Good evening StockBandits!
The bulls produced follow through on the heels of Tuesday’s relief rally, which was exactly what they needed to do. Not only did we see follow through, but we saw greater strength today than in yesterday’s session in terms of net gains. The wider participation of today’s lift puts added distance between prices and the lows from Monday, which could help on the next dip when those same bulls are hoping for a higher low.
What’s potentially problematic though, is the fact that each of the indexes are still well shy of their prior highs even after this bounce. That isn’t to say that the bounce has completely run its course, but simply to say that much more is needed in order for the bulls to return to form. Until then, stocks are a long way from being out of the woods.
Today’s strong finish may be enough to provide some continuation, at least until prices either stall out or gap significantly higher and turn the short-term tide. My focus heading into tomorrow’s session will be on single-day setups, as the V-shaped bounces which are underway just are not allowing for the creation of the tighter bases I prefer for swing trades. Once the bounce stalls out, we may have some better patterns to work with in the form of rising wedges or short-term rounded highs.
Earnings season is getting underway this next week, so now is a good time to remind you to keep an eye on the earnings calendar. I use the calendars at EarningsWhispers and Yahoo! Finance primarily, which helps me avoid any big surprises. These are great sites to bookmark as quarterly reports start rolling in.
One last note tonight is that I’ll be producing the Charts on Demand video tomorrow, so if you have a few tickers you’re interested in having me review, send them my way. You can simply reply to this email.
Let’s get to the charts.
NAZ – The NAZ has lifted 131 points off Monday’s low, but upside volume has diminished in each of the last two sessions. Price is also still 103 points away from the prior bounce high of 4286, which should leave the bulls a bit uncomfortable tonight. I’m not writing the eulogy for this index, but I am watching out for any signs of stagnation on the bounce as it could quite easily create a lower high.
SP500 – The S&P for the third time in a month broke 1850 this week and then right away reclaimed it. Tonight it’s back in the range, 25 points from the high. The hard downside reversal from last week should not quickly be forgotten, but at the moment the bulls are making another stand so we’ll see if they can eclipse 1900 or if instead we finally resolve this indecision to the downside.
RUT – The RUT has lifted nicely from Monday’s low, but tonight still stands 34 points from the prior bounce high of 1193. For now, lower highs and lower lows are in place for this index so this bounce has much to prove before it can be trusted.
DJIA – The DJIA rallied today but volume sagged. The prior high from last week stands at 16631, roughly 194 points from tonight’s closing level. This index is clearly at home on the range!
Notable Names:
YHOO has seen a quick V-shaped bounce but volume is falling off as price lifts. That shows narrow participation and limited conviction, plus price is still a long way from the prior high. This lift needs to show much stronger character, or else another lower high could soon emerge.
SUNE is another stock which has just bounced nicely from the low but lacks the upside volume needed to be convincing. It also stands a long way from the prior high, so another lower high is possible in the next few days if price happens to stall out.
MS is struggling here to make any big headway, much like many other financial names. The song remains the same, which is light upside volume on the bounce and price still well short of the prior peak.
FSLR is holding up nicely here and could see an attempt to exit this high trading range. I’d only be interested in a single-day play on a breakout through $75 as this pattern is simply too loose to consider for a swing.
PVA is attempting to stabilize after a minor pullback and an upside break of the trend line at $16.90 could spark some interest. I like this setup for a single-day play if the trend line break occurs, but the risk/reward for a swing lacks appeal as I’d have a stop beneath the dip low and would look for a test of the recent high, which is essentially 1:1.
GPRE was listed here last night but didn’t quite trigger. I still like the setup for a single-day play on the long side if price can clear $29.05, ideally on strong volume.
RCII has a very large unfilled gap from January which it may attempt to get into here if price can make a new recovery high at $27.25. I like the accumulation that has been underway since mid-February, but once again the base is just too wide for my taste here so I’d be most interested in a single-day play to participate in the initial breakout attempt out of this base.
New Swing Trade Candidates:
No new swing candidates tonight, waiting for new patterns to emerge and sticking with existing positions heading into tomorrow’s session.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
