Good evening StockBandits!
The indexes moved past their June highs today to enter the upper ends of their respective trading ranges ahead of the Wednesday Fed day. A minor gap higher this morning was quickly followed by additional strength with traders not shying away from tomorrow’s main event. Instead, traders acted in confidence that their bravery in buying another dip will be rewarded.
This isn’t an easy tape to navigate, thanks to the lack of follow through in recent weeks. While that has allowed many charts to slow down a bit and carve out some support and resistance zones to closely monitor, the fact is that reversals have been frequent and it’s been a choppy environment to say the least. That has required us to largely step away from the multi-day timeframe and focus instead on either longer-term setups or those on the shortest of timeframes. There just hasn’t been much in between. Tonight there are a few new plays that I’m setting up, and I like the fact that I could get triggered on both longs and shorts, which would make me naturally hedged. The basing action of late has finally produced some plays, but as always I’ll wait for them to trigger and will not enter until they cross their respective levels.
Gaming tomorrow won’t be easy, particularly after this ramp into the announcement. I think this adds a bit more to the possibility of a sell-the-news response, whereas a flatlined market ahead of the event leaves the door open for a spike in either direction. With the trading ranges still intact as well, I think it’s wise until we see a breakout to expect the mean reversion type price action in the broad market to continue. After all, that’s the nature of the price action when channel-bound, and it’s certainly what we’ve grown accustomed to in recent weeks. In other words, expect more of the same until we see otherwise.
Let’s get to the charts.
NAZ – The NAZ added 30 today but volume remained below average. That was enough to clear the previous bounce high at 3484, although it didn’t close above it. This index has seen a big bounce the past few sessions, but the trading range is still intact overall.
SP500 – The S&P rallied past the previous bounce high, but volume here was weak as well. There’s still another 2% of room to the upside before the highs would be reached, but lasting moves haven’t been the norm within this range. Will this time be different?
RUT – The RUT is within 1% of its all-time highs after today’s solid gain. The channel is still in place for now though, so it may take something significant to produce a breakout.
DJIA – The DJIA closed above the previous bounce high of 15300 today, putting it in the upper portion of its trading range. It has seen a big lift since last Thursday, which isn’t the ideal scenario for bulls going into a pivotal Fed day. They’re holding their ground, but if the range persists strength will be used for raising cash, not for putting it to work.
Notable Names:
GLD is potentially nearing a decision point to this 2-month descending triangle pattern. A downside break to a new low would occur at $130.50, which would only require a decline equivalent to what we saw today. Such an event would also begin another leg lower within the overall downtrend.
C and many other financial stocks are nearing decision points as well, and tomorrow could be the catalyst they need to exit their narrowing trading ranges. This base is representative of the others with an overall uptrend but several weeks of indecision.
MM may be gearing up here for a spike higher toward the unfilled February gap. I like it for a momentum play above $8.85 for Wednesday, although not for a swing as an adequate stop is just too far away.
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.
LYV is sitting in a bull pennant here after a high-volume spike last week. I’ll be a buyer for a swing trade if price clears $15.70, and ideally I’d like to see volume expand with a breakout. I like the fact that price hasn’t given back much ground and has largely just moved laterally over the past four sessions since the big jump.
F has held its uptrend very well and now price is getting squeezed between the primary uptrend line of the past couple of months and the small descending trend line of the past couple of weeks. A turn higher through $15.75 will trigger a buy for me as a swing as this stock begins a new leg up. I’ll be looking for a similar move to the previous few advances, and will set a protective sell stop beneath rising support in case of a reversal.
TSO has held short-term support but keeps failing to lift from it. A breakdown through $56.40 will trigger a short entry for me as this stock heads back down toward prior levels.
FSLR has been rather volatile over the past couple of months, but last week changed character in a big way with a steep decline on heavy volume. The last two days have seen this stock attempt to bounce, but in a feeble fashion with weak closes and diminishing volume. This bear pennant sets up a play on the short side which I’ll enter for a swing if price undercuts $45.20. I’ll be looking for an eventual test of the breakout zone from April, and will have a protective buy stop above this base in case it turns higher.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
