After the big drop last week, Thursday and Friday’s action formed what could become a new base or launch pad as I like to say. Plus, the S&P 500 and the Dow had inside days as well. Basically, two possible scenarios will emerge into this week. First, the base remains just that-a base to gather momentum from as all indexes are firmly in bullish phases. Second, the base becomes resistance if the market gaps lower or works its way lower right out of the gate on Tuesday. The same applies with the groups and sectors we have been friendly to all year. Semiconductors, financials, real estate and interest rates-if they all stay firm and over last week’s lows, those are the best signs that the US once again shook off news of foreign woes, with minimal fear, sustaining its bullish sentiment.
S&P 500 (SPY) Inside day and just under the fast DMA. Subscribers: 3 days under negative pivots with Friday’s low key support and R1 above the 10 DMA 165.80
Russell 2000 (IWM) AS with SPY and per the above analysis, the direction on Tuesday should define the direction of the next short term move up or down. This (as well as the others) closed beneath the weekly Bollinger bands. Subscribers: 3 days under negative pivots with Friday’s low key support and R1 above the 10 DMA 98.20
Dow (DIA) Inside day. This closed OVER the fast moving average. Sometimes, good things come in small packages.
NASDAQ 100 (QQQ) Similarly, has to either clear Thursday and Friday’s high to continue the bull journey or, if fails those levels, we’re looking at April highs next support. Subscribers: 3 days under negative pivots with Friday’s low key support and R1 above the 10 DMA 73.72
ETFs:
GLD 2 inside days. 130.00 is huge as in if it fails see a move down to 110-115. However, never discount the power of the range break up over the 2 inside days either.
XLF (Financials) Inside day. Held the weekly Bollinger Band!
IBB (Biotechnology) Inside day and hung on to the 179 support level
SMH (Semiconductors) Inside day and held the gap from 5/3 which means as per the above comments, good one to follow the range break with.
XRT (Retail) 77.00 a really good support level to watch for a hold.
IYT (Transportation) Inside day. Last week, recommended a dip to 113 a buy opportunity. Friday’s low was 112.84 (note-not filling the gap from 5/7) and it bounced from there-now, that’s the area of support with 116 resistance.
IYR (Real Estate) The bigger they are-the harder they fall right to the 50 DMA. But, it held it so bullish in phase intact as we begin the week.
USO (US Oil Fund) Inside day and unconfirmed phase change bearish.
OIH (Oil Services) Inside day. It’s all about the monthly moving average now-43.83. Up or down.
XLE (Energy) 81.00 has been a big area of support
TBT (Ultrashort Lehman 20+ Year Treasuries) I see a base that formed as long as 64.00 holds
XOP (Oil and Gas Exploration) Inside day that fast moving averages
XHB (Homebuilders) Inside day.
UUP (Dollar Bull) 22.55 is a new buy opportunity
SGG (Sugar) Sugar futures back in a channel which means a move over 60.50 here should correspond with a new buy signal.
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: The most important trading signals next week, should come from the indexes and ETFs. Although there are always stocks that follow their own path, my eyes will be on the beta trend setup.
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:
TSO Inside day and could be getting in at a good risk point with a chance to see 66.00 the 2007 high cleared for more upside. Risk is 60.35
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:
PM Inside day above the 50 DMA. Has to clear 94.60 and hold 93.80
MTW Risk to the 50 DMA at 19.12 Friday’s high and R1 line up 19.87 plus like that it is over the 80 monthly moving average.
IP Island bottom was made here on May 2nd. Inside day Friday over the 50 DMA making Friday’s low good support. If that island bottom is good, this should clear 49.00 for another 5.00 move up.
NE Neutral pivots inside day. Over the 80 monthly and has to clear R1 40.83
BSX Inside day. May’s high is right at the 80 monthly 9.21. If this clears R1 9.17 and holds around 9.00, could see that monthly MA taken in June.
USG Had a down day Friday, but held the 50 DMA which makes the risk for a new trade even closer. The 50 DMA is 26.81 and has to clear R1 28.18
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)
APC Over 89.72 clears some resistance after an inside day with a tight risk under Friday’s low.
IGT Bullish engulfing pattern. 17.80 good support and 18.65 clears multi-year highs
AMGN Inside day over the 10 DMA. 104.46 the 50 DMA good risk and still needs to clear R1 at 106.62 to continue going up.
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:
INTC One almost has to ignore the daily chart gyrations and focus on the weekly and monthly chart points, both of which show strong trends up. Over 24.00 better and can use 2 ATRs or around 23.50 for risk.
Phase Change:
AWAY Has to clear that 50 DMA once and for all at 31.10.
FDX 97.40 is the 50 DMA support as this corrected down to where it broke out from a few weeks ago. 98.50 is a good point to clear for confirmation.
AAPL Inside day. 446.16 should take this up to next resistance 455. And has to hold Thursday low 436.
ESV 2013 pick. Inside day. Has to clear 62.15 and hold 60.80
Shorts: Until we see good risk setups, no new short recs-but do watch gold and mining stocks
Category 5: N/A
Category 6: N/A
Bye for Now!