Good evening StockBandits!
The market’s in a habit lately, and today it gave us a virtual replay of the previous three sessions. Once again, we saw a strong start to the day which was quickly followed by selling, much like Friday’s, Monday’s, and Tuesday’s sessions. Although it has quickly become the new routine, it is definitely different to see strength repeatedly sold after so much aggressive dip-buying. Today’s give-back left every index in the red. The selling was relentless once it arrived, and leadership was distinctly absent. Conversely, weakness was just about everywhere, accentuated by the worst IPO debut of the year with KING. The Candy Crush IPO got crushed like candy as traders showed a complete aversion to the new name.
I think it’s always important to stay objective and not jump to any conclusions in the market. But for a moment, let’s consider the psychology at work in the market right now. The bulls have had a fabulous run from the February low to the March high and have only given back a relatively small amount of those gains in the past few weeks. We’ve based more than enough to alleviate the overbought conditions which were present early in the month, opening the door for the bulls to take another shot at new highs – only they haven’t seized the opportunity. It could be that they’re simply in rest mode here waiting for a catalyst, not eager to secure recent profits. Or it could be that the churning price action we’ve seen lately has been a gradual shift of the tide.
Today’s follow-through declines in the NAZ and RUT certainly support the latter notion. The S&P is now once again leaning on the key 1850 zone, and the DJIA is again turning away from the lower high it already established. The market is in pullback mode here, it’s just going to be a matter of how deep it carries and how intense the cash-raising gets.
My personal exposure remains light at these levels as we wait for some better directional bias in the broad market. With the NAZ/RUT singing a slightly different tune than the S&P500/DJIA, it’s difficult to commit fully to a short-term directional bias until there’s greater unity. The day-to-day reversals we keep seeing makes for better trading ranges than tight bases, which is keeping my watch lists limited. As such, I’m staying selective and patient while waiting for patterns to build and mature. Until then, more choppy price action should be expected and that’s only ideal for quick-flip plays.
Let’s get to the charts.
NAZ – The NAZ attempted to rally this morning but instead got hammered with a 90-point drop from the opening bar high and a finish at the low on heavy volume. This adds further validation to the 4246 break we saw on Monday, and opens the door for more downside. With 4177 also having been broken today, next level I’m watching is the unfilled gap to 4057 from the close on Feb. 6.
SP500 – The S&P was able to stay inside its range today despite a 23-point slide from the opening bar high this morning. It looks like a matter of time for this index before we get the break of 1850 which sticks. Next level to watch on the way down would then be 1823.
RUT – The RUT broke 1182 on Monday and held beneath it on Tuesday. Today it attempted once more to reclaim it, only to fall flat on its face with a downside reversal intraday of 30 points to end the day down 1.9%. Next level to watch is now 1147, just a few points away.
DJIA – The DJIA got within 40 points of the March high today, then reversed lower by 198 points. It now appears poised for a test of the March low, giving it room down to the 16046 area where next support stands.
Notable Names:
KING went public today and received a harsh welcome from the Street. With the first print coming at $20.50, it ended the day $1.50 lower. That’s a quick 7.3% haircut for those keeping score at home to anyone who bought it into the early hype. The highly-anticipated IPO’s continue to disappoint and this was simply the latest.
TWTR had been indecisive in February and early this month, but it has picked a direction and that is down. This goes hand-in-hand with the social/app performance we also saw with KING and stocks like FB, YELP, P, and others.
WWE has been on my radar lately but never did break out through $32 to trigger a buy for me. Instead, it retreated to the lower end of its range and then today broke down hard. It now looks poised for more corrective price action, but tonight serves as a good example of why I wait for levels to get cleared before buying. Until resistance is crossed, there’s simply no reason to expect upside continuation.
AET has pulled back within its uptrend and could turn back up any day. Today it showed some relative strength, so I’ll be a buyer for a single-day play if it can clear the descending trend line at $74.65. This pattern is just too small for a swing in my opinion.
FANG is at short-term resistance and held up well today. I’m interested in a single-day play on the long side if price can clear $66.20, but with a sloppy base here all I want to do is participate in the initial move and then move back to the sidelines.
NLSN is still hovering above short-term support here and continues to look good for a play on the short side upon a break below $43.60. My preference is still as a single-day play to participate in the initial breakdown since the risk/reward for a swing to retreat toward the low is still only slightly better than 2:1. A swing would need just over $1 for a stop (downtrend line), and a target would belong just north of the February low in the low $41 area. That risk/reward just isn’t real appealing to me, so I’ll opt for a single-day play.
SHLD is a reversal-prone stock so this one won’t be a swing for me. I do like the setup here for a single-day play on the short side if price breaks the uptrend line at $46.25 to pave the way for some selling.
FLS broke down today and gave me a little bit of a move today. It still looks to have some room, so I’ll give it another shot as a single-day play if it makes a new pullback low at $75.20.
RIG just bounced back up to test former support, failed, and reversed lower. It’s now facing the short-term rising trend line and I like it for a single-day play on the short side if it breaks that trend line at $40.10 with room to pull back toward the March low near $38.50.
New Swing Trade Candidates:
No new swing candidates tonight, most bases are still too loose for initiating swing trades so I’m sticking with limited exposure while waiting for more new opportunities to surface.
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Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
hey nice page mate – looks great !