So is the market going higher or is the rally going to fail here? I don’t know the answer, but I do think the most logical plan is to continue to play the market with a long bias. SPY is in a little consolidation between $92.5-$95. I think the most likely scenario is a move to $100 and perhaps up to $105 before the market hits another consolidation phase or a move lower. If this ends up being the end of the rally or at least a correction, I think $92.5 or so can be used as a stop out and as an indicator that the rally is failing.
I will actually be paying even more attention to the QQQQs. I’ll be playing it long until $35 is broken. So there you go, this is my simple plan of picking a direction and managing risk.
Unfortunately, the VIX is not much help. Also reflects indecision. It could bounce off support at $26-27 or it will breakdown which will launch us up to $100-105 on SPY.
INDEXES
I plan on getting long XLU right here. A nice little cup and handle and volume on the breakout. This one looks really good.
Still watching to see if IYT can breakout over $62. Not only would I want to enter IYT on a breakout over $62, but it would also confirm any move higher in SPY.
Still waiting on a breakdown on IAT below $17.5.
I still like XLE so long as it holds its trendline.
I think FXI (China) is an important index to watch closely. Part of the recovery theme in part is that China is already back. This theme is affecting the markets generally and especially commodities. It is providing commodities a fundamental theme in addition to the drop on the dollar. I would be surprised for SPY and QQQQs to go higher if FXI fails right here. If FXI can break $40, I’ll be buying it.
INDIVIDUAL STOCKS
I’ve already posted charts pretty recently on my long/short ideas so I won’t post new ones except for BDK which has not been mentioned previously.
Long ideas:
NRGP – Entry $40/Stop $38.4 (buy off support)
SGP – Entry $24.25/Stop $23.3 (wait for breakout)
CLNE – Entry $10.10/Stop $9.05 (wait for breakout)
ABAT – Entry $4 / Stop $3.7 (buy off support)
HERO – Entry $5.10 / Stop $4.95 (buy off support)
PCX – Entry $10 / Stop $9.02 (wait for breakout)
ADM – Entry $29/ Stop $27.3 (wait for breakout)
BSY – Entry $30 / Stop $28.60 (wait for breakout)
PEGA – Entry $25.75 / Stop $24.95 (buy off support)
MV – Entry $26.7 / Stop $25.73 (buy off support)
NPK – Entry $82 / Stop $79.95 (buy off support)
Short ideas:
PNC – Entry $40 / Stop $43.4 (buy on breakdown)
DRI – Entry $33 / Stop $34.3 (buy on breakdown)
FDS – Entry $52.5 / Stop $54.05 (short on retest of Friday breakdown)
BDK – Entry $30 / Stop $32.57 (short on breakdown)
I will also have C&C Portfolio Holdings updated shortly.