Hungry Like The Wolf

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Duran Duran

The sheep are in the meadow, fat and happy. The wolf salivates. After posting the tightest 5-day trading range in SPY since 1968, Tuesday’s session brought back some fond memories of 2013, aka “Turnaround Tuesday.” It did so on light volume.

The Russell 2000s helped considerably by not breaking down further making new November lows. Yet, nor could they quite clear the healthiest of resistance points, 116.75 or even 116.50 by day’s end. Doesn’t mean they can’t, just means they haven’t.

As we have witnessed since late last week, the pockets of excitement that the market is now serving up for active traders ensued. Solar energy, particularly Sun Edison (SUNE) soared rising nearly 29%!

Although other sectors scored well (Biotechnology, Gold Miners, Healthcare), clearly Solar (mentioned Monday night here, “We are very much attentive to solar energy and 3-D printing. All could be basing after doing very little throughout 2014. Those sectors just might hold the Ram’s head position as this year concludes and 2015 begins,” delivered with unbelievable abundance and ahead of schedule. Perhaps the final equestrian feat from our soon to be old friend the horse is the proverbial message, “Don’t look a gift one in the mouth!”

So, if the sheep are grazing in the meadow, the horses are bearing gifts, where are the wolves hiding?

Looking at the Market Internals: Advanced/Decline, Up/Down Volume Ratio and the McClellan Oscillator, which had all turned negative, Tuesday went to neutral meaning they remain technically in a sell signal, just not as clean. Like a hungry wolf shrewdly plotting out how to present as a sheep, these internals heed consideration.

Therefore, we continue to take profits and trail up stops on our existing positions. Moreover, execute new trades using much shorter timeframes (day to miniswing) on new longs and hedge with short setups.

S&P 500 (SPY) I remember mentioning 220 target months back. Maybe. For now, 203.50 has to hold

Russell 2000 (IWM) 115.28 the November low to defend

Dow (DIA) Starting to look toppy

Nasdaq (QQQ) Remember the runaway gap from October 31st? Never filled and still working.

XLF (Financials) Closed over 24.10-now has to stick above it

KRE (Regional Banks) Inside day

SMH (Semiconductors) Closed on new highs

IYT (Transportation) Maybe toppy, maybe resting

IBB (Biotechnology) Good day but the topping candle from 10/31 remains above

XRT (Retail) Mediocre day

IYR (Real Estate) Back over 75.00-a reliable swing area

ITB (US Home Construction) Hovering at recent highs for 5 days in a row-merits close eyes

GLD (Gold Trust) Narrow range getting close to the 50 DMA

GDX (Gold Miners) Pushing up against the 50 DMA

USO (US Oil Fund) 2 Inside days reconciled to downside-that is another potential wolf in sheep’s clothing

XLE (Energy) Not impressed

UNG (US NatGas Fund) Doji day and still very interesting to see if can clear 23.35

TBT (Ultrashort Lehman 20+ Year Treasuries) TLTs 120 pivotal area and the 50 DMA to hold 118.10 (notice the slope is moving up?)

UUP (Dollar Bull) Back to looking toppy potentially