Today’s market action was very concerning on both a technical and fundamental level. The four major indexes gapped lower this morning, spurred on by fears of the escalating situation in Syria. Crude (UCO)prices jumped and the United States Oil Fund (USO) gapped up and consolidated for the duration of today’s trading hours. Tomorrow, I will closely watch today’s range in the Russell 2000 (IWM) for a clue to the next move in the indexes. If IWM breaks today’s low, it will take out the support offered by the recent lows. It is a long way to the 200 DMA from there, although it may find some support in the 98.75 area. If it breaks above, it will be back in an unconfirmed bull phase. The recent swing low in the S&P 500 (SPY) is another key level, which will most likely be resistance. IWM will need to clear today’s high and SPY will need to clear 64.19 for me to believe in a short term rally. I plan to trade very cautiously until the fundamental and technical outlooks improve.
S&P 500 (SPY) Confirmed the warning phase and broke the recent lows. Watch for 164.19 to clear and today’s low to hold. Subscribers: Pivots negative
Russell 2000 (IWM) Watch which direction today’s range breaks for an indicator of the next short term direction. Subscribers: Pivots negative.
Dow (DIA) Gapped lower. 145.17 is the next support. Subscribers: Pivots negative.
Nasdaq (QQQ) Gapped lower this morning. If today’s low breaks, I expect a test of the 50 DMA. Subscribers: Pivots negative.
XLF (Financials) Gapped lower, watch for today’s low to hold.
SMH (Semiconductors) Gapped lower. If today’s low breaks the next support is 36.08.
XRT (Retail) Gapped lower and closed on support. Oversold.
IYT (Transportation) Gapped lower and is now in an unconfirmed warning phase.
IBB (Biotechnology) Held support by closing above the 10 DMA.
IYR (Real Estate) Holding the 10 DMA.
XHB (Homebuilders) Closed under the 200 DMA. Now in an unconfirmed distribution phase.
GLDGapped up and closed with a doji candle.
USO (US Oil Fund)Gapped up amidst fears of conflict in Syria.
OIH (Oil Services)Closed under the 10 DMA.
XLE (Energy) Closed under the 50 DMA, bringing this into an unconfirmed warning phase.
TBT (Ultrashort Lehman 20+ Year Treasuries) Gapped down and is holding the 50 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:
ETP Corrected to the 10 DMA and held the 10 DMA. Watch for a breakout or reversal.
INTU Inside day holding the upward sloping 50 DMA. Today’s high and the 10 DMA need to clear and today’s low needs to hold.
YELP Watch for a reversal or breakout against the 10 DMA.
CLR Holding the upward sloping 10 DMA. Watch for a breakout or reversal.
CI Watch for a breakout or reversal against the 10 DMA. Today’s low must hold.
GT Tested support and closed strongly over the 10 DMA. Watch for a breakout or reversal against the 10 DMA.
ALXN Holding the converging 10 and 50 DMAs. Watch for a breakout or reversal against the 10 DMA.
Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing
SPG Watch for a breakdown or OR high failure against the 10 DMA.
BPO Watch for a breakdown or OR high failure under 15.94.
NBL Watch for a breakdown or reversal under the 10 and 50 DMA. Next support is 59.85 area.
MS Watch for a breakdown or reversal under today’s low.
PHH Watch for a breakdown or OR high failure against the 200 DMA
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
PIR Moved into an unconfirmed distribution phase today. Watch for a breakdown or reversal.
Best wishes for your trading,
Geoff & Matt