Before We See the Fed’s Take on the Economy…

A quick noted before the FOMC Minutes at 2pm EST that the small caps in the Russell closed their gap back to Friday afternoon’s close.

On the 30-minute chart for the small cap ETF, note that price is now coming to terms with the post-gap fallout. I suppose, as we mostly expect, we need to wait until after the Minutes before finding true resolution as to whether the bounce has legs for a 2013-style rally, or instead will roll back over.

Which ideas are you on before the Minutes?

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Courtesy of The PPT algorithm, here are the most current top five readings from my “12631 RELATIVE STRENGTH” custom-made screen, identifying which stocks are exuding some of the best performances to the market at-large at any given moment.

I look for stocks whose Daily PPT Hybrid Score surges, while the Weekly Hybrid has been negative over the past week. This can often yield stocks which are emerging from consolidations.

Members can click here to view and save the screen.

Sorted for at least 500,000 shares of daily average volume to ensure liquidity.

Please click on image to enlarge.

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The first chart is a 5-minute look at the SPY since the bell this morning. As you can see, we have been narrowing and likely pausing in front of the FOMC Minutes. I expect an uptick in the pace of the price action this afternoon, after 2pm EST.

And corn continues to impress with its steady push higher, especially today relative to other softs.

What are you trading this morning?

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I am inclined to not do too much before the FOMC Minutes are released later today. I am not concerned with the substance of the minutes but certainly do care to see the market’s reaction. After a relief bounce yesterday and today, we should discover if the heavy selling in recent weeks has run its course or instead is setting up a deeper pullback, say, to the Nasdaq Composite Index’s 200-day moving average. For now, names like Facebook continue to enjoy snapback rallies.

Natural gas and crude are acting well, again, and are on my radar long.

My General Motors short is cracking $34 and needs to hold below it for my thesis to play out.

REITs continue to impress, as the sector ETF weekly chart, first below, is basing tightly now under well-defined resistance.

If we do see a breakout you can look at levered long ETF’s like DRN, or individual REITs like O to play.

To be sure, the longer bonds stay firm the more likely it is that the rate-sensittive REITs can sustain the breakout.

Which stocks are at the top of your watchlists this morning?

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If you are looking for some (quick) support buys here, a good algorithm screen to have, courtesy of The PPT, is one I made called “12631 Quick Bounce Plays.”

In the screen, I am looking to isolate stocks with positive daily Hybrid PPT scores, but negative weekly ones.

Thus, they are ripe for a quick bounce as the momentum seems to be turning, if only for a bit. I also screen for PPT Relative Strength scores, as well as volume and % from 50 day moving average.

Members please click here to view and save the screen

Here are the readings as of Monday’s close. Remember, we are talking about short-term flips here, not high quality, multi-week swings. Keep those stop-losses in place.

(Click on image to enlarge)

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