Here is how perverse one’s mind can be-it almost seemed like Monday’s action was positive-after all; it came back from the intraday lows, got above Friday’s lows in the Dowand other indexes, with decent volume. But then, end of day, the sellers came back with theDow closing beneath Friday’s lows. Once again, if we have anywhere to look for a tangible silver lining, it’s in the small caps or Russell 2000s. That tested but held the May 3rdrunaway gap low plus closed above Friday’s low. But, before we call out the trumpets, it is now back in an unconfirmed warning phase. Certain instruments look better for a possible bottom in place (individual stocks, soft commodities). But looking strictly at long bondsand interest rates, although it made a new multi-year low early on and rallied from those lows, (also held a long-term weekly moving average) it has another day to really prove itself. For now, best we can say is that it worked off some oversold conditions in its currentbear phase.
Subscribers: Note the ETFs that have to clear R1 for a bounce.
S&P 500 (SPY) A move over Monday’s high might spur a rally. But, the overhead 50 DMA is now resistance.
Russell 2000 (IWM) As mentioned, held the runaway gap low but did fill the gap from late April and is now in an unconfirmed warning phase. Like with SPY, over Monday’s high will look better, with the 50 DMA close by. As with all indexes, getting oversold
Dow (DIA) 146 giving this some support and only a move over 150 or so would be encouraging
NASDAQ 100 (QQQ) 68.00-69.00-these are the levels we were watching in the early part of the year.
ETFs:
XLF (Financials) One by one the ETFs are breaking down. 18.50 is next support level.
SMH (Semiconductors) 35.45 is the low of the runaway gap move.
XRT (Retail) Also holding the runaway gap low making 74.00 a good support area to watch
IYT (Transportation) Maybe over 108 could see a pop-otherwise, see the 200 DMA once this works off some of the current oversold conditions
IBB (Biotechnology) If Monday’s low holds, perhaps this could be one of the better places to look for a new long
IYR (Real Estate) Tried hard here but closed more in the middle of the range after making new 2013 lows. But, keeping eyes on this over 65.50
XHB (Homebuilders) Touched the 200 DMA which means a good bounce candidate-against today’s low
GLD 115 the eventual target
USO (US Oil Fund) Bullish engulfing pattern over the 200 DMA again for an unconfirmed accumulation phase. Standing aside for now
OIH (Oil Services) Touched the 200 DMA. As with any of these ETFs, if they touched a major moving average, they need to give us a great reason to reenter besides risk-for example, a positive pivots stack and move over R1.
XLE (Energy) This like OIH, has the setup potential over R1
XOP (Oil and Gas Exploration) DOJI right on the 200 DMA-again R1 is key here as well.
TBT (Ultrashort Lehman 20+ Year Treasuries) Tweeted along entry today on a possible new low in TLTs. Also tweeted a profit target hit with ½ the position going into tomorrow. Again, would like to see R1 clear
UUP (Dollar Bull) Got to 1.5 ATRs today from the entry last week-but, could not clear the 50 DMA and closed only slightly higher
SGG (Sugar) In SGG, 60.81 is the 50 DMA to clear. Although it seems this has bottomed, a phase change is consistent with our swing trading rules
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:
YELP Tested and held the 50 DMA closing above the 10 DMA. R1 is key here too
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:
GCI Above the 80 monthly with the close just under the 10 DMA. R1 the 10 DMA and today’s high all line up
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)
SPLK Made ½ ATR and got out for a daytrade. Now, 44.45 is the place to clear and 43.50, the 50 DMA place to hold.
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:
BSX not oversold, but held 9.00 and still in good shape if holds around 9.10
Phase Change:
CRM Inside day with swing position on against the slingshot low. Has to clear today’s high, then Thursdays high to get real interesting
WMT Swing trade against today’s low with the risk going into tomorrow, 73.44 the 200 DMA
P went back into an unconfirmed bullish phase with 14.90 a good tight risk and over 15.50 more interesting
LPX Slingshot low if holds today’s low. R1 lines up with todays high
OSK Slingshot low on the 200 DMA. R1 and today’s high line up
ISRG Basing out over the 50 DMA but under the 200 DMA. Positive pivots so a reversal candidate. 502 area tight risk
FDX Inside day on the 200 DMA and has to clear the 50 DMA over today’s high
Shorts: May have to wait for some white cap patterns now
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
SLB 72.33 max risk. Eventually has to break 69.00
Bye for Now!