Evening Watch List for March 12th

Mish Schneider | March 11, 2014

No great surprise here that the patient saw another piece of the puzzle unfold with the Russell 2000 down the most percentagewise. After all, I have written about the unusual volume on new highs every day since it occurred exactly a week ago.

Moreover, we have noted that the high tick from last Tuesday’s spectacular run remains the high. Last 5 trading days, IWM stayed within the range of 03/04 until this Tuesday, when it broke the lows and closed on a pivotal point-118.

Therefore, safe to say that under 118 expect more correction. I wouldn’t rule out 114 area next stop.

One positive sign is the S&P 500. With the small caps decline, it remained above the fast moving average and Monday’s low. Same with DIA. NASDAQ held Monday’s low but closed beneath the fast moving average.

Here is a repeat of the 4 possible scenarios one more time, only now with some slight modifications:

1) The blow off top pattern is still playing out

2) The market is digesting the recent rally through time rather than price

3) The market is digesting while it works off overbought conditions, and pretty much will continue to be range bound for a while longer

4) The market is not merely digesting, but fueling for a blast off from last Tuesday’s high with much higher levels to come-looking a bit less likely now

S&P 500 (SPY) Although under the average daily volume, still a distribution day in that better volume than Monday’s session on a red day. Subscribers: Negative pivots in all

Russell 2000 (IWM) Held 118. Eyes here

Dow (DIA) Tuesday’s low not the point to defend if bulls have a chance here

Nasdaq (QQQ) Looking toppy now too

XLF (Financials) 22.00 could easily be the place this stops declining

SMH (Semiconductors) I will love this group for a long time but not enough to stay long if everything else disintegrates

IYT (Transportation) Inside day but the shooting stars are beginning to show more of a top than launch pad

IBB (Biotechnology) Vulnerable to the 50 DMA

XRT (Retail) Vote for best place to go if the market holds up-still see new highs possible

IYR (Real Estate) Closed green-another place to look over Tuesday’s highs

GLD All of a sudden, looking exciting-watch this over130.60

USO (US Oil Fund) Touched down on the 200 DMA-important area

XOP (Oil and Gas Exploration) Drop to the 50 DMA

TBT (Ultrashort Lehman 20+ Year Treasuries) TLT Confirmed a phase change to bullish Monday and now we see why

EEM (Emerging Markets) Subscribers: One of the first to short this group and right now, looks heavier

CORN (Corn) Subscribers: Inside day which means over 33.66 seems more likely we will see this cross the 200 DMA

BAL (Cotton) Subscribers: 2 Inside days-good place for eyes

JO (Coffee) Subscribers: Made new highs and worked off some overbought conditions-watching the 10 DMA to hold

SGG (Sugar) Subscribers: Next time this clears the 65 week moving average-60.45 looks poised for the next place-the 23 monthly a=MA -65.12

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) N/A

Category 2: (Pipeline) N/A

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)

YUM Held up better than most. If can close above 78.30 will be a new all-time high close

HOG Still looks good if holds around 66.50 to around 70.50 or so

AA Has to clear 12.36 now to keep going and hold 11.97

KSS Has to clear 56.00 and hold 54.90 to stay in play

Category 4: (Rip Tide)N/A

Phase Change:
CELG
turned around and now if clears 162.11 the 50 DMA could see nice pop up
FDX
Needs to hold the 50 DMA. Really has to clear today’s high
AAPL Cleared the 50 DMA so if today’s low holds, good for pop to around 565.
TFM 35.85 the 50 DMA to clear which it has a good chance of doing
MO
If 36.38 holds and 37.33 clears, like this better
IBM Closed green therefore, if holds today’s low and clears the 200 dma again-186.84-consider going with it this time

Shorts:

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

APA One to watch as it looks vulnerable and possibly with enough weakness to match 2013 lows or lower

CVX Needs to break 114.01 with max risk to 50 DMA at 116.81

RAX Watch for a breakdown or a reversal under prior day low. The 50 DMA at 36.65 is max risk.

Bye For Now!