On Friday, the divergence in the market continued with DIA closing marginally higher with a marginal accumulation of volume and QQQ ending down .5% with yet another distribution day in volume. SPY closed down .1% and ended with an inside day.
IWM also firmed slightly with no interesting volume pattern.
All in all, with a couple of times last week the market trying its hand at $100-$150 moves up, all were met with selling and none of the indexes made a big push above the 200 day moving average. Furthermore, the 50 day moving averages continue to slope downward and NASDAQ ended not only in a distribution phase but also with a bearish engulfing pattern. Sounds messy. Since nobody can deny that the obvious is not always obvious, the spike low on March 16 in QQQ at 53.77 has now been tested twice last week on an intraday basis and both times managed to close above. I'm just saying that if one were looking for any possible daily chart point, one certainly would have to not only respect that, but also the fact that the 50 weekly moving average in QQQ is not so far below at 53.13.
Looking at the ultra short QID, the corresponding March high was 58.47. In SDS the high was 23.67.
Just as TWM retreated from 48.24 last Thursday, it might be prudent to watch the ultra shorts and how they react to those key areas before we completely say sayonara to the markets.
ETFs: several had inside days on Friday. FXI** which is hanging on to the 200 weekly moving average at 42.06 had an inside day. Interesting is that the pivots for Monday are slightly positive. Therefore, a move above 42.10 with a confirmation above 42.28 where R1 is could be interesting for a bounce. Conversely, a break of 41.96 where S1 is, not only is a significant sign of weakness, but also gives you a low risk against the 200 weekly moving average for a short.
EWZ** although it's above the 200 weekly moving average, had a death cross on the daily chart ending with an inside day on Friday. That too has positive pivots which means above 70.88 especially if it clears 71.41 could try for another rally. But the better money is on the anticipation of it breaking 70.40 where S1 and beneath Friday's low in anticipation of the move down to test that 200 weekly moving average at 67.36.
XRT rallied to the 70 day Exponential moving average closing up on the day although the 50 DMA continues to decline. Above 51.15, the retail sector could be a beacon for the market. Otherwise, below 50.16, which was also the closing and opening price on Thursday when it had its DOJI day, and we got ourselves yet another negative indication.
IBB also failed to get above the 70 Day Exponential Moving average and ended badly with a bearish engulfing pattern. There is support on the weekly at around 100. Will watch to see if that area can hold as we are approaching oversold on the 2-Day RSI.
SMH broke the 200 daily moving average but held the 50 weekly now at 31.75.
XLF held 14.63 but could not get above 15.00.
XLE closed right on the 160 Day Exponential moving average and although not quite oversold, does have 3 days beneath the floor trader pivot. Above 71.85 and we could have a low risk trade against the EMA at 71.67.
No surprise was the follow through in GLD to the upsde after an inside day on Thursday and a continuing bullish phase. SLV also closed higher but unlike GLD could not take out the high of the week at 35.07, remaining in a warning phase with price action still below both the 50 DMA and the 70 EMA. Worthy to watch is the spread between gold and silver.
The sectors and groups are all breaking down based on the accelerated warning and in some cases, distribution phases. Same can be said for the indexes. But, since the market has had huge volatility lately, it does seem that everyday one can count on one of the major sectors trading counter. And by that I mean, up when the market is down and down when the market is up. This makes it a bit harrowing for anything other than daytrading and perhaps a 1-2 day momentum play in the major stocks and groups. A lot of the divergence depends on the direction of the dollar which is basically range bound against the Euro 1.40 to 1.44.
Of course there are always instruments trading in their own universe-often they are the smaller stocks. For example, somebody on twitter pointed out VUQO a new Filipino vodka brand apparently all the buzz in New York now trading at .19 and looking poised to take out .20. I make no claims about any expertise in penny stocks or those that trade with an average volume less than 500,000 shares per day. But, this has an average daily volume of 62.5K and traded over 229K in volume last Friday. Just mentioning.
Picks: My featured pick last Friday was CL. Tweeted the entry over the five-minute opening range and it proceeded to close on new all time highs. Needless to say I am reticent to declare that this will keep going up which is why I also tweeted to take some off at .5 of an ATR since as I wrote last Thursday night, nothing is impermeable should the market drop. Since this worked out pretty well last week, my long recommendations will either be ones that have a positive stack in the floor trader pivots or are way oversold holding key moving averages. The short picks are ones that have already begun to break down but yet still have a manageable risk. I've also shortened the list so that we can narrow the focus. If there is something you see that looks interesting, please e-mail or Tweet me about it and I'll be happy to comment.
CVX**this had both an opening range breakout that failed and an opening range reversal that failed. However, the pivots are still positive and still above the 160 day exponential moving average at 97.23. The FTP is at 99.59 with Friday's low 98.73 therefore, it this firms and has an early breakout above the FTP, risk is manageable and we could still see a pop to at least 101.65 where the 70 day exponential moving average is and if energy and oil prices firm, perhaps up to the 50 day moving average at 103..70. Day to mini.
BEAV*did the identical thing failing both a breakout and the reversal. But, considering it's one of the stronger looking stocks, the pivots are positive on Monday therefore I am putting it back on the list. Plus the 10 looks like it's about to cross above the 50 day moving average. We can tighten the risk using Friday's low at 37.78 and either try another opening range reversal or breakout. Then, watch to see what happens over the recent high at 39.49 with the next overhead resistance at 40.81 and better resistance back from 2008 at 43.30. Day to swing
AET**also one of the better looking charts. Friday's low held the 10 day moving average at 43.10. The pivots will be positively stacked and the FTP comes in at 43.38. That makes the risk very manageable to under the 10 day moving average buying above the FTP. If this can get going, multiyear high was made at 46. Next resistance at 47.50. Day to swing.
CRM*Resting on the 50 DMA which is sloping up. The privots are positive coming in at 139.40. Over 140.38, Friday's high, could see a move higher as that will also take out the 10 DMA. Some resistance first at 142.50 then at 146.75. If this comes in lower than the FTP, then would probably not be my first choice of a long. Day to mini.
TIF** Had a decent rally on Friday holding above the 10 DMA and R1. 72.93 is now the must hold support. The pivots are positive coming in at 73.64. This I would consider buying on strength or an opening range reversal depending on how the overall market behaves. Has overhead resistance at 76, but if can clear that-has the all time high to contend with at 77.02. With the recent volatility, as with all buys on strength these days, I advise you to use the recommended stops and keep locking in profits as you see them. Day to mini
HLF** has 3 days under the FTP and the pivots are stacked positive. The FTP comes in at 52.96 which gives a clear risk to Friday's low 52.71 should it come in higher. Want to see it clelar Friday's high at 53.63 to stay firm. Then it will also close back above the 10 DMA for a possible rally up to 57.57 and a weekly projected move to 58.75. Day to mini
PCLN The buy on weakness pick. Thursday it held the 160 Day Exponential moving average followed by an inside day on Friday. The pivots are positive so if it can clear 463.46 you could see a quick pop to 466.76 R1. Can look at a 2 min opening range breakout over the pivot for a daytrade until the 30 minute mark-especially if it cannot get through R1. Otherwise, since it is very oversold, we could even see a move up to 480 or the 10 DMA at 486. Daytrade
Shorts:
I would look at the ETF's and ultra-shorts mentioned above is the some of the best short potentials.
BG** Had an inside day on Friday but could not get back through the 200 DMA. Plus, it failed the 200 weekly moving average and is hanging onto the 50 weekly. The pivots are positive so would not go short over 66.56. But, if it breaks the low, 65.38, that also breaks the 50 weekly. Then, next support is at 60. Day to mini or swing.
SLB*On Friday, the 70 EMA crossed beneath the 50 DMA. It closed weak and below the 160 EMA which means the last moving average support comes in at the 200 DMA at 80.10. Pivots are negative so can use 82.03 as first area of resistance with 82.30 the 160 EMA and 82.94 Friday's high. Next support under 80 is 77. Day to mini
GS even though it rallied on Friday, it ended on the lows and still has a very negative daily chart pattern. Plus it never got above the weekly high at 138.95. Depending on how this opens, if it breaks Friday's low at 137.21 we could see it begin to roll over. But since the pivots will be positive, would not risk more than the FTP for now at 137.76. If we do get follow-through to the downside, next area of support is 129.50. Day to swing.
WHR** Although this has rallied since first appearing on the list, the Death Cross is keeping me very interested in a short. Now, I would look to sell weakness. Under S1 or 75.54, with a confirmation under Friday's low at 75.42, could be the truning point. Risk would be to over Friday's high 76.30. Still has to break the 200 weekly moving average at 72.91, but once it does see nothing major until 50 as far as support. Day to swing.
Have a great Sunday. Happy Father's Day!