Prepared by Geoff Bysshe, President of MarketGauge, filling in for Mish for Until November 19th.
The After 3 days of attempting to hold the SPY's at the 200 DMA the bulls gave up today. Apparently, after the FOMC minutes were released and the President was well into his press conference, thu bulls couldn't find anything left to look forward to as a catalyst for an up move and stock indexes sank like a stone for the last two hours of the day. For weeks any sign of a rally has been sold. Volume was high but not high enough to consider the day a capitulation move.
The markets are all getting stretched into very oversold levels on a weekly basis, but until there is some kind of positive price action there is no reason to try to pick a bottom yet.
S&P 500 (SPY) Strong volume decline. Could find some support at 135.60 or at the gap from 135.26 to 134.56, but the bigger number to watch is the 133 area. Look for strong resistance at 137.40 area. Subs: look to sell a reversal, must get a positive daily pattern or pivots to consider anything long.
Russell 2000 (IWM) Same story as SPY but it has reached its 65-week moving average at 77.55. Look for support around 76.25. Strong Resistance at 78.60.
Dow (DIA) Now sitting on its 65-week MA at 125.50. It has decent weekly support in the 124 to 124.70 area
NASDAQ 100 (QQQ) Even with CSCO up 5% and AAPL holding within its prior day's range the Q's broke to new lows. It did have the most volume it's had since May, but until it clears today's high I wouldn't consider that bullish.
ETFs:
GLD very quiet today giving it a 4th day of consolidation between 166.60 and 168.16. You could play that range in either direction. I'd favor the upside breakout.
SLV Tried to breakout of the 3 day range 3 time with volume but fell back each time. 31.00 big area to hold.
XLF (Financials) Touched down on the 200 DMA at 15.05 area. The 200 DMA has been support in the past and the 15 level has also been pivotal so this is a logical place to rest.
IBB (Biotechnology) stopped at the 200 DMA and well above its 3 day low. It's in a good spot to consolidate.
SMH (Semiconductors) Stuck in a wide multi-month range. Until clears the 50 DMA, or tests the lows near 29.60, stay away.
XRT (Retail) An impressive outside day pattern today. Unfortunately for the bulls it close on the lows and below the 200 DMA. This has potential to move nicely up or down from this 200 DMA level.
IYT (Transportation) Confirmed phase change to bearish, but trapped in a wide messy multi-month range. 86.50 is where you can look for a range based reversal if a daily pattern suggests one. Not yet.
IYR (Real Estate) The weakest looking 200 DMA breakdown by an ETF today
USO (US Oil Fund) Now has 6 days inside the 11/7 range. Could break nicely either way, but phase is bearish. For shorts look at (SCO)
XLE (Energy) Acting just like the general market in how its breaking down below the 200 DMA
TBT (Ultrashort Lehman 20+ Year Treasuries) The 15.80 area could be good support based on it being a significant low in May 2012.
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 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:
COG - Inside day with good support at daily low of 47.89. Must be over FTP at 48.14 with risk under today's low of 47.89
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:
ARMH - Has consolidated for 6 days, has positive pivots. Max risk 33.70
NFLX - Should hold 79, breakout is over today's high of 81.32
TSLA - must hold 31.00. I prefer to be over the FTP of 31.56
SWN - inside day, max risk is today's low at 34.62.
QCOM - inside day and negative pivots so longs must be above the FTP at 61.93
EQT - inside day, max risk 59.57
GGC - pivots are negative but daily is strong enough to warrant watching this over the FTP at 40.23
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:
Phase Changes
Shorts:
Category 5: Titanic - Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
LULU - look for another OR breakdown or and OR reversal against resistance from 66.50 to 66.85.Next resistance at 67.40
UTX - look for another OR breakdown and resistance to sell against is 75.50
CLR- look for another OR breakdown and resistance to sell against is 68.80
CIT - look for another OR breakdown or and OR reversal against resistance from 36.30 to 36.50.
RL - look for another OR breakdown or and OR reversal against resistance from 150.00 to 150.50
JOY - look for OR reversal against resistance from 55.70 to 56.20
COH - look for another OR breakdown or and OR reversal against resistance from 53.50.
Best wishes for your trading,
Geoff Bysshe
President
