No new developments in the market. I warn you that I expect major whipsaw on both the intra-day and daily time frames for the next several days/weeks. Don't play games with the market here, since you are guaranteed to lose.
Instead, I suggest holding a majority cash position and fill your portfolio with high probability long and short setups if you are going to swing. In addition, day trading will help you fill the coffers on a daily basis, provided that you don't lose. I will write an educational article on short setups, similar to the one I did for the long setups.
I put up the 5-day, 1-month, and 8-month charts below. The magical lines should tell you that today's action is not going to be pretty. In fact, I recommend not trading. However, since I am an Addict, I will be ignoring my own advice.
Below is an analysis of the 9 SPRD Select Sectors (XLV, XLB, XLK, XLI, XLP, XLY, XLU, XLF, XLE):
The Emperor of Mankind - Guardian of the Imperium, Lord of Terra, Aeternus Eternus
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The current 1-day box on the SPX is located between 905-925/930 as it can be seen on the 1-mo/20-min chart + 1 blank day. Immediately underneath is the 3-mo/60-min chart where you can see the intermediate-term support and resistance areas.
The 8-mo/daily chart is what gives me pause. I have given enough blank days for the next 1.5 months. The key areas to focus on are 875 and 925 and everything in between. The early June flag failed, therefore, I have to give significant weight to the downside. I don't see a free fall occurring, but I do see an initial test of 875. The chart assumes that the market will complete a "head & shoulders pattern" by the beginning of July.
I wrote that it "could get complicated. This simply means that I expect a significant amount of whipsaw. Therefore, I do not plan on making too many swing trades, but rather day trade until I see a setup form. Why am I not short yet? I am waiting for a lower high to form (if it forms).
The following sectors are under significant stress: materials (XLB), consumer discretionary (XLY) and staples (XLP), industrials (XLI), financials (XLF), and energy (XLE). Health care (XLV) is neutral and the utilities (XLU) and technology (XLK) are still in up trends.
Does this mean there are no more long plays? Absolutely not. I think it is time to mix in longs with shorts while keeping a large cash position for any swing plays.
Lucius the Eternal -- the Champion of Slaanesh, Scion of Chemos
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I am in 100% cash. It is my standard procedure during times of extreme uncertainty. It allows me to assess the current situation and make new allocations accordingly. At this point, I will ease off of swing holdings and move towards day trading until I find a suitable setup in the general market, long or short. The market may have formed the left shoulder and head of a "head and shoulders" pattern. I can't say for certain, but it is a possibility.
I am up almost +180% YTD, and up a good +27.5% MTD, so this is a necessary precaution. I had a larger number of losers this month so far, but they were small compared to the 20-50% gains I achieved from various names nearly every single day. I've seen some large gains disappear, but I've also seen large gains become much larger. I take those risks based on my judgment and also due to the fact that I can afford to take losses. I was up +1.8% today.
I analyzed and posted charts of the various sub-industries that make up the nine main sectors in the market. I will be looking at these charts everyday for the next several days. I listed the tickers (for Stockcharts.com) and their representations below:
$XAL -AMEX Airline Index $BKX - Philly Bank Index $BTK - AMEX Biotech Index $DJUSCH - Dow Jones Chemicals Index $CRX - MS Commodity Equity Index $XCI - AMEX Computer Tech Index $DDX - AMEX Disk Drive Index $XAU - Philly Gold & Silver Index $HWI - AMEX Computer Hardware Index $HCX - S&P Healthcare Index $RXP - MS Health Care Products Index $RXH - MS Heath Care Provider Index $INSR - NASDAQ Insurance Index $IIX - Interactive Week Internet Index $XNG - AMEX Natural Gas Index $NWX - AMEX Networking Index $XOI - AMEX Oil Index $OSX - PHilly Oil Services Index $DJUSPP - Dow Jones Paper Index $DRG - AMEX Pharmaceutical Index $DRJ - Dow Jones REIT Index $RLX - S&P Retail Index $XBD - AMEX Broker/Dealer Index $SOX - Philly Semiconductor Index $XTC - AMEX N. American Telecom Index $TRANQ - NASDAQ Transportation Index $UTY - Philly Utility Index
