I took the day off from trading. As such, Icould step back a bit and digest the last several days. The fact that the drop happened quickly (over the last couple of days) is concerning but, the drop is into support therefore would expect a bounce from here. With S&P 500 posting 2 distribution days in volume in the last 2 weeks and NASDAQ 100 with 3, these are real warning signs for the near term. However, NASDAQ 100 internals show the trend both in the short and longer terms still bullish. The logical conclusion then is to watch NASDAQ for the lead. Specifics below.
S&P 500 (SPY) 143.00 acted as support. 144.45 is initial resistance to clear, then the next area is the fast moving average.
Russell 2000 (IWM) 82.70 is the area of support with a move back over 84.50 also an indication of a test of the fast moving average. Not expecting much more than these areas as an established trading range for the time being.
Dow (DIA) 133 big area of support
NASDAQ 100 (QQQ) Through 68.90, expect a test of the fast moving average. Also, expect 67.45 level to hold. It seems that although the QE3 has not been the shot in the arm everyone expected, it should have an impact going forward. Certainly, the FED acted for a reason-to abate the possibility of another recession. So, if the plan worked, we should stay firm. That doesn't mean new highs necessarily, but more or a trading range for now.
ETFs:
GLD Gap lower, close at the intraday high. If cannot clear 170, next support 164.
XLF (Financials) 15.71 now initial resistance then 15.95. Best support 15.38
IBB (Biotechnology) With 2 days left to the month, watching to see if hold the close of last month considering it has done that all but one time this year
SMH (Semiconductors) Came real close to its 60 day low. Above 31.30 would expect a relief rally
XRT (Retail) Slightly out-performed the market. 63.75 resistance if firms more
IYT (Transportation) Subs: Out-performed the market. 89 is the channel number. It is not oversold, which means under 87.00 would not be good
IYR (Real Estate) Seriously oversold now
OIH (Oil Services) Slipped right under the 50 DMA and onto the 70 EMA. The 200 DMA not far below. Unconfirmed phase change to warning as well.
XLE (Energy) Subs: 71.84 is the 50 DMA. I would like to look at a buy around these levels considering trend positive and quite oversold.
TBT (Ultrashort Lehman 20+ Year Treasuries) The bizarre relationship of strong TBTs and market means that with this oversold, back above 15.50 should help the market.
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.
NOTE: Only picks that held S1 or are against a major moving average and are very oversold
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:
ONXX 82.15 now max risk. Like to see this clear today's high and R1 which line up
EWW 63.85 was the breakout area. Today, it broke it but with no sellers below, it came back to close well. Has 5 days closing under the pivots. Now, has to hold 54, and clear 65 to stick for a swing
Category 2: (Pipeline) Positive Phase, Condition 2-3, 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:
IBM 6 days under the pivots. 203.46 a very clear max risk. Ultimately has to clear 208, but if can get a good entry with tight risk, for now a miniswing trade. Oversold.
KORS R1, today's high and the 10 DMA line-up. Risk 52.00
AEM 5 days under pivots but closed up on day. Through today's high clears R1. Then, the 10 DMA is 51.15. Risk today's low
CF Through today's high clears R1 with risk 215, the pivots. 10 DMA 219.26
QCOM Oversold condition 2. Outperformed NASDAQ. Today's low max risk, has first to clear 62.60
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:
DVA 99.76 max risk. 102 resistance to clear
AGU Could not close end of day over the 10 DMA to stick with the trade. Now, has to hold 101.18 ad really 102 to indicate it can clear the 10 DMA
ESRX Improved to condition 1. Neutral pivots. Like to see it hold 62.90. 64.33 all-time high
COG Choppy action with neutral pivots. Prefer to see the 10 DMA clear.
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:
CRM Now oversold and today's high and R1 line up
GS Changed to bullish phase and oversold. Today's high and R1 line up. Risk today's low
TROW Oversold, 50 DMA is 62.07. Max risk real close
Phase Change: IDCC Big volume unconfirmed phase change to accumulation. Today's low max risk. On September 14th had a slingshot which means, 36.11 must clear. Then could see 41.00
Shorts: Not much right now since oversold conditions
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
BIDU Has to break today's low and S1
Bye for Now!
