Evening Watch List for July 22nd

Mish Schneider | July 20, 2013

“Let’s think stable and close the week on a high note.” Last sentence from last week’s daily. And so I begin with thanks! The Dow made the new all-time high last Thursday and managed to stay well within its grasp by Friday’s conclusion. The S&P 500 closed on new highs with an inside day from Thursday’s range. TheRussell 2000 the same-new all-time high inside day from Thursday’s range. The thorn? NASDAQ-tech stocks like Google fell from grace putting in a reversal pattern in the QQQ which makes some of us scratch our heads as we go into this week. An early warning sign? A new divergence paradigm? An overreaction with a possible gap higher to begin the week following the other indexes? These are my questions. Here are my thoughts:

S&P 500 (SPY)169.07 the prior high from May 22nd, now what could be ancient history in the annals of reversal candles. Inside day which means a gap below go on defense. Otherwise, looks good for more

Russell 2000 (IWM) Inside day here as well-same applies-follow range break

Dow (DIA)Inside day-really, these patterns have to be healthy. However, we will watch 154 carefully as support to hold

NASDAQ 100 (QQQ) Struggling, with some more big earnings coming up-Apple, Amazon, Netflix. 75.00 pivotal and the gap low from 7/11 74.25 critical to hold

ETFs:

XLF (Financials)All good on the financial stage. 20.50 support

SMH (Semiconductors) Held the 50 DMA-not that I think this group is the be all tell all to our economic health. But, I do like to see semis at the party. 38.60 good number to pop back through

XRT (Retail) Sideways as this looks more like a time rather than price correction. The low of last week 80.39 good number to hold

IYT (Transportation) Probably a much better gauge of economic health-this closed right on the new highs

IBB (Biotechnology) Yet another new all-time high in what literally is the most spectacular multi-year rally

IYR (Real Estate)Confirmed the bullish phase. Subscribers: Look for another opportunity against the 50 DMA

XHB (Homebuilders) And just like that-back to unconfirmed bullish

GLD125 cleared and see a trip to 129 highly likely

USO (US Oil Fund)Sign of improving demand? Beginning of an inflationary period? More questions

OIH (Oil Services)New 2013 highs

XLE (Energy) 83.95 the 2013 high here

XOP (Oil and Gas Exploration) Still has the 2013 highs ahead of it at 63.30

TBT (Ultrashort Lehman 20+ Year Treasuries) Looks a bit heavy after Friday

EWG (Germany) Subscribers: Stunning move last week. The 5 DMA 25.81 good point to watch

SGG (Sugar) Subscribers: Inside day. Looks better as a bottoming formation

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:

CSIQ Like Friday’s low to hold and clear R1 and Friday’s high which line up

Category 2: (Pipeline)N/A

Category 3: (Double Up) Positive Phase, Condition 1 through 4, Positive Pivots which means can eitherbuy 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)

DDD Reports July 30th. Starter position put on Friday. Over Friday’s high will look like it could get back to 50.00. Has to hold 46.50

DTV Reports August 1st. 64.25 is good risk point with a move over 65.88 a really good breakout to 68-69.00

MET Reports July 31st. Neutral pivots and inside day. Has to hold 47.70 and clear 48.93 to see new highs

CVLT Reports July 30th. Range Expansion on Friday. Now, has to hold around 80.00 and continue over Fridays high

KRFT Reports August 1st. Inside day. Through 58.05 and if can hold around 57.00, could see move up to 62.00 to 63.00

Category 4: (Rip Tide)N/A

Phase Change:
GMCR Reports July 31st.
Inside day. Has to hold 72.15 clear 74.80 then the 50 DMA
JCP Reports August 17th. After a slingshot low in April, each dip has made higher lows. Now, if holds 16.00 and takes out R1 after an inside day Friday-like it for swing
CRM Reports August 19th. Inside day, over the 50 and 200 DMA. Risk about 41.00 with move ove r43.00 good.
MAS Reports July 29th Phase change to bullish as long as the 50 DMA at 20.69. Could see 22.00 or so before earnings

Shorts:

Category 5: Titanic-Bear Phase, Negative pivots, not oversold, Risk R1 or previous day high. Target: Day to swing

DRI unconfirmed Distribution Phase with resistance 50.00 the 200 DMA. Has to break 49.39

IBM Huge move Friday so for risk have to use max 196.60. This could see a move down to 169 over time

FAST Friday high max risk with a move under Friday low see 44-43.00 next support

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

FWLT Broke under the 50 DMA 22.64 and now resistance. If breaks S1 and Friday low should see follow through to next support around 21.50

Bye for Now!