Good evening StockBandits!
The S&P 500 put up its 13th advance in the past 15 sessions today as it again reached for new all-time highs. The DJIA actually led the way in today’s session though, moving to within 30 points of its all-time high. Meanwhile, the NAZ and RUT each posted modest gains as they tested their recent highs, but took a backseat to the senior indexes as some rotation took place ahead of tomorrow’s FOMC announcement.
The speculative appetite remains strong, as we’ve seen essentially zero profit-taking since the bounce off support October 9th. Stocks and averages alike have ripped higher and currently are levitating, unwilling to retreat. With each day of rest or limited movement that we see, the prospects for another push could be increasing. The S&P 500 has seen a 125 point lift off its pullback low, and the prior rally from a similar pullback into August carried 149 points (1560 to 1709). That leaves room here for a similar move if the same script is followed, although that’s just one scenario.
Many individual names sit in uptrends tonight but that doesn’t make them all buyable. The best trades are those which not only appear to have a high likelihood of moving, but which also come complete with a well-defined downside exit in case of failure. Right now, the latter component is the one that’s so rare, making it difficult to place new trades for timeframes much beyond just a few hours. Toss into the mix it’s still earnings season and many companies still have a major scheduled fundamental event with their announcements, and it’s still slim pickin’s out there.
I’ll continue to work the charts in search of quality setups and stocks looking poised for imminent moves, but this is a time where exercising some patience is helpful. The entire point of short-term trading is to be tactical and participate when conditions are best. At the moment, the market’s certainly strong, but that doesn’t necessarily equate to the best conditions for trading. Nonstop directional drifts can leave the proverbial rubber band quite stretched, which is the state we currently find this market in. I’m not at all opposed to a continued market advance, but some rhythmic give-and-take simply allows for better positioning and the current rally simply hasn’t fit that description with only 2 S&P declines in the past 15 sessions.
Let’s get to the charts.
NAZ – The NAZ finished just 9 points off its high from last week after bouncing back from a tiny decline yesterday. This index has advanced in 12 of the last 15 sessions, but has put in a few days of rest. Every one of them counts, and it’s not acting yet like it wants to back down despite the huge run it just had.
SP500 – The S&P kept the pedal to the metal today with another solid advance and a finish at the high. This index paused briefly last week but otherwise has seen nonstop strength for 3 weeks running.
RUT – The RUT actually made an incremental new high today but still finished at 1121, which I view as a test of the same level this index has respected on several occasions in recent days. This rest has been brief but may be enough to support even higher prices if another decisive breakout takes place to a new high.
DJIA – The DJIA looks like it may soon be the last of the bunch to reach a new 52-week high. As of tonight, only 15709 stands in the way from September. When the casual investor turns on the nightly news and hears about a new all-time high for the Dow, they don’t necessarily realize it’s only 30 stocks. Instead, they generally accept it as a safe market environment and become a bit more eager to put cash to work. We’ll see soon if that occurs, but technically this index has lagged the others and today saw some rotation as it led the way.
Notable Names:
PG is facing a breakout here but despite numerous tests of the same level it’s difficult to trust a push through resistance to last. The reason being that price just rallied right from the lower end of the range essentially with no rest to speak of, so I’d prefer to see price pause up here first for a few days. That way, a breakout can have fresh legs rather than occur after price has become short-term extended.
SCTY is sitting in a symmetrical triangle and needs a bit more work. I’d like to see price pressure the upper trend line, but each day spent inside this pattern allows it to tighten. It’s on my radar for now.
CTRP is another stock on my radar as this pattern develops. More time would allow it to tighten and possibly bring price up toward key resistance, which it’s not yet pressuring.
CAMP is right at a descending trend line tonight and a turn up through $25 tomorrow looks good to me for a single-day play on the long side. This stock could quickly test the recent high near $26, but the upside volume today didn’t impress me at all so I’m not interested tonight in taking it for a multi-day swing.
PCYC is a quick mover with plenty of pace to it in recent weeks. A turn up through the trend line at $126.40 could generate a quick lift, so I like this one for a single-day play for Wednesday. Earnings are due out Monday so the window for a swing is just too brief.
MPEL is turning back up here after a mild pullback. A break above the trend line at $34.40 could see momentum quickly return. I’ll take this for a single-day play for Wednesday, but with earnings due out next Tuesday the window for a swing is just too brief for me.
CAVM is set to report earnings Wednesday afternoon, but this bearish setup could still see more cash get raised in tomorrow’s session. I like it for a single-day play on the short side if price breaks the small rising line of support at $37.20, but I’ll definitely be out by the closing bell in order to avoid the earnings announcement.
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.
SLW just bounced and stalled out and now is beginning to roll over. A break of $23.90 would make a new multi-day low and will trigger a short sale for me as a swing. I’ll have a protective stop above the bounce high and will be looking for a retreat toward the recent low as a target. Earnings are about 2 weeks out, so there’s some time here for it to make a move.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
