NASDAQ 100 is becoming the "Boy Who Cried Wolf," with today's new multi-year high, close on the intraday low pattern we see once a week these days. Ok, so some sheep are nervous and rightfully so. Most of this rally has been made with investors waiting for the other shoe to drop. The volume has been super light and the proverbial "climb the wall of worry" prevails. Do not forget that QQQ began 2012 at 57.00 with today's closing price 68.21. That's an awesome move. Of course now that the weekly Relative Strength is near 100%, new longs should be cautious. But, as I have to remember myself when asking if this is the top; can any one of us pick the high tick? Doubtful. But the market will tell us when it's time.
NASDAQ (QQQ) With all possible reversals, a couple of days confirmation is necessary.
S&P 500 (SPY) Last week, when QQQ made a similar looking candle pattern it made today, this index did not. Today, though, it has-new high and close on the intraday low. To be respected but too soon to completely fear.
The Dow (DIA) Not close to testing 132.61, the high from March 16th. Could mean has more catching up to do. Could also mean like last week, a sign of Turnaround Tuesday. Under 131.34 might be time to get out of the pool, especially on a closing basis.
Russell 2000 (IWM) This too made new highs and closed on the intraday low. But, holding the low of the gap higher with room to 83.10.
ETFs:
GLD Island bottom still intact but could not confirm a phase change back to accumulation. That means it remains in a weak distribution phase til further notice
XLF (Financials) Like the 3 indexes, new multi-year high ending on the intraday low, yet holding accelerated fast moving average.
IBB (Biotechnology) New highs, close on intraday low. But, volume also real light. A correction would not be the worst thing in the world for the whole market. Did one a few weeks ago and then the fun returned. Now, not too much fun watching and waiting.
SMH (Semiconductors) 36.12, last swing high in 2008 was tested intraday with a close on the intraday lows. I highly doubt the move is over, but we have little exposure after today long or short.
XRT (Retail) Just to write something different, last several times this made new highs and closed on intraday lows, the pattern was a 2-5 day correction in store.
IYT (Transportation) A push through the fast moving average looks good with 100 not out of the question.
IYR (Real Estate) Filled a gap and ended with a DOJI. Still has to clear and close above 62.00 to look good up here.
XLE (Energy) OIH (Oil Services) Gave you the head's up on these as the best ETFs to go to if the market weakened. Subs: US Oil (USO) has positive pivots
TBT (Ultrashort Lehman 20+ Year Treasuries) The correction I have been waiting for. Subs: Either we will wait to see if a base at these levels develops or jump in over Tuesday high risking 19.90.
Longs: Not unexpected to see a choppy, rest day after yesterday. On every peak, we get out of weaker longs and make sure the deep in the money positions are lightened. Right now, our exposure is minimal and we are ready for anything. Not recommending anything that made a new 60 day high and closed on its intraday low. Lots of strong stocks have only 1 day under their FTPs which means not enough of a correction to meet our strategy.
Category 1: 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:
LULU (74.05 max risk)
Category 2: Positive Phase, Condition 2, 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:
None Applicable
Category 3: Positive Phase, Condition 1 through 4, Positive Pivots which means candidate for Opening Range Reversal, Risk S1 or previous day low, whichever is lower unless noted differently, Target- Day to at least 3 ATRs from entry:
COST
JEC
TEN (Inside day, hammer candle)
JWN
WSM
GOOG
MON
CF (Inside day-ended with an opening range reversal, outperformed)
LEA
SHLD
Exception: Pivot neutral to slightly negative, must hold today's low:
WYNN
V
UTX
Category 4: Oversold (2 or more days under FTP), Condition 1-4, Needs to clear R1, Risk previous day low unless noted differently, Target- Day to at least 3 ATRs from entry:
None Applicable
Shorts: Eliminated anything holding the 80 monthly moving average or with RSIs under 15 on weekly or daily.
RIO (Positive Pivots Must Break Today's low and Not Clear R1)
GMCR (Negative Pivots Must Not Clear R1)
NAV (Negative Pivots Not Clear R1)
ATI (Positive Pivots Must Break S1 and Not Clear R1)
Goodnight!
