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All bear markets we’ve experienced have had wicked rallies and it’s good to always have a plan in both directions in bear markets.

XLF 23 next target here — this one is a big one and we imagine at least there should be some type of hold/bounce there, dead cat or not.

QQQ 156 weekly lost today but market has until Friday close to get over.  Overshoot territory and then rally back to 156 definitely one potential plan.

SPY look how that descending 20EMA/60min served as a wall all the way today — lost short-term support but held the round 250 spot.

We went through our MarketSmith scans of the entire IBD 50 this evening and wow what technical damage across the board.  It’s going to be a long time before bulls can get any type of healing/constructive patterns on daily/weekly.   Even if we do bounce, dead cat bounces are usually V type bounces that still don’t set up conventional swing type entries.

Once market does stabilize, whenever that may be, we will look at the software names to take leadership and will likely see them populate the Near Pivot screens.

As for shorts– we never like shorting into the hole.  Sure if it’s Indy down intraday follow the trend down for a trade but for swing shorts probably wiser to look at resistance spots to short above than pressing down here with SPY QQQ IWM all under Bollinger Bands.

So what’s our favorite plan?  Get some panic and hit XLF 23 for a quick squeeze up past QQQ 156 by Friday close.   Very specific but hey just one potential plan.    Stay safe, and if you need to hear it just one more time, here it is: cash is a position.   See you on the streams.  HCPG

Last night we responded to a question about the possibility of a headfake down thru 2600 on the E-mini:

We didn’t actually think it would happen– but it did, sort of, depending on your time-frame, with a break of 2600 and then 40 point rally up. 

We were focusing on SPY 260 so let’s stick with that for now:   when the 260 level broke we actually were still pretty bearish. Why? Because it was very orderly and financials were acting like death.  Our feeling was that we would go lower, led down by the banks.     We thought SPY 260 is nothing, let’s get QQQ to 156 and then think about a bounce.

Then one thing happened that changed our opinion and our positioning — and if you go through our tweets from 11:30 on you will see a complete turn around in terms of our focus.  The old school tech started firming up and taking leadership.  As we tweeted about it a half dozen times: for a while there it was financial anchor on tape pulling down, and tech trying to rally the market.  

Tech won the day and SPY closed green.   Our map for last little while has been the 9/20EMA on the 60min — if you recall we got long a basket on XLF 25 hold last Thursday which worked great until Friday morning when SPY hit 270 and the descending 20EMA on 60min and reversed hard.  

Note the rally last Thursday until 270/descending 20EMA which immediately reversed the tape.     Today’s rally is the second test on this EMA and the EMA is flatter so it has a better chance of breaking.  

We got our 263 and 265 short term targets met on SPY but still like the position long to see if we can get it over that 20EMA/60min.  If 260 goes all bets are off.    Same story for tomorrow– watch the financials vs tech contest.  If financials can firm up we could be in for a decent multi day rally. Big if, but that’s what you have to watch.

As for individual stock longs we have two one sector we like a lot and which we have blogged about, Enterprise Software and one stock, TSLA.

From the IBD50/MarketSmith scans you can see NOW PAYC ADBE TEAM ALRM VMW all in the IBD50.  Sector is holding up great but it needs a more stable tape — and once it gets that it could really rip.  Have these stocks front and center.   We consider these, for now, the new leaders of tech.   (#IBDPartner)

Take a look at NOW for example, IBD #8, and just set to go — just needs a less hysterical market.

And talking about old leaders — we just missed the AAPL buy (saw it a minute too late) today but do like this risk/reward potential:

So to conclude — we would feel better about the market if XLF can get over that 20EMA/60min resistance, and all bets are off if SPY loses 260 (1.5% away so decent risk/reward against that stop).

See you on the streams.

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We’ve been talking on our streams about Enterprise Software a lot lately, especially since the correction because their relative strength has even been more impressive.  The group is up 28% YTD and clearly a leader group in the  hard hit tech sector.

Quick look at the group via a MarketSmith scan sorted via EPS rating:

 

WDAY just came out with excellent earnings and one of the clear leaders of the group.   We’re not in the stock and would not want to chase it up here but any basing in this 165 area would be constructive.

TWLO another clear leader near highs — quasi cup now needs a handle near 97-90 range.   Again, too much of a chase for us to jump on here.

PAYC just hit resistance near 136 (horizontal resistance, 100sma daily and 20sma weekly) and now needs some time to gnaw away at this congestion zone.  Basing at 136 would make this a very nice set-up.   And bearish case of course would be if it is spanked hard and reverses at this resistance area.

NOW good looking chart that also has stalled at 192 resistance — same theme you will see over and over in this sector.  Needs to set up a base without giving up too much of the rally to set up a new swing long.

CRM same thing — would love a base near 147 for a week.  Note also 20sma weekly resistance at this area.

Exact same thing ZEN — rally from weekly support to stall at congestion zone at 62.  Bullish case:  doesn’t give back too much (for example staying above 58-59) while creating a new base.

NTNX rally stalled immediately upon hitting descending 20sma weekly at 47– this one is weaker than the rest and has 200sma at 50.  Needs some work before it can tackle those areas.

COUP same thing — big V reversal from support (52) and now stalling at horizontal 70 resistance.

Buying at resistance after a big V reversal bottom usually NOT a good idea.   If the move is real it will likely base and create a new set-up/ solid risk-reward for a new buy.  If it’s a dead cat bounce then resistance will hold and it will immediately give up a good portion of the rally.  Clues to look for?  Pullback is mild and intraday as price does not move but buyers keep showing up after every little dip.

Tough to know whether market has really bottomed yet or not — the SPY 280 resistance should tell the tale in the next little while.   If the next move is higher though then put Enterprise Software on your radar.   See you on the streams. HCPG

 

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Most of the stocks we follow are being whipsawed around with the market up and down as SPY carves out a range between 260-280.   Understandably old man stocks such as  CLX MCD UNH AET,  are offering some refuge, but one sector with decent growth that is standing its ground is select retail.  We’ll focus on a few here found in our MarketSmith scans— Apparel, and Discount stores.

TJX BURL FIVE OLLI DG

BURL, Earnings out Nov 19, high base in the mid 170s.   Could be good for a trade if it can show some relative strength 175+– add to list for potential breakout.

TJX, Earnings out Nov 20, making a base under 56.   Both BURL and TJX could be in play next week post earnings — worth having on radar.

DG earnings out Dec 05, IBD #33.  Already run up some ways but any further basing would catch our interest.

FIVE Earnings out Dec 05, IBD #2,  sitting on 50sma right now.   Continuation move up and towards 126 would get us interested.  Do or die pattern here with a move below 121 hurting it technically on daily (while on weekly has some support at 114)

OLLI Earnings out Dec 06 move towards 94 would catch trend-traders eye — treading water right now.

Tough tape right now. As we wrote this morning the first test to horizontal support at SPY 260 was relatively easy buy and selling it into 280 resistance was again pretty clear technically.  But now in the middle things get murky.   As our newsletter subscribers know we sold our swing basket last Thursday at resistance and have not taken any new positions as of yet.  We’re always looking for lower hanging fruits and right now can’t find any.   There will be more clear risk/reward scenarios — today is not one of them.  See you on the streams.