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Happy Birthday America.

SPY $104 was major support and truthfully I expected more panic to set in when we broke it. But the market is in such an oversold condition that the selloffs have been pretty sloppy. Never the less we have broken through major support, the next support levels that I see are down around SPY $100 and then $95. In short the recent lows, Thursday, need to hold or we are likely headed lower.

The only real contra indicator I have seen is the weakness in the Dollar index. The DXY is back below the 20 & 50 day MA , for the first time since April and is testing support down around $84. In the recent past dollar weakness has meant higher equities.

Last week provided some excellent examples of my style of trading and I would like to share them with you.

On Thursday CSX had a text book breakdown at $48. If you look on the daily chart you will see where CSX tested the $48 level back on May 21st, 25th, June 8th and then again on July 1st. CSX opened Friday up above $49 and proceed to sell off all morning. It based nice above $48 testing it three times before finally breaking through around lunch time. Once breaking down through it never gave you a reason to be stopped out. An argument can be made that there was a better entry up around $48.50 on the second test of that level but either way it was a pain free trade.

The other examples are reversal/support buys on an important moving average. The first example is EOG which had a nice bounce off of the 200 day MA ($96) on Thursday. Note the vertical move into the MA on no news and moderate volume. EOG then puts in a low below $96 ($95.78) providing us with a built in stop, and reverses nicely. If executed properly you would have risked about .25 to make $3. Not a bad risk reward.

The other example was in HMIN on Thursday as well. It had a nice bounce off of the 50 day MA ($37). Again notice the vertical move into the support level on no news and moderate volume. In this case the spot to buy the stock was right on the number (37 was the low of the day) but the bars of volume at the level were your tell that this was the spot to get in. This one was more difficult to catch but if nothing else it goes to show the importance of these levels.

There is going to be a lot of people on vacation this week and we have a light economic calendar so I am not expecting too much action early in the week, but keep an eye on Thursday’s lows. If we start to break down below them things could get interesting.

The following ideas could be actionable early this week.

cmi 59.67 reversal/support buy on 150 day MA

ctsh 46.96 reversal/support buy on 200 day MA

fast 47.22 reversal/support buy on 150 day MA

fnsr 12.96 reversal/support buy on 150 day MA

netl 25.52 reversal/support buy on 200 day MA

pxd 54.66 reversal/support buy on 150 day MA

sbux 23.43 reversal/support buy on 200 day MA

tii 17.28 reversal/support buy on 200 day MA

trw 25.44 reversal/support buy on 200 day MA

uhs 34.69 reversal/support buy on 150 day MA

vrsn 25.02 reversal/support buy on 200 day MA

wfmi 33.23 reversal/support buy on 200 day MA

wll 73.12 reversal/support buy on 200 day MA

wynn 71.41 reversal/support buy on 200 day MA

dhr 36 short

esrx 45 short

intu 34 short

ir 33 short

rah 54 short

rax 17 short

shld 62 short

sohu 40 short

iwm 59 short

iyr 46 short

kre 22 short

hsp 58 long