1. As the major indices search for a tradable bottom, it seems reasonable to highlight the October 2014 swing lows on our charts. That means looking toward $90.50 on the PowerShares QQQ Trust (QQQ), $103.54 on the iShares Russell 2000 ETF (IWM), and $181.92 on the SPDR S&P 500 Trust (SPY). I am leaving the SPDR Dow Jones Industrial Average ETF (DIA) because it's already trading beneath its $158.27 mid-October 2014 swing low. Selling excess, or candlesticks with long lower shadows, beneath these levels would offer fantastic levels for intermediate and higher timeframe traders to base their risk on.
2. For the first time in many, many weeks, I was asked for an opinion on Peabody Energy (BTU). I tend to avoid most stocks when they begin trading for a buck or two, primarily because they're usually in the gutter for a reason. That said, if you want to roll the dice on BTU -- and this is a pure lotto ticket stock -- I'd be trading long against a 21-day exponential moving average. Put another way, I would not want to be long beneath that moving average.
3. We continue to hear how anxious big money is to re-enter the energy space. However, the nonstop selling in the sector has left everyone more than a little gun-shy. It may be worth noting the monthly Relative Strength Index (RSI) is now printing beneath 30 (oversold), for the first time dating back to the early-1970s, on both Exxon Mobil (XOM) and Chevron (CVX).
The bottom line is, while I have no idea where the bottom ultimately is in these stocks, I believe the declines over the past week are unsustainable. My guess is we're nearing a tradable low in energy as a whole, and I'm beginning to pay a lot more attention to my favorite names in the space.
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.
