Equities are staging a shape upside reversal this afternoon, but it remains to be seen if it is another false pop or a durable bottom.

I am have my eye on the exits with my shorts, but want to see a bit more action before deciding.

In the meantime, gold and gold miners are reversing sharply higher again. Let’s see if they can finally offer a tradable low.

And corn has been most impressive of late. Check out the snapback rally, below.

 

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I took partial profits in another Ebola winner for us inside 12631, this time being APT.

Much like LAKE, APT also deals with protective gear and clothing regarding Ebola.

We have been trading these Ebola plays quite well inside 12631, a nice complement to our shorts and inter-market trades.

I am also stalking a reentry in TKMR is it can hold the 20-day moving average on this upside reversal.

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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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Here is a 30-minute chart look for the small cap ETF, below, down a well-defined channel.

Buyers are giving it a go as we speak, but bounces have not been too impressive.

Keep an eye on that channel this afternoon.

Drop me your top afternoon tickers.

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The small caps in the Russell 2000 Index continue to throw cold water on any attempts at a broad market bounce.

In addition, the blow-ups of the day can be seen in the massive drops in ARWR SHLD.

To be sure, healthy charts are few and far between these days, as I expect the senior indices to continue to buckle under the same pressure the small caps have been facing for a while now. Although it seems as though a bounce is due, my sense is too many are expecting just that. Admittedly, however, it is always tough to gauge sentiment.

I am still pressing shorts inside 12631 and remaining opportunistic with inter-market trades.

Currently, the S&P 500 cash is testing its under-watched 150-day moving average, which offered support last Thursday, down at 1930 or so. Bulls are going to need to defend that in order to prevent new pullback lows.

Overall, cash is a powerful position in this environment. I am electing to look for opportunistic shorts, namely AAPL MA SBUX, and others, in the event things really do get flashy from here.

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The following is just a small excerpt from my latest Weekly Strategy Session (please click on that hyperlink for details about trying it out) which I published for members and 12631 subscribers this past Sunday.

 The Russell 2000 Index, featuring high beta, small market capitalization issues with tons of institutional sponsorship by growth managers, has been our main key to this market for quite some time now. The small caps’ persistent weakness has largely seen us maintain a rather defensive portfolio posture as swing traders amid their technical deterioration.

Last week, the Russell momentarily breached 1,082, our major downside support level and indeed “neckline” which would trigger a confirmed multi-quarter topping pattern, before staging an upside reversal on Thursday afternoon and Friday. Against that backdrop, the Russell and indeed broad market can easily bounce higher yet in the early portion of this coming week of trading.

However, a short-term bounce does not negate the technical damage we have witnessed in the Russell and indeed other parts of the market. In the next subsection of this strategy session, I will zoom out and look at the major indices to keep that broad perspective.

But, for now, traders should be on guard for a bounce in the Russell potentially up to the 1,130-1,140 area, which would mark the 20 and 50-day moving average convergence.

At that point, traders can stalk fresh short entries in the Russell, provided that we see signs of the rally failing. Of course, if the bounce immediately fizzles out early next week and small caps attack 1,082 again, the presumption is that we will see a violent breach of support which will, in fact, trigger the multi-quarter top.

Please click here to continue reading

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