The Trader Daily

 | Apr 15, 2014 | 7:30 AM EDT  | Comments
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

QQQ

,

intc

,

IWM

,

XLU

,

msft

,

hpq

,

XLP

,

csco

,

IBB

,

itb

,

OIH

,

XLF

Monday's big trading event should have been the bullish reversal in the Sunday evening Globex futures session. But that's been glossed over in favor of the bullish reversal that occurred during the regular day session. You read that correctly. The market staged a bullish reversal not once, but twice, during Monday's full 24-hour session.

No major changes need to be made to our view on the four major market ETFs, as all remain in short term downtrends. However, it is worth noting that the PowerShares QQQ Trust (QQQ) and the iShares Russell 2000 (IWM) are once again showing bullish divergences on a short term (5 period) RSI. I'm still expecting the bulls to be active during this holiday-shortened week as they attempt to push the averages back toward their respective 50-day moving averages.

 

Major Indices
eSignal

 

Monday's late day (bullish) snapper should make for an incredibly interesting session on Tuesday. Assuming the overnight futures don't get hammered back down toward Monday's intraday lows, I'll be looking for any push through $183.25 to pull a fresh batch of buyers into the market. From there, intraday traders would be expected to begin targeting $184.10.

Failure to sustain a break above $183.25 keeps us trapped within the same two day $181.50 to $183.25 range, and encourages range traders to sell the SPY back down toward $181.95 to 182.05. To be clear, I would be very cautious (read: avoid) attempting to fade a fresh break of last Friday's intraday low. Given Monday's bullish reversal, my guess is that any failed retest of that area will result in a slide toward $179.65. 

 

5-Minute Volume Profile Es
eSignal

 

 Having discussed the Consumer Staples Select Sector SPDR ETF (XLP) on Monday, I should have anticipated the emails asking whether I thought the Utilities Select Sector SPDR ETF (XLU) was also worth a look on the short-side.

My initial reaction when studying the daily chart of the XLU is that I hate all the recent selling tails, and am concerned by the numerous negative divergences in the 14 period RSI. That said, the ETF continues to close above both its late-April 2013 swing high, and the 20-day simple moving average. I'd probably avoid any short-side stabs in the XLU until it is closing back beneath $21.45 at a minimum. Those wanting additional confirmation could wait for a few closes beneath the rising $20 day moving average. The advantage to waiting for a break back beneath $21.45 is that you'll be giving yourself a new swing high to trade against (for a logical stop-loss level).

 

 

Strength in old (big) cap technology isn't exactly breaking news, but unlike Microsoft (MSFT), Intel (INTC) and Hewlett Packard (HPQ), Cisco (CSCO) has yet to explode to ne12-month highs. The bulls have been trying to close the mid-November 2013 gap in CSCO for months. With the company's quarterly earnings date still a month out (May 14), I believe a new closing swing high above $23.40 will allow buyers to close that gap and drive the stock on toward $25.

 

Additional Notes:

1. The iShares Nasdaq Biotechnology ETF (IBB) tested and bounce from $213 to $214 support. I initiated a long trade in the IBB near $213, and plan to run an initial stop of either $203, or three consecutive closes beneath $212. It's worth noting that like the QQQ and IWM, the IBB also has a bullish divergence on its short term RSI.

2. The iShares U.S. Home Construction ETF (ITB) looks at risk (bearish) to me. As long as the ETF continues to close above $23.40 support I'll likely avoid it on the short side. But beneath that level and I expect the bulls to run for cover.

3. Aside from XLP and XLU, the Energy Select SPDR ETF (XLE) and Market Vectors Oil Services ETF (OIH) are two of the better looking ETFs at the moment. Should the broader market ETFs stabilize and recapture their 50-day moving averages (a big IF), I'd expect these two energy ETFs to lead the way higher.

Any trading or volume profile-related questions can be posted in the comments section below, emailed to me at parkcityyeti@gmail.com or posted to my twitter feed @ByrneRWS

BEST IDEAS

REAL MONEY'S BEST IDEAS

Columnist Tweets

BROKERAGE PARTNERS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.