Friday was just the type of day one would expect after a couple of days of huge selloff and phase changes accompanied with good volume. Digestion and a meager bounce off of the lows: not enough to actually totally believe a bottom is in place, but just enough to make the start of this week compelling and a bit hopeful. When the market bottoms, there are obvious signs. 3 classic signs of a bottom. 1) Double the average volume on a big down day. (Happened on 11/7) 2) A big green candle with an accumulation in volume (Happened on 11/9) 3) Consolidation and break over resistance, again with decent volume. (Almost happened as volume was in accumulation in S&P 500 but it could not close above the 138.30 the 200 DMA). Therefore, with 2 out of 3 in the works, would not discount the possibility that the selling is done for now. On the other hand, with the 200 DMA such an obvious area to hold and clear, recommend traders wait for that to confirm before putting on new long swing trades.
Note: Check out TA Stocks and Commodities Magazine- November issue, an exclusive interview they did with me. Come meet Keith and me in Las Vegas 11/14-11/18 at Caesar's Palace.
S&P 500 (SPY) Over the 200 DMA 138.26 and clearance of Friday high, especially with a close above, a pop is more feasible. Otherwise, could see 135. Subs: Negative Pivots. All indexes have slingshot bottom possibilities.
Russell 2000 (IWM) If this gets back over 80 would go long but ultimately has to cross the 200 DMA to stick. Subs: Prefer to look at SPY or QQQ, but when this gets going, with a low weekly RSI, can move up quickly.
Dow (DIA) 129.75 the 200 DMA. Oversold on the weekly RSI. Subs: R1 and Friday high line up.
NASDAQ 100 (QQQ) Inside day. Very oversold weekly RSI. This is a great index to watch and follow the way Friday's range breaks. Subs: Weekly RSI remains very oversold. 556.88 is R1 which would also be a return over the 50% Fibonacci retracement area. 545 is support to hold
ETFs:
GLD Stopped dead in its tracks at the 50 DMA keeping the weak warning phase intact. Subs: Positive pivots with Friday's high an area to clear. Not overbought. Otherwise, under Friday low and S1, could see move down to 166. SLV Closed over the weekly moving average but not the 50 DMA. 31.00 big area to hold
XLF (Financials) As long as 15.45 holds, a chance to see if this has legs to get back over 15.85-a very clear healthy sign. Otherwise, likely to see the 200 DMA
IBB (Biotechnology) Nice looking candle-bullish engulfing with a close over the 200 DMA. 128.80 area to hold. Subs: Unconfirmed phase change back to warning, albeit strong warning. Neutral pivots.
SMH (Semiconductors) Closed below the fast moving average. That makes 31.80 an area that has to clear for more upside. Subs: Slingshot low still in place, but unless it gets back over the 50 DMA, aside
XRT (Retail) Held the 200 DMA. Subs: One to watch for possible slingshot bottom. Confirmation over 61.45. Otherwise, will have to visit the 200 DMA again.
IYT (Transportation) Weaker performer Friday. Like to see a return over Friday's high for renewed confidence.
IYR (Real Estate) Unconfirmed distribution phase and a very important piece of the puzzle in the case of seeing more upside. Has to close back above the 200 DMA. Subs: Has gap to fill 62.59, which if does not fill is positive
USO (US Oil Fund) As it began to work off some oversold conditions last week, expect more upside, which eventually should lead to another low risk short opportunity
OIH (Oil Services) Subs: Unless this is a slingshot, still looking at selling rallies.
XLE (Energy) Landed on the 65-weekly moving average. Now, has to get back over the 200 DMA to be a contender.
REE (Rare Earth Element) Looking at a possible slingshot against some good support from spring lows
TBT (Ultrashort Lehman 20+ Year Treasuries) The bleed has to stop here as well.
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.
Note: Anything that is on this list is a candidate for a swing trade-(of course market condition is a factor) -use the max risk mentioned along with an opening range stop using fudge factor and time confirms. I suggest you decide on 1 or 2 that have a risk you like and then position size accordingly.
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:
VC 2 Inside days. Risk 48.60. Has to clear 49.70
JBHT Improved to condition 1. Has to clear Friday high and R1.
MA 463 has to hold and really, 472 has to clear to stick
DVA Inside day after a 3-day correction. Like to see it clear 113.27 and hold Friday low.
PNR Improved in condition but has 3 days under pivots. Has to hold 43.45 the 50 DMA and clear pivots, then R1. 45.06. Then, 46.12 to keep going.
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:
FDO 2 Inside days. Like to see 66.92 clear and 65.37 hold
SLW Still want to see it take out 41.00 to stick and hold 40.25
LPX Bullish engulfing pattern. Like to see 15.85 hold. And really, clear 16.50
DISH improved its condition. Risk 35.55. Like to see it clear ad close over 36
Category 4: (Rip Tide) Oversold (2 or more days under FTP), Condition 4, Needs to clear R1, Risk previous day low unless noted differently, Target- Day to at least 3 ATRs from entry:
EQT 58.50 has to hold and R1 Friday high line up
Phase Change QCOM Back to unconfirmed bullish phase if holds Friday low. Inside day. Has to clear 62.80 F Since earnings, 3-day correction. Max risk 10.60 and over 11.12 takes out R1. AIG Slingshot and unconfirmed phase change to warning. Has to clear Friday high PNC Working a slingshot only if clears 56.81 QIHU Back to unconfirmed bull phase if 22.72 holds. BIIB Phase change back to unconfirmed warning.136.15 max support. Through Friday high also could confirm a glass bottom DLR Back over 62 and could see could rally to the 50 DMA. TXN Over 30.00 would follow MTH Slingshot on10/26 only if 36.10 holds. Must clear Friday high and R1.
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
NUGT Entered unconfirmed distribution phase. Cannot clear 15.00
MPC Entered an unconfirmed warning phase. Has to stay under Friday high. 52.36 last swing low to break
FLS After a slingshot, has to stay below the 10 DMA 136.10
CAM Confirmed distribution phase. Cannot clear the 200 DMA and Friday's high
MJN Cannot clear 66.05
Bye for Now!
