Slope in the 50 Day Moving Average in SPY finally turned positive just as the 2-Day RSI closes in on overbought. QQQ cleared the summer/fall range, posted a fourth accumulation day in volume and has gone beyond overbought on the RSI. The midcaps are of most concern since after a third accumulation day in volume and an overbought condition, the slope remains stubbornly negative; perhaps the best case for at the very least, an inevitable healthy correction. But, markets do not go down simply because they are overbought (weekly RSI not overbought). Just look at AMZN and IBM, both of which had been overbought beginning last Wednesday and could not care less. No one piece of a puzzle defines a market. On October 4th, volume and candle patterns along with reasonable risk parameters gave the "bottom in place" clues. Traders trade their belief systems. Let the market speak to you and have a plan.
Subs-All indexes have positive pivots therefore, must break and close under S1 to signal a significant dip. Volume patterns will be important as well.
SPY: S1 121.67. September high 123.51. 50 DMA 117.50
DIA: 115.56 S1. 117.03 September high. 111.60 50 DMA.
QQQ: 57.35 September high now should be area of support. Then, 56.28 the 200 DMA. Best reason that a dip will look more like a correction then a failure.
IWM:I S1 70.25. September high 73.39. 50 DMA 68.33.
ETFs:
GLD clearly not overbought and has this looming gap up to 167.48. Not to mention a gap higher over 165.75 leaves a potential island bottom. 8 days of ridiculously low volume. Wakey wakey.
XLK (Technology) SMH (Semiconductors) Overbought with no signs of rolling over yet
IBB (Biotechnology) Just cleared the range of the bear candle from last Thursday. Not overbought. September high 99.24. Good support at 95.25 the low from last week
XLF (Financials) If closes above12.70, has room to upside. On the other hand, 12.10 must now hold.
OIH (Oil Service Holders) Like textbook, rallied to the 50 DMA at 122.50 and closed right there. Support at 119.55 so we will see what this is made of.
TBT (The 20 year Treasuries Ultrashort) 21.73 last week's high to clear. Support at 20.15.
XRT* (Retail) Retail sales were up in September although consumer confidence remains low. Like IBB, not overbought and unlike IBB has cleared September high. 56.50 target not out of the question.
Longs: Some big earnings this week IBM AAPL INTC GS for starters. Picks are not overbought and have clear risk parameters. Note: even swing trade recommendations should be exited before they report.
TJX (Nov 15) Condition 1 with 2 days under the FTP at 57.56 and R1 at 58.04. Risk under the 10 DMA at 56.50 for swing and S1 for mini 57.24. If clears all time high 59.72 could see a 10.00 move.Day to swing
CERN has to clear 70.28 after a funky red candle last week. But if does, looks poised to go to all time high 74.39 and perhaps beyond. For buying strength, miniswing traders can use the pivots around 69.40 as risk. Day to mini.
REGN (Oct 26) Condition 1 with 2 days under the FTP at 64.22 with clear risk under 62.40 for swing and 62.97 for miniswing. R1 is 65.18 and must also clear Friday high 65.45 since inside day. Day to swing
HUM (Oct 31) 2 inside days in a row which means this is paused in its confirmed recovery phase. Positive pivots at 74.77 with good risk to the 50 DMA at73.90. Over Friday high75.20 could see recent swing high 80.64 or beyond. Day to swing
FSLR (Oct 27) So very oversold on weekly and monthly and making the list because it has positive pivots at 56.98 and held S1 Friday. Risk is under 53.05, the low, for a longer trade, but for a quickie risk Friday's low 55.60. The 10 DMA is 58.69 which if clears should bring this to 82.00 maybe even 100.Day to swing
Honorable Mention: OR Reversal with positive pivots TIF* NEM ORLY* CHKP SPG VMW CF CELG SGEN (S1 and Fri low 20.54)
Shorts:
PEP (Reported) Under the long term moving averages with negative pivots at 62.26. But must not clear R1 which lines up with Friday high 62.74. Multiyear low 58.50 and if that breaks looks pretty ugly. Day to swing
URBN (Nov 14) Must not clear 24.26. Has negative pivots at 23.86 with potential to recent low 21.47.Day to swing
OPEN Negative pivots must not clear R1 52.70. If breaks 49.00 could see 47.70 the 10 DMA then 44.00. Day to mini
Honorable Mention: IDCC (Must not clear R1 49.92)
Have a great Sunday!