A couple of interesting potential developments to consider in spite of the huge down day. First, is my close friend Semiconductors. Yes, we go way back as a rally cannot sustain without them, I believe. And conversely, a selloff should have trouble sustaining if they run. Now, granted, run is a relative term considering how beat up they have been from when they peaked in March this year. But, today's action is, at the very least, worth noting. Next, my other friend Russell 2000. It touched down on the 200 DMA and closed at the top of its intraday range. Again, needs confirmation, but at least worth noting. Finally, there is GOOG, which after the huge post earnings selloff, remained green all day. Again, a one day wonder is possible. However, one must look at the obvious and the obscure.
S&P 500 (SPY) 140.15 support, 141.75 pivotal and over 142.05 interesting. Subs: Market tone has deteriorated naturally. 142.05 is R1
Russell 2000 (IWM) Subs: 81.82 is R1
Dow (DIA) 129.63 support and 129.50 the 200 DMA. With accelerated warning phase, defensive mode
NASDAQ 100 (QQQ) 65.04 the 200 DMA. A close over 65.95 will breathe new life.
ETFs:
GLD So much for a bottom. 163.50 is a weekly support area to watch
XLF (Financials) At this point, the odds favor a double top-or at the very least, trip to the 50 DMA
IBB (Biotechnology) Interesting that this is still in just a weak warning phase. After a good correction, getting my interest again Subs: R1 is 137.71
SMH (Semiconductors) 31.65 is the real point to clear, but with Tuesday's move, love to see a test of that area
XRT (Retail) Subs: Just about cleared that channel on a closing basis. Over 61.85 looks better with R1 62.31
IYT (Transportation) Back in unconfirmed recovery phase. Subs: 90.10 good place to hold
IYR (Real Estate) 3 lows around 63.40 makes this compelling if holds there Subs: Today's high and R1 line up
USO (US Oil Fund) Really oversold. Best case would be an island bottom if gaps higher. Otherwise, leave it alone
OIH (Oil Services) Subs: Held low of that channel on video. Eyes on
TBT (Ultrashort Lehman 20+ Year Treasuries) 63.13 number to defend.
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: Looking at beat up stocks in a good phase, or those that outperformed. May of our picks did way better than the market today-VHC CRM URI to name a few.
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:
ADS R1 144.05. Has to hold 142.65
EXP Reports 10/29. Held the 10 DMA. Max risk49.05 with 50.34 R1
LMCA Reports 11/6. Held the 10 DMA. Max risk110.34 with R1 111.31
C Held 10 DMA. Today's low max risk. Needs to clear today's high
UNP Needs to clear 124 and hold 122.63
KORS Reports 11/13. 54.65 tight risk with R1 55.67
LEN Max risk today's low (10 DMA). R1 38.12
ACE Reported after an inside day. 80.70 is R1.
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:
OPEN Reports 11/1. Slightly negative pivots but an inside day. Over 47.00 looks good. 45.05 max risk
GOOG Will confirm a glass bottom if can cross 687.79 R1. Must hold 679.
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:
M Reports 11/7. Held 50 DMA needs to clear 39.78
SRPT Oversold 23.15 max risk. Reports 11/1.
Phase Change: CRM Possible slingshot pattern. 147.95 good risk. Reports 11/20. URI 38.50 good risk. 39.51 R1 FDX Inside day. 92.25 R1 to clear ROST Reports 11/15. Slingshot but has to cross 61.50 the 200 DMA CTRP Reports 11/5. Inside day. Has to hold today's low, clear 19.83
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
FAST Can go either way after 2 inside days, but pivots negative. Watch R1 or S1 and follow the range break
WLP Reports 11/7. Inside day. Also can go either way-watch way range breaks
CAT Inside day. Max risk today's high
NSC Reported. Should gap lower so watch for OR high failure
Bye for Now
