Good evening StockBandits!
The S&P 500 finished with a different color bar than the previous session for the 5th straight session today, jumping back with a solid gain after a decline Monday to challenge the high. This fickle price action is keeping the short-term trading ranges intact and further validating the boundaries of them with the lack of follow through we’re seeing of late. For the most part, even beyond the indexes it’s keeping prices contained and on virtual standby waiting for some sort of catalyst. Monday’s lift on Cyprus news just wasn’t enough to do the trick, so traders remain on hold for something strong enough to propel prices higher or worrysome enough to prompt some profit-taking.
Heading into Wednesday, the bulls will have another chance to produce a breakout as we challenged the short-term highs today but couldn’t quite push through. The NAZ and the RUT have a bit farther to carry than the DJIA and S&P 500, although none of them are far from new high territory. The S&P still has the 1576 level in its sights, and so as we sit less than 1% from that level one can be sure the bulls are considering a commitment to the long side if anything to see if new all-time highs can generate more buyers.
We have some econ numbers scheduled for Thursday morning which might be able to produce a pop or a drop, but otherwise there’s potential for this choppy action to continue on an otherwise quiet holiday-shortened week if the bulls don’t produce some upside follow through tomorrow. With each passing day, bases are maturing a bit more for those stocks which are in holding patterns, so eventually this could lead to a decent influx of trade candidates. Until then, patience is the key as forcing new plays in a limited follow-through environment is generally a recipe for frustration. I’m only adding one new play tonight, as I’m doing my best to stay rather selective with where to allocate capital until we see this market choose a direction.
By the way, I put out an article earlier today on moving averages that I think you’ll gain some insights from, so be sure to check it out.
Let’s get to the charts.
NAZ – The NAZ bounced back today but still stopped short of a breakout. 3263 is the number to watch here for an exit from this high channel. If we see that, it could project a quick move to the 3320 area based on roughly a 60-point height of this channel.
SP500 – The S&P may finally break out from this high channel and make a push toward the all-time high of 1576, although it’s going to take something we have not seen in a couple of weeks: upside follow through.
RUT – The RUT seems hesitant to lead here after leading the way up from the November lows. This index is just a short distance from all-time highs as well, and a push through 954 would do the trick for a possible push toward 970 or higher (based on the prior channel breakout at 932).
DJIA – The DJIA got to within 2 points of Monday’s high today but couldn’t make a breakout happen. This 180-point channel is very clean, and an exit from the range could produce a nice move for this senior index.
Notable Names:
GOOG is stabilizing after a pullback and now price is near the descending trend line right off the peak. A turn up through $817 would open the door for a quick pop in this high flyer. I do not swing trade this stock due to the capital requirements of trading a stock of this price.
NFLX is turning up here on expanding volume and may push through the descending trend line any day now. If so, it could be worth a quick momentum trade on the long side, although for a swing the stop is just too far away for me to justify a trade.
JNJ is an example of an uptrend channel and here we see price is hitting the upper boundary of this channel. Price could accelerate higher and leave the channel behind, although it’s more likely this stock just needs a rest at this stage as some lateral movement would allow the channel to catch up. Shorting a stock like this rarely pays off, as it’s exhibiting steady strength and generally it’s far better to short weakness.
CP is still on my list for a swing trade but it needs to clear $129 to leave this high base. Price has been stable so I’m giving it more time to see if it will trigger. KSU is another in the group that I own and it perked up today, so perhaps CP can get going as well.
MELI is also still on my list for a swing although the pattern has changed slightly. My levels are still the same though, and I’m waiting for a breakout through $96.30 to trigger a buy.
New Swing Trade Candidates:
These stocks look ready for imminent multi-day moves. Pattern confirmation occurs with a move through the entry level. Initial stop and target levels are also provided.
GMCR is trying to turn back up here after a minor dip, and that set up this small, tight base. I’ll get long through $56.05 as the uptrend continues, and will have a protective stop just below support. I’ll eventually be looking for this one to fill the gap from March 2012 as a final target, giving this one a nice risk/reward profile. With earnings still more than a month away, there’s ample time for this one to make a move.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
