Good evening StockBandits!
The DJIA and S&P 500 each broke out to new all-time closing highs today, finally clearing their respective resistance zones which have plagued them in recent months. For the DJIA, that resistance went all the way back to December. For the S&P 500, it has been in place since early March. In both cases, today’s breakout paves the way for upside continuation – at least on a technical basis. Follow through hasn’t been a primary characteristic of this market for most of 2014, although there’s a chance that changes with today’s development.
On the more speculative side of the coin are the NAZ and RUT, which each spiked higher today as well. They’re both still a considerable distance from their 52-week highs, but just last week they held important support zones and are now trying to turn back up. It’s unlikely to be smooth sailing for them, although today’s lift on the heels of Friday’s gains was certainly a positive for the bulls.
Anytime we bounce from support areas, traders are quick to wonder was that it? The fact of the matter is that we simply don’t know, only time will tell. I will say though, that if this does end up being the end of the correction, then there will be lasting upside and many chances to participate. Chasing the first bounce isn’t necessary, so be careful here buying names which are quickly becoming short-term extended. There’s much more to be proven and a lasting change of trend will need to develop over a few weeks, not two sessions. There’s still lots of technical overhead to contend with for the NAZ and RUT, which could keep things somewhat choppy. Pick and choose your spots based on risk/reward, as always.
Let’s get to the charts.
NAZ – The NAZ tacked on 1.7% today to show some follow through on the upside to Friday’s lift. Volume was light, however, and price still stands shy of the previous minor bounce highs at 4149, 4177, and 4185. Short-term support looks to have held, which is a step in the right direction for the bulls. Lots of overhead to contend with though, so if this is the road to recovery it could be bumpy.
SP500 – The S&P finally broke out today with a solid push through 1883. The all-time intraday high wasn’t quite cleared, but today’s close at 1896 is a new all-time closing high. Here again, volume stayed light but now we’ll see if this index can build on this significant technical development.
RUT – The RUT had a big day, up over 2.3%. Price is still beneath the previous minor bounce highs of 1137, 1157, and 1160, but the support test last week looks to have been successful. Now, the bulls need to produce some follow through and prevent any big downside slips if they want this low to be embraced.
DJIA – The DJIA broke out today with a 112 point lift. It was the only index to set new all-time highs on both an intraday and a closing basis, but interestingly, it lagged each of the other averages for the day. Nonetheless, it’s in blue-sky territory here so the stage is set for a lift toward the 17100 to 17200 range if a measured move out of the recent rectangle pattern unfolds.
Notable Names:
VFC is a stock on my radar as is now approaching multi-month resistance. It’s not quite there yet, and actually I’d like to see it consolidate for a few days before breaking out, but it’s one to keep an eye on and I wanted to bring it to your attention.
AFOP is trying to turn back up here but needs to clear the descending trend line at $18.55. If it can do so on Tuesday, I’ll grab it for a single-day play on the long side. A swing stop would be nearly 9% away, which is just too wide for me.
WPRT has built a bull pennant pattern here as it digests the recent spike higher. A turn up through $16.20 would be a breakout, and could set price free to lift again. I like this one for a single-day play, as a swing stop would belong beneath the pattern and that’s still a bit too wide for me.
CSIQ is set to report earnings on Friday, so I won’t be taking it for a swing given such a short window of time to move. It may be worth a single-day play though, as it just carved out a higher low and now faces a multi-week descending trend line. I like it on the long side for Tuesday if price clears $28.30.
VECO is sitting in a very small pattern tonight so I’m only looking for a quick move out of it. The trend is down and this bounce looks to be losing steam quickly, so I’ll grab it on the short side for Tuesday if price breaks $32.70.
NTAP is at short-term support here and a break below $33.20 could trigger another wave of selling and continue the downtrend. This one tends to move in 1-2 day spurts, so I am only interested in taking it for the initial move as a single-day play if it goes on Tuesday.
New Swing Trade Candidates:
No new swing candidates tonight, sticking with existing list and the single-day plays listed above for Tuesday.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
