Market Analysis for Trading on 4/4/2013

Mish Schneider | April 3, 2013

Open Trade Updates

TradeCancel FXI Buy Stop 37.02 Limit 37.12

Instrument Name: iShares FTSE China 25

Position:

Stop:

Target

Trade Description: Cancel the open order

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Existing Position: XLF 17.96 Long

New Stop: 17.96 -stopped out today

First Target: Stopped out break even with first bit taken off 18.37

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Existing Position: QQQ 69.02 Long

New Stop: 67.79 (Tested and held the 10 DMA today. After making new highs, then closed on the lows, a slingshot possibility and now brick wall high is possible. That means the original stop is still good, but also giving you the option to raise your stop to 68.49 or under S2)-stopped out if used this stop

First Target: Stopped out if took the 68.49 choice. If not, keep the 67.79 stop in place.
NOTE*: As this is a new service, the market had already made a great move higher first 3 months of the year before we started this service and the long picks became riskier and harder to find.  I felt it would have been remiss to not recommend any buys, but wanted to do so using the tighter stops because of the overbought market. However, now that the market is correcting, new opportunities with much better risk will emerge.

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Market Analysis for Trading on 4/4/2013

Ha! When I read back what I wrote last night about John Q. Public, then look at today's action, I realize why the public tends to lose-they get in too late and out too early! But really, the market hates uncertainty and with headlines all day from North Korea, it seems an already jittery market due to weakness in sectors which have been featured for last 2 weeks-Financials, Retail, Homebuilders, Transportation and Short Bonds, once you add talk of war, the possible key reversal occurs. Let's not forget the small caps. I was ready to divorce myself from the usual analysis on Russell 2000 weakness, yet another negative in a sea of negatives, because of the strong flock to industrial companies. I guess we can say never mind. However, the Dow held the support level. Unless it confirms with more downside tomorrow, this could have been business as usual, volatility with a 100 point move in either direction par for the course. Then, there's the distribution day in volume in the S&P 500. We are mainly cash after enjoying some big swing profits and a few shorts to offset. Uncertainty is not the best environment for swing traders like me as well!

S&P 500 (SPY) Distribution day in volume. Broke the fast moving average but still in a strong bull phase and held the channel top from the point of breakout on March 5th  Subs: Most likely a good time to see how today's move digests from the sidelines

Russell 2000 (IWM) Broke the 50 DMA and now in an unconfirmed warning phase. Sometimes, when instruments get a return move through the 50 DMA, it offers a good low risk long entry. Oversold so watching for that.

Dow (DIA) Held the fast moving average but with a possible brick wall high. Tomorrow will be more telling

NASDAQ 100 (QQQ) 67.85 is the fast moving average below. Since this never got close to 2012 highs, not totally convinced this is over and done for.   

ETFs:  

GLD  150 today. Been negative here all year-now, 150 is a support level that could give this a bounce Subs: SLW had big volume and dropped to the 200 weekly and oversold. See more daytrade maybe miniswing

XLF (Financials) After an inside day, never a good sign when the lows break. Especially, when this was already one of the vulnerable ones we were concerned about. Now on the 50 DMA. Subs: Double the average volume today. Sometimes a sign of a blow off.

IBB (Biotechnology) Possible brick wall high if confirms

SMH (Semiconductors) Another dollar lower and I will be back into this long. Subs: And with triple the average volume today, a real head's up as a possible blow off.

XRT (Retail) Again, after an inside day and the double tops, hindsight is for more aggressive shorts. Now, the 50 DMA is close by

IYT (Transportation) Unconfirmed warning phase.  See my comments on IWM for return moves Subs: At 105, will be very tempting to start a new long

IYR (Real Estate)  Brick wall possible but also held the fast moving average. Probably the first place to look if the sharks swim away

USO (US Oil Fund) Unconfirmed warning phase. The 200 DMA is now at hand

OIH (Oil Services) Ugly but approaching support around 40.50 Subs: Now you know why I like to watch the 80 monthly moving averages. Kept us away

XLE (Energy) Broke the 50 DMA substantially so needs some work now before a new direction up or down Subs: Double the average volume today. Sometimes a sign of a blow off.

TBT (Ultrashort Lehman 20+ Year Treasuries) The best warning sign all along. When the market made new highs, this has stayed in a warning phase. Subs: 64.25 pivotal and the 200 DMA not too far away

XOP (Oil and Gas Exploration) Confirmed weak warning phase and now oversold. We are still above where 2013 began. That means, will begin to look for signs to reenter Subs: Had double the average volume which could mean a blow off today. Might look at a buy over 58.00

XHB (Homebuilders) Subs: Another one that had double the average volume with the 50 DMA not that far away

Subs: Typically blow off moves on high volume happen at new highs or lows. And they also have some digestion the next day until the setup of a corresponding move over previous day highs, R1 with a good risk. Although today was not new lows by any means, we will be watching and tweeting about this more.

UUP (Dollar Bull) Golden Cross forming.  Needs to get through 200 weekly MA. 

Bye for Now!