For the sake of redundancy, some anniversary present-and after 25 years, we were hoping for silver not lead. A couple of potential bright spots: Financials and transports held their fast moving averages, homebuilders barely faltered. Overall, Semiconductors, real estate, retail (although managed to hold last week's low) are vulnerable. 2012 remains a solid up year in S&P 500; but the expectation that new highs are around the corner seems farfetched. But, always keep an open mind. An unconfirmed weak warning phase is just that- a weak warning for now.
S&P 500 (SPY) Unconfirmed weak warning phase with Friday, October 12th low 142.58. Noteworthy is that even with the selloff, the low at the start of last week 142.77 held-only in this index, however. No picking bottoms though, as lots of damage has been done with this correction and one has to wonder just how much resiliency there is over and over again. Distribution day in volume. Subs: Moving averages are stacked and sloped which means, would rather wait for a buy opportunity than sell into this weakness.
Russell 2000 (IWM) Gapped lower under the 50 DMA right from the get go on Friday and the tone for the day was set. I would be aside here as more downside seems limited, with a rally-and the attraction to retest the 50 DMA- a factor.
Dow (DIA) 132.75 the low from 10/12. Like SPY, a weak warning phase with the 50 DMA close-133.40.
NASDAQ 100 (QQQ) Started to see acceleration in the warning phase as this now approaches oversold. AAPL reports this week.
ETFs:
GLD Held the 50 DMA and outperformed the market. One of the first places to look for a bottom.
XLF (Financials) Could be looking at a double top. Could be looking at a buy opportunity against 16.05. If this gaps under that level, as disappointed as I would be, would have to think the former statement is more likely.
IBB (Biotechnology) Wrote all last week to ignore this group as it looked tired.
SMH (Semiconductors) Another fine example of how well trading range breaks on inside days works! But, tired?-this drifted into a coma. But a return over 31.00 and perhaps "It's Alive!"
XRT (Retail) 61.85 support. 62.50 the 50 DMA and pivotal area.
IYT (Transportation) Step back and there is a range this year between 86 and 96.
IYR (Real Estate) 64.50 support on the fast moving average although, back in an unconfirmed warning phase.
USO (US Oil Fund) 33.31 last week's low
OIH (Oil Services) Subs: Looking at a buy opportunity around 40.15
XLE (Energy) Held up well-in fact, closed above where the week began.
REE (Rare Earth Element) Subs: Controlled the risk and position size and sold ½ under the 50 DMA. A confirmed phase will get me out completely
NUGT (Gold Miners 3X Bull) Subs: Held the 200 DMA and closed well. Friday low tight risk. R1 and Friday high line up
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: Only those that outperformed the market and still in a good phase; or against major support with a clear risk. Plus, need at least 4 days before reporting date to consider.
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:
RKT Reports 11/1. Friday low good risk. Like to see it clear 74.18
EOG Reports 10/30. 11.50 max risk and needs to clear 113.70 the FTP
M Reports 11/7. Friday low touched the 10 DMA so must hold. 40.10 the FTP must clear
SHOO Reports 11/1. Inside day. Needs to clear 44.85
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:
HD Reports 11/8. Friday low good risk and ideally should clear 62.12
EBAY Inside day. Like to see Friday low max risk.
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:
WPI Reports 10/30. Not oversold. 86.05 is the low it improved condition and now has to hold up. Has to hold today's low. Clear R1 which lines up with today's high
Phase Change: PAY Held S1 and Thursday low. 31.25 max risk. Has to clear 32.23 to stick CREE Gap after earnings holding. 26.40 good risk RGLD Reports 11/1 Weak warning phase. Has to hold Fri low and clear R1 and Friday high CRM Weak warning phase. Reports 11/20. 147.70 support. Would want to see it clear the 50 DMA JOY Reports 11/28. Inside day. Trade range break SWK 70.67 the top Thursday and Friday to clear which also corresponds with the 200 DMA
Shorts: Nothing with less than 12.00 RSI which has reduced the choices
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
LTD Reports 11/14. 48.86 max risk
HFC Reports 11/7. Max risk 38.75
APA Reports 11/1. 87.65 area now resistance against the 50 DMA
Bye for Now
