Open Trade Update
Trade Update: Long XOP on 58.20 limit order
Stop: 56.94-stopped out
Trade Description: After initial strong open, limit order to buy was meant to limit risk to 1 full ATR. Since the market had some ominous candles, was more concerned with controlling risk than the initial risk/reward. With huge and unusual market decline, rare to see that happen in same day. Now flat.
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Analysis for Tuesday, 2/26/13
Lesson learned is to respect brick walls, especially when they happen in the Russell 2000-small caps or the index that led the whole way up. Another lesson is in following the flight to quality in interest rates. They dropped significantly ahead of the sequestration as if all of a sudden investors got a clue that perhaps the cuts cannot be resolved. But last minute is how they play on Capitol Hill, which means, anything can happen. Therefore, watch both the Russells and the rates with the same scrutiny as Sherlock Homes with his magnifying glass.
S&P 500 (SPY) Lots of buzz about 3 distribution days in volume since making the highs last week. In our research, 3 or more within a 2-week period is a warning sign. Couple that with a slingshot high and an uncertain political climate and whammo. But, the phase remains bullish as long as SPY can hold the 50 DMA. Subs: Got the 1.5 ATRs this morning after last Friday's opening range reversal which I tweeted and pointed out was a place to take profits given the negative candles. The balance was a no loss stop.
Russell 2000 (IWM) 87.75 is the 50 DMA. 91.00 now significant resistance Subs: Pivots Negative-watch for a reversal in TWM-the ultrashort against 21.70 area
Dow (DIA) Cleared the 2013 high early on then turned on a dime, taking out all the work from February in one full swoop. 135.90 is the 50 DMA
NASDAQ 100 (QQQ) Back in an unconfirmed weak warning phase with the 50 DMA 66.68-now pivotal. Subs: QID went into an unconfirmed recovery phase-first time I even covered the ultrashorts on the daily video in quite some time
GLD Not a surprising bounce here given the gap higher oversold conditions and 2 inside days. 156.00 resistance. Subs: Bought the opening range reversal, took ½ ATR and now will keep no loss stop at 153.50 to play it out
XLF (Financials) Real close to the 50 DMA 17.11. A failure of the current bull phase will be reason to think this can see Jan lows 16.74.
IBB (Biotechnology) 143.44 the 50 DMA. Subs: After looking so much better, now back to a possible short setup for 2013.
SMH (Semiconductors): Subs: 34.00 area still of interest but will not try to catch the falling knife. Will look for evidence that it will hold for real
XRT (Retail) Never cleared the67.75 resistance and now looks like 65.00 the 50 DMA is in the cards
IYT (Transportation) Could not clear the brick wall highs but still a good place to look for a long entry once dust settles. Subs: Back to looking at 102 to hold
IYR (Real Estate) 66.60 the 50 DMA and another tell last week after it made new highs and could not hold up
OIH (Oil Services) Subs: Will stay aside until we can see whether this holds or fails the 80 monthly moving average by February's end
XLE (Energy) 75.10 the 50 DMA to hold
TBT (Ultrashort Lehman 20+ Year Treasuries) Can finally say it broke the candle form February 1st after 14 days trading within it. Only, alas, it broke to the downside. Subs: Weak warning phase-let's keep an eye on the 50 DMA
XOP (Oil and Gas Exploration) Subs: If you were long on the OR reversal from Friday, used a no loss stop and are now gone
XHB (Homebuilders) Subs: Was a short pick for 2013 but only now is it starting to look real weak. Need a better setup to short
UUP (Dollar Bull) Subs: 22.65 is the 200 weekly moving average.
Bye for Now!
