Good evening StockBandits!
Bulls have had an agonizing weekend after a very poor showing last week. The bounces which had kicked in the week before did continue – at least initially. We were seeing strength even into mid-week, but the short-term overbought conditions paired with approaching key levels and it prompted some selling. In the end, all the averages ended the week lower. It wasn’t by much. However, it’s how you finish that matters and the bulls definitely tripped before crossing the finish line.
The swan dive we saw last week – particularly in the NAZ with the Thursday elation gap that went red less than 25 minutes later – was indicative of the concerns this market is facing right now. Positive earnings responses are being erased, tensions are still on the rise in Ukraine, and most importantly, resistance levels are holding.
The 2-way price action we’ve started to see more often is definitely a welcomed sight as it keeps things mixed up. From a trading standpoint though, the nature of the turns has been somewhat sudden and therefore not easy to participate in on a multi-day basis. Intraday shifts of momentum have become more common, making it a market for the nimble. In addition, the lack of basing action has prevented the sort of high-quality patterns I prefer for swing trades, which has kept me in cash-flow mode with my trading by opting for single-day plays quite often lately.
We’re right in the thick of earnings season and another big week is ahead of us, which also is preventing me from being more aggressive on the multi-day timeframe. Once a little rest arrives for the market and some of the scheduled reports are out of the way, I do expect we’ll see many more opportunities surfacing. I’m looking forward to that personally, as I really prefer to utilize capital across timeframes and not feel limited to just one. Until then though, it’s a stick-and-move environment so I’ll tuck and roll accordingly.
Let’s get to the charts.
NAZ – The NAZ closed Friday 99 points from where it opened on Thursday, which puts the give-back move in perspective. Considering that the lift from the April low into Thursday’s high was 231 points, to see nearly half of that given up in less than two days goes to show which side the worry is on. Lower highs are still in place, so now I’m watching the small unfilled gap to 4034 as the next level on the way down. Beneath that we have 3966 and 3946.
SP500 – The S&P tried twice to clear 1883 last week, but couldn’t hold it on a closing basis and eventually rolled over. Friday’s finish was poor and it further validates the importance of that key resistance level. There’s a small gap to 1842, but beneath that the next level is the 1814 low from two weeks ago.
RUT – The RUT got within 3 points of the prior bounce high last week, only to roll over by 34 over the following 3 sessions. Tonight it’s back to the 1123 level, which we’ve seen before. A failure to hold here brings the 1095 low into view without much effort.
DJIA – The DJIA held within the range last week, again validating resistance by failing to clear it despite having the chance. There’s another 300+ points of room down to support, so it doesn’t look wise to embrace a bullish stance at this juncture.
Notable Names:
NFLX is one of a handful of stocks which had seen a positive initial reaction to earnings, only to see those gains quickly wiped out and more. $312 is the recent low and at the pace this one’s falling, that level could be completely ignored. This former leader just can’t seem to stay out of its own way.
FB is another which gapped higher after earnings, only to fail at resistance and then roll over. It looks like it has a date with destiny at the gap to $53.53. Leadership is lacking for big-cap tech.
YHOO saw a similar reaction with a jump higher on earnings, then a gap-fill retreat which erased the post-earnings gains. Yet another example of how strength is being used for selling into right now.
GLNG is one of very few bullish patterns out there tonight, and even it might need more time given the finish not far from the low on Friday. I like this falling wedge pattern within an uptrend, but will only be interested in a single-day play on the long side if price can clear the upper trend line at $44.30.
PBR is working on a large symmetrical triangle pattern but price is starting to be compressed. An upside breakout at $13.90 looks good to me for a single-day breakout play. However, this pattern is too loose for a swing and earnings are less than 2 weeks out.
AKAM is at support here and a breakdown to a new low at $51.45 looks good for a single-day play on the short side. This one has an unfilled gap from early Feb. which it may try to work on very soon.
DDD is scheduled to report earnings on Tuesday so I am sure not considering it for a swing, but it may have some potential Monday on the short side if it breaks $49.30. It’s just starting to break rising support so some continuation on Monday would have appeal.
XONE is starting to break rising support here and I like it for a momentum play on the short side if it makes a new low at $30.95. A swing stop would be somewhat wide here, so I’m only interested in participating in a single-day play if it goes.
New Swing Trade Candidates:
No new swing trade candidates tonight, staying in cash while waiting for better plays to surface.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
