Not unexpectedly, all the indexes had low volume, narrow ranges with inside days. SPY ran 18% from its peak low October 4th to the high made on October 27th . The other 4 times this occurred, (single month rallies of 20% or more), was during the depression. Statistically, October is a flat month, with May, the worst. Interesting that one of the worst performing months has now become one of the best. One more day to go. Lots of reasons to look for a correction especially in the midcaps (IWM) that have resistance at the 200 DMA. However, at this point, Nasdaq (QQQ) is not overbought and the most likely reason we could continue higher first. PSA climbed to all time highs last week. It owns and develops self-storage facilities in the US and Europe. Reports this week. An interesting leader in an environment where foreclosures remain a concern.
SPY: Inside day and 2 closes above the 200 DMA. Breakaway gap last Thursday, with inside day Friday. Gap low should hold, which if breaks, suspect. Subs-if gaps below 126.61, would be a potential island top with next support down to 123.50.
IWM: Midcaps were a big reason market rallied and now, have crossed an important weekly moving average at 75.20. Gap low from Thursday 74.49. Like to see that breakaway gap hold. Subs-if gaps below that Monday, not a healthy sign.
QQQ: Not far from the high made in July. No gaps to be concerned with nor overbought condition, which is why the leaders must perk up and lead or market could start to lose upward momentum. Subs57.70 the 10 DMA then 56.40 the 200 DMA to watch. Upside, if 58.50 holds, peak high in July 59.83.$COMPX is 3% from the high of the year-this is the broadest index for Nasdaq. 2691.40 is the 200 DMA to hold.
ETFs:
TBT (Ultrashort 20 Year Treasuries) Right here, right now, total flexibility is crucial. 2 closes above the 50 DMA which sits just below Thursday's low 21.88. If holds that number, lots of room to 24.40. If fails, 19.80 next big support.
GLD Inside day and holding the 50 DMA with a declining slope which makes the return to the recovery phase weak. Subs-Use Friday low 168.75 as pivotal and an important number to hold since if closes below, back to warning. If clears 170.32, the high from September 22 (post FED), good sign for a gap fill at least to 172.20.
SLV (Silver) Had a death cross with price bumping up against the 160 EMA and 50 DMA. Overbought on daily, not weekly. Subs: If crosses over 35.40 the death cross will be irrelevant. But if cannot and begins to sell off, a quick drop to 31.50 area is likely.
FXI* (China) Gap up but not a breakaway from the high put from August 31st at 38.72. Has not crossed the 160 EMA or even close to the 200 weekly moving average. Subs-has negative pivots at 37.83 with S1 under Friday low 37.48. On the other hand, over 38.76, could see 40.00.
XLK (Technology) Breakaway gap by one tick made with Thursday low 26.05 from October 14th high 26.04. Momentum in its favor yet AAPL underperformed which is 15% of the ETF Subs-Watch the gap low. July high 26.88.
SMH (Semiconductors) Similar situation with breakaway gap over the 200 DMA which now must hold for continued upward momentum.
IBB (Biotechnology) Second close over the 200 DMA without a breakaway gap which could be interpreted as weakness, but also could mean that sideways action or digestion to come.
XLF (Financials) inside day and hovering on the 160 EMA with a weekly RSI overbought. 13.45 now support but if good, should not break 13.68, the gap low from Thursday. Subs- if gaps under 13.68, Thursday and Friday could look like an island top. At that point, go to GS and other financial stocks to see if they hold or break S1.
OIH (Oil Service Holders) Breakaway gap on the 160 EMA. Subs-crossed the 80 Monthly moving average, not the 65 weekly. Huge crossroad here for this sector/group and pretty much, the entire market.
XLE (Energy) Another breakaway gap to hold at important levels (the 200 DMA). Subs: RIG* now 11 days above the FTP and under the 160 EMA- can have a party with this if market sells off.
Longs: With end of quarter, finding new swing trades for an extended stay is harder which often means that the market is at an inflection point of renewed volatility in either direction. Also note that stocks not approaching overbought right now, the logical question would be -why not? FLEXIBILITY crucial. My main focus will be the highlighted indexes and ETFs above.
AAPL 408.42 was the high after it gapped lower post earnings. But, if the market remains strong, this has room to match the highs at least. And if the market stays strong and this does not continue higher, somewhat worrisome. Inside day. At a critical point since there is an potential island top post earnings if gap mentioned above is not filled soon. Now can use Friday low 402.50 as risk point. Volume has slacked off since peak high, another interesting layer to watch for-which way volume comes in. Day to swing
GOOG Inside day and good close. If crosses 600 with any volume could see another 25-50.00. Pivots positive at 598.50 which means OR reversal candidate. Risk now, under 590.00. Day to mini
QCOM Had an OR reversal Friday and now coming in with an inside day and negative pivots at 53.14. Want to see it hold Friday low 52.71. If it gets going above the 200 DMA, could see a move to 59-60.00. Day to Mini
YUM Chopping around intraday but now, if good should hold 52.80 and get above 54.00 to see 58.00 or better. Pivots negative at 54.05-for near term, good place to hold if comes in higher. Day to mini
LULU Has to hold 56.50 otherwise has room to drop a possible full ATR before next support. But, if market rockets further, last peak high 61.80, all time high 64.49. Day to mini
LO 112 is max risk as it compressed last week then rallied Friday afternoon to close above a declining 10 DMA at 114.04. All time high made at 120.00. Positive pivots at 113.39. Must also cross over 115 with volume. Day to Swing
Oversold: AVP (Cramer touted this before it dropped 19%) What has me writing about it now is that the low Friday held the swing low from October 4th at 18.17 (maximum risk). Has to clear R1 19.23 and hold either the swing low or the pivots at 18.80. Overhead now at the 50 DMA 21.26. Day to Swing
Honorable Mention: OR Reversal BIDU* (Friday low 1422.64 should hold) CMG* ALXN (Or breakout if sets up over Friday high) ABT
Shorts:
SINA (Nov 18) Watch for a move either way on this with positive pivots yet under the 50 DMA. Under S1 86.19 looks vulnerable. Over 91.45, the 50 DMA good chance it will rally. Day to mini
CMA Inside day on the 70 EMA with none of the oomph of the rest of the market last week. Pivots negative at 25.98 with Friday high the risk at 26.38. Under S1, 25.54 also takes out Friday low. Then could see 31.50 or lower. Day to Swing
STJ Big drop Friday and now under the key moving averages on daily, weekly, monthly. Unless it clears41.21, would look for a short with negative pivots. The 10 DMA is 39.69 therefore, that needs to break. Then can see 36.50 or lower. Day to swing
Hon Mention VRTX FSLR (under S1) CREE (under S1) MCP (under S1)
Have a great Sunday!
