January 11th, 2016 Watch-list
Evening traders! So as it stands now we're seeing the Chinese market continue to fall which could mean the US markets follow suit. We've broken some major support levels on both the DJIA and SPX over the last week. We may be entering an interesting point in the overall market if we continue to fall and test the lows set back in late August. A break of those lows could mean a bear market for much of 2016. As usual we're going to continue to monitor both the DJIA and SPX from a daily and weekly perspective to try and gain a better perspective on potential reversal points. We preached caution late last week and caution will be my recommendation for this week as well. Until we see this market settle, don't be afraid to sit on the sidelines. Hopefully we can see it settle out this week. Whether we begin a trend downward or reverse towards the topside strongly, as long as we can enter a solid trend we will be able to structure trades. Both the daily and weekly DJIA along with the daily and weekly SPX charts are posted below with key support and resistance levels labeled.
Current Below $20 Plays:
AA: We placed this one on watch late last week as a potential bounce as the market settled down. We've seen it fall a little further and begin to enter our buy range. If we see the market continue to fall, this one may do the same. Complete chart breakdown below.
ELNK: We've seen this one continue to get hammered with the overall market. Buy range adjustment made to reflect the downward pressure. If we fall further and break this new buy range, we will most likely remove this one from watch. Chart breakdown below.
AXL: Unless this one start to move tomorrow, we're going to remove this one from watch until we see it settle down a bit. Has seen some significant selling the past few days on high volume. Do not look for an entry at this time.
Current Above $20 Plays:
AER: With the market still showing downward pressure, slight adjust to the buy range made. Is a wide percentage buy range, but absolutely wait for a clear 3/4 buy before taking an entry. Complete chart breakdown below.
CHD: Started to see this one make a move topside Friday. Many however passed on an entry due to the fact the market is so uneasy right now and these above $20 plays are much more attached to the overall markets movements. We'll keep a close eye on this one and see what Monday and early this week bring. No issue with waiting out like most did, even though a buy signal was given. Good to be cautious at this time.
New Plays:
Though we are looking to be cautious, we still will look to add some above $20 plays to watch that could be good reversals at key support levels as the market comes down. A few things to consider with these plays...First, absolutely do not chase above buy range. We don't want to chase these on a small one day pop. Second, consider reducing your total share size at a time like this to reduce capital risk. Third, always have your 1/2 R/R ratio stop set.
KO: We're seeing this one come down to a nice support level near that 200ma. Complete chart breakdown along with entry criteria listed below. If we solidly break below that 200ma, we will remove this one from watch for a bit.
VMC: Seeing this chart work its way down. Key buy range labeled. Indicators near/in their oversold levels. MFI still shows some room to potentially fall however so price could come down further. Complete chart breakdown below!
Some other plays to consider are DDM/UDOW and SSO/UPRO. Both are correlated ETF's for the DJIA and S&P 500. As the market settles down, keep them on watch as potential reversal plays if we see a move higher. If you are not familiar with these ETF's, watch the Trading the DJIA and Trading the S&P 500 videos.
