Prepared by Geoff Bysshe, President of MarketGauge, filling in for Mish for Until November 19th.
The oversold conditions finally provided some relief for the bulls on Friday. There was also a little help from news out of Washington. Together these enabled the markets to close near the top of their daily range for the first time in 7 trading days. Finally.
However, the bad news for the bulls is that there wasn't any sign of capitulation, and at the end of the day the price action across the market markets indexes was not convincingly bullish. We may be able to point to good reasons for the market to move up this week becuase it is oversold, but the bulls will have to watch their back - the bears are still very much in control.
S&P 500 (SPY) Outside day, and nearly a key reversal on decent volume. Expect resistance at 137. There could be good support at 135. Subs: pivots are positive.
Russell 2000 (IWM) Has a Slingshot bullish reversal pattern combined with a key reversal pattern. 76.50 and 76.00 should be support. Expect resistance at 78.50. Subs: pivots are positive.
Dow (DIA) Very oversold but price action was weaker that the other three 3 indexes so I'll just watch the DIA. In needs to at least clear 126 then expect resistance at 127. Subs: pivots are still negative
NASDAQ 100 (QQQ) Tried to break Thursday's high but stopped just short. The 2 day high to break is 62.50 then 62.80 is likely resistance. Support should be in the 61.80 to 61.60 area. Pivots are still negative.
ETFs:
GLD Unlike stocks, it was completely disinterested in what Washington D.C. had to say. Inside day looks like it could break either way.
SLV Still holding its 10 DMA. Looks like it's trying to turn back up, but I'd like to see it clear Friday's high before looking at it long.
XLF (Financials) Sitting right on the 200 DMA and tested it on Friday. 15.30 is the high of Friday and Thursday. If the market moves over these highs the 15 level could be a good stop for a swing trade. 15.38 is significant resistance so it's not likely to be an easy ride up.
IBB (Biotechnology) Another strong day on Friday created a bullish looking formation over the last 6 trading days on the 200 DMA. I'll be looking at this and biotech stocks for long opportunities.
SMH (Semiconductors) it recovered nicely, but it was one of the weakest groups until the market turned, and it remains weak. There are better places to spend your time.
XRT (Retail) Friday was a good consolidation day right on the 200 DMA. If it breaks 60.60, it may rally.
IYT (Transportation) At its LOD it was down for the year! It recovered to close over the 86.60 area and inside its multi-month range. I don't see any reason to touch it in either direction yet, but the location is interesting.
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:
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:
COG - Max risk is 47.00. If you can't get that in your stop then wait for a break of 48.36 to enter.
ARMH - Prefer to have FTP, 34.26, or PDL, 33.75, in my stop. Look out for breakout above 34.80
TSLA - Prefer breakout over swing highs of 32.12, but FTP of 31.44 is good support. Max risk 31.50.
EQT - Has negative pivots so entry should be above FTP of 59.98. Would like to see break out of PDH, 60.56.
GGC - This is on the list to catch the breakout of the daily consolidation high of 41.46.
DVA - Prefer an entry over 113.40. Max risk 112.60
EOG - back to a condition 1 with good support at Friday's low. Should be over this low for an entry. A breakout over Friday's highs could get to 118.50 quickly.
DDS - Has a Slingshot bullish FTP transition pattern and big volume at Friday's last hour low, 82.70. Max risk is 81.70
XRAY - Thursday was an inside day, and Friday closed just over the pattern's high. I'd prefer a breakout trade over 48.50 over a reversal.
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:
DDS - needs to clear 83.66
Phase Changes:
EIX - Nice volume and back over the 200DMA upgrades it to a weak bullish warning phase. Prefer and entry to be over the FTP at 44.20.
CRM - back over the 200 DMA and 10 DMA into a weak bullish warning phase. I prefer any entry to be over the 1 day pivot low which lines up with intraday and daily support all around 142.50.
Others to watch
These are all sling shot RSI reversal setups sitting on major moving averages. All have positive pivots and you can use S1 as you lowest entry point.
WMB - on the 200 DMA
AMZN - on the 200 DMA
CTXS - on the 200 week moving average
Shorts:
With the extended down move that we've seen there are not many stocks that look like "new" shorts. These shorts have been down for a while so if the market moves higher they are likely to move up with it. Be careful, this is not the best time to looking for shorts.
Category 5: Titanic - Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
CLF - Max risk 36. I prefer to be short below the FTP at 35.
ENDP - Has a Slingshot bearish continuation pattern. Look for a reversal around 27.15. Max risk is 27.61. Breakdowns are also worth considering.
JOY - Didn't rally on Friday and still has negative pivots. I'll look for an OR reversal against R1 at 55.50 so I can have 56.00 in my stop.
Other Potential Shorts
These have positive pivots because they rallied with the market on Friday, but they're rallying back to resistance. If they break their FTP look for a stop that includes the high of the day and Friday's high and or R1.
LULU - against the 200 DMA
UTX - against 75.65 daily swing low
COH - against 10 DMA
Best wishes for your trading,
Geoff Bysshe
President
