68.10 in which case I would certainly not be looking to short or a break beneath 67.25 with a risk to today's highs 68.10 for a possible short. Day to mini.
IBM** the 50 day moving average slope is still 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. Plus, with today's rally it underperformed the market and had a narrow range with an inside day. Unless this clears 164.77, in which case I would not be short, still looking for a short entry and would most likely wait for a break of today's low 163.65 with 160 as a first target. If the market gets weaker, could stay short this for a swing trade looking ultimately for a move down to 152. Day to swing
Also watch GOOG especially if it closes beneath the 200 weekly moving average at 505.34. Then you could have a move down to 450 area.
Goodnight!