The reason I have been so focused on the phase changes and moving averages is for exactly what we saw in Tuesday's market action. When the DOW regressed in phase on Monday and NASDAQ failed to improve its phase Monday and into Tuesday, the overbought S&P 500 and Russell 2000, in spite of the improved phases, became more suspect. Add the continuing flight to Bonds and an unsurprising announcement that the fiscal cliff talks are floundering, and viola-the selloff. But of course, living in the tech bubble, the real lesson here is that warning and distribution phases are not the same as bullish ones, in spite of improving market tone that ended last week. Where do we go from here?
S&P 500 (SPY) Distribution Day in volume on a day after an inside day that took out the previous day high, but held the low of 140.19. However, the better support is 140 with next level a gap fill to139.57. If SPY comes in higher, 141.40 is the ultimate level to clear Subs: Pivots Negative
Russell 2000 (IWM) 7 days up in a row with another close above the 200 DMA 80.50 putting this into a confirmed warning phase. Subs: Positive Pivots with a test of the channel and then failure-This could mean a break of S1 and in more for more downside
Dow (DIA) Could not clear the 200 DMA making that level ever so important especially since it is now in a confirmed distribution phase. Subs: 129.38 now resistance and a place to short against if the 200 DMA cannot clear
NASDAQ 100 (QQQ) Tried for the 200 DMA but could not make it closing on the lows. Could see 64.00 especially is AAPL breaks Tuesday lows. Subs: GOOG great trade which did as a daytrade since could not close within channel. If AAPL fails today's low, see572 level next support.
ETFs:
GLD Broke the 50 DMA making 167.80 the next viable support
SLV The 50 DMA support is 32.25 and if holds, 34 the next objective.
XLF (Financials) Confirmed warning phase after registering a bullish one Friday meaning all we can say is that this rallied to resistance and looks a bit dicey from here.
IBB (Biotechnology) Has room down to the fast moving average at 134.10
SMH (Semiconductors) Confirmed recovery phase. Watching to see if 31.00 can hold.
XRT (Retail) Over today's high will be a confirmed follow through on the charts. Subs: Back in an unconfirmed bullish phase above 62.65.
IYT (Transportation) Subs: 89.75 the weekly moving average to hold
IYR (Real Estate) Wedged between 63.25 and 62.50-the way it breaks should be followed
GDX (Market Vectors Gold Miners) Subs: Back to unconfirmed distribution.
OIH (Oil Services) Subs: If this group stays weak, HAL under today's low could see a drop to 31.00
XLE (Energy) Could not hold the 200 DMA. If 70.00 breaks see more downside
TBT (Ultrashort Lehman 20+ Year Treasuries) 59.95 has to hold
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:
GILD has to hold today's low max risk and clear 74.90 then R1 to look like it has more upside.
BEN Inside day. Has to hold the 10 DMA 130.30 and ideally, today's low. Ultimately it has to clear 133.91
HFC Doji has to hold today's low and clear today's high. Then in uncharted territory.
GRA Inside day. Like to see it hold 64.32 and clear today's high
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:
BKD 25.41 is 2012 high that has to clear. Today's low has to hold
TRW Over 49.95 looks poised with risk today's low
ECL Improved in condition to a 1. Has to hold 69.54.
TRMB 53.82 max risk. 55.95 the 2012 high
JBHT 59.60 has to hold and 60.50 has to clear
SBAC Has to clear 68.68
DE 1st try at the 10 DMA and it backed away. Has to clear it now or could be a rally to resistance after a slingshot pattern made 11/02.
LEN Has to clear all time high 39.33 and close above
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:
QIHU Inside day on the 50 DMA. Frist has to clear today's high then 23.59.
Phase Change: GOOG Probably should have held the ½ but now will look for support at 667 level and a clearance of 671.50 MTH Has to hold 35.00 and clear 36.42 WAT 83.65 has to clear PETM Bullish engulfing pattern. Over 69.73 breaks recent consolidation. CERN Like to see today's low hold as this outperformed market. PXP: Possible slingshot low if takes out todays high
Shorts:(HAL-white cap see above)
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
WLP Under 54.79 should continue down. Max risk 55.50
BBBY Inside day. Has to break 58.66 then 58.15 and not clear today's high
HES Should not clear 50.00
JOY Prefer an OR high failure against 56.50 level.
BIDU 2 inside days. Under 94.35 next stop the 200 weekly moving average but over 97.41 could see a pop as well
ROSE Should not clear today's high. Watch the 200 DMA at 44.95 for support.
CNX 31.86 max risk
SLXP Unconfirmed bearish phase with max risk the 50 DMA 40.91 and R1 41.17
Bye for Now!
