Bloodbath followed by bloodshed. How does one write pithy comments after a day like today? Trying to shake off emotions and the all too familiar trauma having worked in the World Trade Center for so many years and losing many friends is not easy. But, looking at the charts, the question that plagued us about the small caps lagging, gold collapsing and interest rates dropping certainly were answered today. The Dow had the worst day of the year. From a technical standpoint, this is the making of another brick wall like the one we saw on February 25th. When that brick wall candle occurred, similar to today, the Dow was above the 50 DMA holding its bull phase. Therefore, regardless of the damage done in commodities and small caps, one must look here first for signs of leadership to the upside. If we learn from repeating patterns, an inside day tomorrow is one to be respected. If more damage is done, that too is to be respected.
S&P 500 (SPY) Here is what I wrote coming into today, "A one day correction may not be enough to clean out some of the weaker longs. But, what will help us ascertain a correction from something far more insidious is if this can hold 156 level." Something more insidious for sure. 154 is the 50 DMA-key area to watch.
Russell 2000 (IWM) Broke 92.00 early on and now 86.00 is where the 2013 rally began
Dow (DIA) As mentioned above, best chance to recover if can cross back over the 146.50 level. Otherwise, 142.80 the 50 DMA
NASDAQ 100 (QQQ) Broke 69.00 after failing a longer trend channel early on today. 68.15 is its 50 DMA
ETFs:
GLD A major liquidation the likes I haven't seen since back in the day-yes, I mean the 1980's back in the day. With big volume, we are going to look for signs of a blow off today.
XLF (Financials) Total reversal and now looking also at the 50 DMA. Subscribers: With the indexes and the stronger ETFs, if they break the 50 DMA, will have to switch to a more bearish sentiment. For now, out of all longs and defensive until signs are clearer
IBB (Biotechnology) Like DIA, this has been the leader since 2012 and even with today's damage, is the first place one should look for strength
SMH (Semiconductors) 34.50 is a wall of support unless it cracks it tomorrow Subscribers: If holds will look yet again, if not-will most likely see a return to the 200 DMA
XRT (Retail) Brick wall reversal unless today's low holds and this can show signs of strength
IYT (Transportation) Washed out longs and now, 103 next area to watch for some support Subscribers: Stopped out under 107 today which turned out to be a P&L saving grace!
IYR (Real Estate) Brick wall reversal unless today's low holds and this can show signs of strength
USO (US Oil Fund) Made new 2013 low today
OIH (Oil Services) Right to the 200 DMA. Subscribers: If nothing else, this is a fine example of watching the 80 monthly moving average, which kept us out of this group
TBT (Ultrashort Lehman 20+ Year Treasuries) Subscribers: Slingshot low 59.45 so if that holds, perhaps there is still a chance for a bounce here
XOP (Oil and Gas Exploration) On the 200 DMA.
UUP (Dollar Bull) Looks like the US dollar got some attention as a somewhat safe place to be
SGG (Sugar ETF) Subscribers: More for money management, got out today with a loss-but like all my starter swings, position size was small. I prefer to add on strength than start on buying weakness with a full position
FXI (China) Subscribers: Also held the slingshot low 34.86 so eyes here too
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: Back to all cash. A few lessons: 1. The ones mentioned that had only 1 day under pivots coming into today were never a factor. 2. Profit targets on the existing reached last week with profit taking is always a good thing to follow. 3. Having shorts in your portfolio makes sense. 4. Using good stops on tails ensures locking in money 5. New entries on weak days need tight stops.
*Have to be patient now for new setups
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:
WETF Small stock but held the 10 DMA at 10.63 after 3 days under pivots. With today's low max risk, can look at a move over today's high which lines up over R1 Reports 4/26
Category 2: (Pipeline) N/A
Category 3: (Double Up) N/A When was the last time that happened?
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:
NTES Broke the 50 DMA and now oversold. With a hold of today's low it also the 65 weekly moving average. Over R1 returns this over the 50 DMA
STX On the 50 DMA making today's low max risk if can clear 35.40 level
Phase Change:
INTC Held the 50 DMA at 21.26. Will watch to see if can get back above 21.47-50
BBBY Had a potential slingshot high last week followed by 2 inside days. Means, could go either way if breaks 64 or above 67.00
Shorts: Some slingshot high possibilities: TMO UA
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
TDC If use R1 54.75 as risk, could have more downside
YUM Reports 4/23 67.00 should be a good wall of resistance with a break of 65.92 reason to think it'll see lower levels
ANN 29.40 good risk with some underlying support down at 24.50
DKS Unconfirmed phase change to distribution. Converging moving averages now good resistance 48.19. Note that if that clears above, good be good for a pop up
Bye for Now!