Good evening StockBandits!
It was indeed a wild session today as stocks traded all over the map. In just the opening hour of the day, the NAZ left traders seasick. After a small gap down and a feeble attempt to fill the gap in the first few minutes, it quickly dropped another 27 points. That was followed by a quick 20 point bounce which only lasted a couple of minutes before another rollover move of 47 points kicked in. That marked the low of the session, and from there stocks battled back to pare their losses on the session. In the end, the net changes were red once again, but didn’t come close to telling the whole story.
Today’s price action did provide some excellent 2-way price action, and gave us a glimpse of some better between-the-bell buying than we saw with Tuesday’s lift (when a good portion of the gains were attributed to an upside gap). The volatility allows nimble traders the opportunity to pick spots and participate in trades in either direction. Whether the short-covering and bargain-hunting will continue, we certainly don’t yet know. However, it was a good reminder to stay on our toes in case of a reversal.
Technically, this market has sustained considerable damage over just the last 2 weeks. The averages have each broken short-term and intermediate-term levels of support, leaving them stretched to the downside after such an abrupt shift of momentum. At this point, it’s difficult to trust lasting upside, but we may very well see some upside backing and filling. As always, the key will be to stay flexible and maintain stops on positions, because it has quickly become a fast-moving market which brings with it both accelerated opportunity as well as increased risk.
I’ll be putting out the Charts on Demand video tomorrow, so if you have a few tickers you’d like me to review, send them my way (a reply to this email is sufficient).
Let’s get to the charts.
NAZ – The NAZ got within 2 points of the 3966 level I’ve been highlighting every night here of late, then bounced 45 p0ints into the closing bell. This is further validation of a former level, and gives us a line in the sand to watch for now. Short-term upside levels to watch are 4044 and 4104.
SP500 – The S&P briefly broke Monday’s low today but quickly bounced back to reclaim 1746, the November low. Tonight it’s only a few points from there, so it’s certainly not out of the woods here. Should it happen to lift further, 1775 is the next level to watch on the way back up.
RUT – The RUT got within 3 points of the November low of 1079 today, another level I’ve been highlighting here. It managed a 1% bounce intraday, but still ended the day down nearly 1% on the session. The 1079 level is the primary short-term downside level to watch, with 1123 being the upside number to monitor in case we see a bounce.
DJIA – The DJIA made an incremental new pullback low today before bouncing 100 points off the low of the day, ending down 5 points on the session. It’s well below 15703 where it just broke support, making that the upside number to watch in the event of a snapback rally. There is no downside number nearby to watch, as this index remains in no-man’s land here, some 721 points off the October low.
VIX – The VIX lifted again today, finishing 0.05 shy of 20. That’s the big number to watch in the short-term as we wait to see whether fear will grow or diminish over the coming few days.
Notable Names:
FB gapped higher last week after earnings and since then price has held up nicely. No attempt has been made to fill that gap, so we now have a new high-level base forming in this tech leader. The relative strength to the market also makes this one to turn to should we happen to see a market bounce. I’d like to see this base mature a bit more before setting up any play.
PG has respected the $75 level numerous times over the past year, and currently price is trying to lift again from that area. However, with many lower highs having formed in the past 2 months, it may not be easy sledding on the way back up. This is an example of a level providing some support but I don’t view it as bullish yet.
MA is roughly 14% off its January high, which leaves it in a short-term downtrend and it hasn’t yet stabilized. This has coincided with a 10-for-1 stock split, as well as very poor performance in retail stocks (less spending). This weekly chart shows it’s still in a long-term uptrend, it may simply need to carve out some support before it’s able to continue higher. I see no play here yet.
MU is holding up nicely and tonight is sitting just beneath a descending trend line. An upside breakout at $23.55 could bring a quick test of the recent high near $24.50. This looks good for a single-day play to me.
SUNE was listed here last night but it didn’t trigger until this afternoon and made only limited headway. It still looks good though, so I’ll give it another shot for a single-day play if it can show some upside continuation with a push through $14.30 to clear today’s high.
APOL is trying to turn back up here after a pullback but upside volume still isn’t impressing me. Rather than set it up as a swing, I’ll opt for a single-day play on the long side if it is able to clear $32.75.
X is sitting in a ‘h’ pattern here and a break of short-term support could send it lower. I like it for a single-day play on the short side if it breaks $24.35, but a swing stop would be too wide for this loose base in my opinion.
New Swing Trade Candidates:
No new swing trades tonight, staying in cash and waiting for tighter bases with better risk/reward profiles.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
