05-25-14 Trade Plan

For the first time in what feels like forever we are starting to see some trending to the upside especially in the NASDAQ which is what price was suggesting anyway.  I'm conscious of that fact that we have had a big move into some potential resistance in the $90 area and at the same time I'm conscious of how this market moves when it is moving to the upside; very quickly in a straight line, which could be viewed on a chart as a 15 minute time frame with the 50 period average trending higher.  If we do continue higher next week I will be looking at $91-$91.5 as an area bulls are targeting in the QQQ.  As far as the SPY goes, I'm to the point where I just want to see some clearer price action before I try to read into it but closing at all time highs is a start and I'll be watching for it to hold the 15 minute trends with the QQQ.  Plus the NASDAQ is just looking so much better technically I would rather just put my energy and focus there.

With that said I'm not willing to give this market a lot of room due to the chop we have been seeing for months.. it really needs to keep holding that 15 minute trend for me to stay interested.  This would still give the SPY a chance to prove it can hold $190 while the QQQ prepares to break $90 in the ideal scenario.  Even if the 15 minute trends do break, there are larger trends building (130/65 minute) for back up if the market needs to build more energy.  The bond market is still trending higher using daily and 130 minute 50 period averages as support while putting in higher highs and lows and there is no reason to guess when that ends.
As far as sectors go, I am still in the same boat I have been in looking at healthcare and technology.  They both still look great for more upside.  Healthcare (XLV) is still looking like it has the potential to at least test $60 and technology (XLK) is breaking out to new highs so basically no over head resistance.  It's just a matter of how long the strength of the trend can last.  This week discretionary also broke out (closed right above $65 level I have been talking about) and is now looking pretty good.  This is very healthy for the market if it can be lead by these sectors and if this continues we can see some huge moves to the upside in individual stocks.  So those are the sectors I am focusing on.

This internal I follow is showing that there is still plenty of room for stocks to recover the 50 day which would drive the indices higher.  This is just something I check on the weekend with you all but it is confirming that there is more room to run on the upside but we should still remain aware of the market conditions we are potentially coming out of.

So that's about all I have to say for this week.  I will likely continue to be active on twitter as setups continue to emerge and I will keep posting them.  For those wondering what the hell I'm talking about with 30 minute trends, 15 minute trends.. it is just a way for me to more systematically rank how strong a trend is in a certain direction.  For example a stock holds a 65 minute or 130 minute trend for a while then lifts into a 15 minute trend, systematically I can change the rank on that stock from a 65 minute trend to a 15 minute trend and that tells me that it is actively being marked up rather than passively.  This ranking system is constantly re-evaluating the strength of a trend and a stocks rank could change at any time.  I'm only going to use basic time frames of daily, 130m, 65m, 30m, 15m, and even 5m for the absolute strongest moves (that don't usually last for more than a few days).  It is just something I am trying out as part of my continuous learning process, maybe make things a bit more systematic in my head which is never bad in a market like this.  Anyway, hope all of you are having a great 3 day weekend.. see you Tuesday.

Trade well,

-Michael