Those of you who read our Daily are by now, learning about the value of our scanning tools, quants and the Complete Trader. What we are trying to accomplish is to show not only how best to use the product, but how to focus on key patterns, especially those that are in line with megatrends.
For example, on February 21st, Classic Short Setup in Tech featured Akami (AKAM). At the time, the stock closed at $76.40. The stock fell to a low of $72.14 in 6 trading days. Now, you see it on the Bullish Reversal Scan. However, buying it does not interest us. The stock is in a major downtrend. So, I would take the information to either take some profit, if short, or lower the stop, to cover to ensure a profit regardless of what happens from here.
What does interest us though, is the Bullish Reversal in CORN.
Incidentally, Amgen Inc.’s (AMGN) a bit more interesting, as it also reversed right after it touched down on the 200-week moving average. But that’s not the focus for now.
The CORN ETF is of interest, as agricultural commodities have fallen a lot lately.
As far as we can tell, food supply and shortages remain a concern going into the spring and summer growing seasons.
The Complete Trader Scan checks off 2 boxes — Brick and Glass Bottoms.
The Brickwall pattern is a 2-day pattern where the stock puts in a new 60-day low on wide-range move and then reverses and closes the next day in the upper portion of its trading range. The price phase is bearish. Momentum as illustrated by Real Motion, indicates a bearish trend. Although as you can see from the chart of CORN, it has the potential for a mean reversion.
The monthly chart is also interesting.
Note how the price holds the 23-month moving average or the 2-year business cycle-still intact. That is positive. And a good risk point.
Going back to the daily chart, we would want to see the price clear over Tuesday’s high or the reversal day high. Moreover, watch for a mean reversion on Real Motion. It is a bit of a trip back to the overhead 50 and 200-DMAs. But REMEMBER: We never know the future, yet we can ascertain the past by seeing where to place a good stop loss to control risk.
Last note — the topic of March 1st Daily was Steel Dynamics (STLD), which, we commented, “may be on the verge of another breakout after a month of price consolidation.” The stock closed up nearly 3% today.
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- S&P 500 (SPY): 390 support with 405 closest resistance.
- Russell 2000 (IWM): MA support around 184. 190 has to clear.
- Dow (DIA): 326 support, 335 resistance.
- Nasdaq (QQQ): 300 the pivotal area, 290 major support; 284 big support, 300 resistance.
- Regional banks (KRE): Back to weak link under 60–could be a warning.
- Semiconductors (SMH): 228 support, 240 pivotal, 248 key resistance; 248 resistance, 237 then 229 support.
- Transportation (IYT): 240 resistance as best Mod Fam performer and 230 support.
- Biotechnology (IBB): 125-130 new range.
- Retail (XRT): Comeback a little, but has to clear 66.40 or warning like KRE.
Director of Trading Research and Education
Mish Schneider serves as Director of Trading Education at MarketGauge.com. For nearly 20 years, MarketGauge.com has provided financial information and education to thousands of individuals, as well as to large financial institutions and publications such as Barron’s, Fidelity, ILX Systems, Thomson Reuters and Bank of America. In 2017, MarketWatch, owned by Dow Jones, named Mish one of the top 50 financial people to follow on Twitter. In 2018, Mish was the winner of the Top Stock Pick of the year for RealVision.