Last week ended with low volume and inside days in the indexes. Also noteworthy is that all but the Russell 2000 closed inside and in the lower part of the substantial trading range from Thursday. Russell 2000 fared better, closing smack dab in the middle of Thursday's range and against the 50 DMA resistance. A higher open on Monday should be greeted with follow through. However, a lower open and/or a gap lower open could get ugly.
S&P 500 (SPY) Confirmed strong warning phase. Held the 160 EMA and closed just beneath the fast moving average making this a great one to watch and follow the way Friday's range breaks. Subs: Negative Pivots. R1 corresponds with Friday's high and the 10 DMA
Russell 2000 (IWM)Over the 10 and under the 50, to grandmother's house we go. That is complete nonsense, but the real sentiment is again, the indexes are a must to look at for next direction, even on your best looking stocks, should they fail the lows from Friday. Subs: Positive Pivots
Dow (DIA) Teeny range, DOJI day. Of course there is some support from Thursday's low125.34, but if the Friday range breaks down, may not be enough to hold this up. On the other hand, over Friday's high, a relief.
NASDAQ 100 (QQQ) Held the fast moving average and the floor trader midpoint. Strong warning phase confirms. A definite one to watch the way Friday's range breaks.Subs: Pivots now slightly negative
ETFs:
XLF (Financials) Like to see 14.24 hold up. Like to see 14.40 penetrated.
IBB (Biotechnology) Big day, new highs-nice to see.
SMH (Semiconductors) It better hold up here or trouble lurks under the 200 DMA
XRT (Retail) Range follower for sure
IYT (Transportation) This likes low oil prices and on Friday, oil climbed, this dropped beneath the 50 DMA-now pivotal at 91.73
IYR (Real Estate) U.S. New home sales start the week at 10 AM ET. Since the overhead 50 DMA is sloping up, still a chance for this to hold and run
USO (US Oil Fund) Another great example of looking at oversold RSIs, and catching a bounce. Inside day so will be interesting to see where it goes from here
TBT (Ultrashort Lehman 20+ Year Treasuries) Back to watching 16.12
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.
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:
ALXN Like to see Friday low hold, but closer is the FTP at 94.97. Has potential as a condition 1 if market firms
AMZN Max risk Friday low, has to clear 221.33 and preferably 223.31 R1.
COST Inside day. Have 12 position with max risk 90.18. Will add over R1 91.35
FDX Like to see Friday low hold and clear the pivots then R1.
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:
CERN Max risk under Friday's low with the FTP at 80.37. R1 81.69 and the 10 DMA at 81.92
CL Max risk 99.24 the 50 DMA and has to clear 100.61 the 10 DMA
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:
SWI Inside day. Max risk Friday low. Like to see 46.32 R1 clear.
PPG Inside day. Like to see103.75 the 10 DMA hold for a return move up if market stays firm
TRIP Now the old high 45.80 next point to clear for trip to new highs
UNH Inside day. Like to see Friday low hold.
FDO DOJI inside day. Must old Friday low and clear the 10 DMA 71.12.
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
Outperformed market and Good Phase: AGU Inside and narrow range day. Positive pivots, has to hold 83.10CF Inside day, positive pivots, like to see Friday low hold.JAZZ Like to see it clear 46.87 for next leg up. STTInside day positive pivots, has to hold Friday low.YELP Like to see it hold 21.22 TSLA Inside day. Like to see Friday low hold. LULU Positive pivots like to see 63.20 hold
Shorts: Looking at inside and narrow range days and not oversold
Category 5:Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
AFL Cannot cross the 50 DMA 41.80
APOL Cannot cross 33.77
BAX Cannot cross 52.19
C Cannot cross Friday high
CTSH Cannot cross 58.75
MCD Cannot cross 88.65
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 N/A
Have a great Sunday!