The market got off to a positive start but fell back toward the lower end of its two week range. With holidays and the beginning and end of the week, the two week consolidation's high and low are more important to watch than the intra-day gyrations between these levels.
Additionally, if the market is truly going to trend lower in a big way it is likely that the TLT will breakout above its high from last week convincingly.
S&P 500 (SPY) Last week's low, 153.59 and today's high, 156.27 are the precise key level to break now, but for range trading against market chop look for support and resistance in the areas of 154 and 156.
Russell 2000 (IWM) The last four days have been within last Tuesday's range. If the trend is real this will likely lead.
Dow (DIA) could be the tightest of range of the 4 indexes and would be a good candidate to trade on an upside breakout.
NASDAQ 100 (QQQ) 67.50 (the 50 DMA) is key to hold and 69.00 the area to break above
ETFs:
GLD pulled back to test the 10 DMA today and bounced. Today's range could define the inflection points for the next multi-day move up or down.
XLF (Financials) 18.00 is the key level to hold. Breaking today's high puts it over the 10 DMA
IBB (Biotechnology) If market rallies this could be a good long play.
SMH (Semiconductors) Marginal, unconfirmed bullish phase. I needs to clear 35.25 decisively. I should have good support at 34.50
XRT (Retail) Has been one of the strongest groups. It held PDL today an almost closed up on the day. Look for support at 70 and a breakout out over 70.50.
IYT (Transportation) Had a wide range day that echoed Thursday's action. Until it breaks today's high area at 111. I'll wait for more of a rest from this group.
IYR (Real Estate) 68.50 to 69.30 is the range to break.
USO (US Oil Fund) Strong move higher but pulled back off its high of the day near the 50 DMA. One of the few markets that held over the PDH.
OIH (Oil Services) Took out 4 days of tight consolidation, but stopped dead at the 10 DMA and fell back into the range. If it moves over 42.30 it may try to move up again, but a move lower that today's low would be quite bearish.
XLE (Energy) Still looking a bit unclear
TBT (Ultrashort Lehman 20+ Year Treasuries) If it breaks below last week's 65.70 low then stocks are probably in trouble too.
XOP (Oil and Gas Exploration) Support around 60.00 with an nice daily retracement. In an up market this could be a good long.
XHB (Homebuilders) This has held up very well and remains above the 10 DMA.
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.
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:
BAC Weak market has pulled it back to the 10 DMA and prior daily breakout area. Should be over 12.50 to enter.
WFC sitting on support and R1 breakout lines up with key daily levels.
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:
N/A
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: (Opening range reversals are good on anything above S1)
STX Holding the 50 DMA at 34.15 which means a good risk to trade off of if this can take out 35.00
ACT was very resilient to a weak market today. Watch for an OR reversal opportunity with a stop below Monday's low.
SPLK Nice big volume breakout today. Watch for OR reversal with good risk to below S1 at 38.74
PM Weak market seemed to spoil its daily breakout. Look for a trade with a stop below S1, 91.60 area.
SKS Like its attempt to cross the 80 monthly moving average. Held up nicely today. Use S1, 11.57 as max risk
CLR Nice bounce of off the 50 DMA. Two trades could be interesting, an OR reversal over S1, 85.67 with a stop under Friday low. Or, if the market is strong, an entry over 86.50 with stop below OR low.
WLP Held up well today with LOD = 50 DMA so this should make for a good risk level to trade off on Tuesday.
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:
N/A
Phase Change: MHP moved above 200 and 50 DMA, and over key swing high with good volume.
Shorts:
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
DLR 66.90 area good risk and looks like could see 63.00 again. Pivots are positive so must be below FTP and better if under 66.35.
NE LOD = 20 DMA at 36.15. Look for a break below that level with a stop over the FTP at 36.50.
EW Prefer it to be under FTP at 81.71.
BIDU 86.80 area has been big resistance and it now lines up with R1 on a day with negative pivots. If 86.80 is not in the stop then I'd wait for break of 85 before getting short.
WFM has traded in a tight range for a month. I want it below 86.40 to be short. It could move big up or down.
APA very tight multi-week consolidation plus 2 inside days. Follow it lower below 74.12.
Category 6: White Cap-Having a 2-3 Day correction over the pivots. In a Negative Phase, Positive Pivots. Can sell an Opening Range High Failure if happens below R1 or previous day high whatever is higher and/or weakness if breaks S1 and prior day's lows
Bye for Now!