Yesterday I wrote that QQQ might be the most decisive index. Most decisive thing about it turned out to be not to sell the lower opening, which one would have never done if one used the opening range rules as we do, but rather once it took out the morning range and got back over S2, buy the reversal. By the end of the day, it crossed S1 and the 200 day moving average leaving a bullish engulfing pattern after an inside day.
Whoa!
It actually turned out that SPY was the most decisive never failing the 200 day moving average, then running above S1 yet unable to close the gap that was left from the lower opening. Both QQQ and SPY had spikes in volume held key moving averages with highly volatile intraday activity. Bottom? Perhaps. But let's look at some of the negative aspects. Slope on the 50 day moving average still declining in both. As mentioned, SPYcould not fill the gap and QQQ traded through the 160 day exponential moving average closing beneath.
Looking at IWM, as I have been writing for a while now, still has the better daily chart set up with higher than average volume but certainly not a volume spike. It had a test and hold of the 10 simple and 160 day exponential moving averages, never even got close to the 200 day moving average and still above the recent price consolidation from last week and earlier this week. It too has a declining slope on the 50 day moving average and fairly significant resistance first at 80.75 and then overhead at yesterdays high 81.11.
All of this continues to add up to what has been the most successful formula for trading these days-buy the stronger sectors and groups when the market is rallying and sell the weaker sector and groups when the market is trading lower. Within those groups, find the best and the worst individual stocks or stick to the ETF's unless you have a very long-term view, which by the way, is as divergent as the market itself. And now add to the mix-earnings season!
ETF's: We came in long SLV puts and covered three quarters of them. Now, unless silver gets back above 34.90, will stay short in anticipation of the move down to support at 32. However, a stop at 34.90 is just to protect profits. A trend changer would not happen unless it crosses back above the 50 day moving average now at 37.60.
GLD** no doubt lots of damage done here today, but it held the 50 day moving average which still has an upward slope plus the support from June 13 at 147.19. So damage done yes, but not a trend change. If GLD holds around 148 coming into tomorrow, can risk to 147.19 and would at least anticipate a rally up to fill the gap near 150.90 and to be conservative, 150.
XRT no surprise that this turned out to be incredibly strong. Now, the pivots are negative so it must hold 52.20 which also corresponds with the 50 day moving average and with the help of these and earnings of retail stocks, could continue on up to the highs. But, a breakdown beneath S1 at 151.74, and I would anticipate it going back down to retest today's low of 51.28 where the 70 day exponential moving average is or possibly 51 where the fast moving average is.
IBB** is clearer. Stopped right before the adaptive moving average at 104.24 with yesterdays high 104.29. With negative pivots would like to see 103.28 hold. Considering the overhead resistance, would not necessarily be looking to buy this now on strength, but rather on the dip to support and perhaps conservatively, after another day or so of consolidation.
SMH** stopped before the 160 day exponential moving average at 33.47. Whereas I might not be in such a rush to short retail or biotechnology, if this cannot get through the 160 day exponential moving average than I might be looking for a short entry either on an opening range high reversal failure or a breakdown beneath the floor trader pivot at 33.08 and even better beneath S1 at 32.72 which also corresponds with a break of the 200 day moving average.
With the news of the release of oil reserves, Energy and oil related ETF's opened extremely weak, but like many others, rallied by the end of the day. OIH is holding the 200 day moving average, XLE hasn't even gotten close to it; they are both still in a strong warning phase and neither were able to fill the gap even with the afternoon rally. On the weekly chart, both still have long term trends that are up, but could easily drop another 10% without violating the long-term trend. These would also be the areas to go to on weakness.
TLT kept a light long position overnight from the opening range reversal entry. Stopped once again at the hi from June 1 97.72 with today's high 97.74. Still approaching ia possible Golden cross therefore, will add to the long position over 97.74 using today's low 97.15 as a risk. Initially, looking for a rally up to 99.25 the spike higher from November 2010.
Picks: My main focus will be on the indexes and ETF's tomorrow. A lot of the individual stocks that were on the list last night performed extraordinarily well and if you were well-timed gave you an entry today on the long side. For example APKT once it crossed 64.77, continued up to the high of 68.10. But, at that point you had a four dollar risk on a stock with a 2.92 ATR. Therefore, only swing traders or daytraders could have taken advantage of this opportunity and controlled the risk. Some of the other picks like GMCR, CMG, BBBY, CLF, BIIB, and SGEN all had much more controllable setups. On the short side, CME was covered near the lows, WHR over S3 and if short GS still in it. All the other short takes never signaled. We bought AMZN which turned out to be a great trade regardless of your style.
AMGN broke beneath the wedge, but held the 70 day exponential moving average and still has an upward sloping 50 day moving average now overhead. Over 58.20 confirmation over R1 at 58.29, it will cross both the 10 and the 50 day moving averages. There is resistance all the way up, therefore would only use the conservative risk under the last hour low of today 57.54. Resistance at 60.80 with multiyear high made on May 19 at 61.53. On the weekly chart, last swing high was made in 2009 at 64.76. Day to swing.
OVTI*actually had an inside day holding the 160 day exponential moving average and the 10 day moving average now at 30.53. Pivots are negative tomorrow, therefore it must hold 30.05 the exponential moving average and ideally stay above 30.70 where the FTP is. Above today's high 31.03 has resistance at yesterdays high of 31.61, and above that could easily run up to the 50 day moving average at 32.77 and since that slope is now up, beyond. Day to swing
TSL*also had an inside day and although the daily chart still looks very weak, the weekly chart is better. Now, negative pivots, want to see it hold 19.85 where the 10 day moving average is and even better, 20.12 the FTP. Then if you can get through today's high 20.43, has resistance up to 21.24 and beyond that could see a move of 23.50. Day to mini.
ACOR*back in early June the moving averages crossed and converged. This week, it broke out of consolidation above 31.70. Today's low was 31.63 which gives us a comfortable risk and the 10 day moving averages below at 31.30. The FTP is negative so ideally would like to see it hold 32.32 on the open. And with an inside day if can get above today's high 32.71 and then clear 33.48 overhead, it will be on a multiyear high with the next level of resistance up at 35.87. All time high was made in April 2010 at 40.48. Day to mini unless market stays firm, then can hold for swing.
CRM what is so interesting about this is that had I had my original position and a no loss stop, I would still be in it. Now, with a bullish engulfing pattern, it looks like it will continue heading north unless the market collapses. All-time high was made on May 26 at 153.99 to control risk, either try to buy against the floor trader pivot at 143.12 or on an opening range reversal. Day to mini.
CF*has an upward sloping 50 day moving average which it tested and closed above. 141.06 is the 70 exponential and 141.88 the 50 day. That lines up well with the floor trader pivot's which are negative, but come in at 141.07. Today's high is 143.03 with overhead resistance at 145.50 where the descending 10 day moving average comes in. But on the overall weekly chart, looks like if the market is firm, might see a move up to 155. Day to mini
WYNN**if the market remains firm, although it is beneath the 70 exponential and 50 simple moving averages, found good support at the 128 level. Plus the slope on the 50 day moving average is up. This has two days under the floor trader pivot and today's high filled the gap from yesterday. Conservatively, can buy above today's high 132.91 and risk to under the floor trader pivot which is negatively stacked at 131.55. If this can get moving might see a run-up to the 50 day moving average at 141. Day to mini
UHS*still holding up very well although it tested and then reversed back above the 10 and the 50 day moving averages. Now has two days under the floor trader pivot which are stacked negative tomorrow. If it comes in above 52.69 where the FTP is, can buy and risk conservatively to under S1 52.04. Above today's high 53.33 has resistance from a couple of days ago at 54, but if can get through there can rally up 55.70. All time high was made on May 13 at 56.16. Day to mini.
Shorts:
IOC*here is an oil stock with a good size ATR 3.10. It rallied right up to the 10 day moving average at 54.02 with an inside day. The pivots are positive, so want to see a break beneath 52.79 and then you can either use the 10 day moving average or today's high of 53.73 as a risk. Still looks like it has potential go down to the 200 weekly moving average now 42.80. Day to swing
WLL** rallied off of the lows with the rest of the market, but could not get above the FTP. Tomorrow, the pivots are negative which means under 54.05 have tight risk to today's high 54.84. On the weekly chart below the 50 weekly moving average and if it breaks beneath this week's low 52.53, next support is at 46.50. Day to swing.
AGU** had a death cross last week and today bounced off the lows into the resistance at the floor trader pivot. The pivots are negative tomorrow so can sell a failure of the FTP at 83.39 and risk to today's high 84.29. On the weekly chart broke beneath the 50 weekly moving average with next underlying support at 78. Under 78 could see a dramatic move down 200 weekly moving average now at 64. Day to swing.
Goodnight!
