Good evening StockBandits!
Each of us is forgetful from time to time. Sometimes it’s from a lack of rest, sometimes it’s age, and sometimes, well I can’t remember what my third reason was going to be. 🙂 When it’s something significant though and recent, it’s hard to forget. Today the market seemed to forget what happened yesterday. We saw considerable selling on Monday with nothing but a late-day short-covering bounce into the bell. That strength saw some follow through into today, however, erasing most of what had been given up yesterday. The NAZ broke out incrementally to a new multi-year high, while the RUT and S&P each moved toward the upper ends of their respective ranges.
The violent snapback moves of the last two sessions has created quite a few sloppy charts. Anytime that’s the case, it’s important not to force new trades and to stay picky. Toss into the mix the fact we’re still dealing with both support and resistance areas in the averages, and it becomes even more important to stick with clean setups when seeking out new trade candidates. Heading into Wednesday, I’ve only got a handful of single-day setups I’m interested in given the indecision we’ve been seeing in the market and the many sloppy charts tonight.
Earnings season is just getting started, which I’ll touch on more tomorrow night, but lately we’ve been seeing a lot of preannouncements with companies guiding higher or lower. Many retailers have guided lower based on lighter foot traffic or holiday sales, notifying the Street they are likely to miss their earnings numbers. That was the case with TSLA preannouncing some very positive numbers, as well as GME today on the negative side. The latter had been listed here for a short sale last night but which obviously gapped well beyond the intended entry price. As per my swing trading strategy gap rules, the gap was much too big to chase so I didn’t take the trade and it has been subsequently removed tonight from the list. If you chased the opening gap, you still got paid, but at this point the distance to an appropriate swing puts the risk/reward way out of whack, which is why I’m not in it despite the breakdown.
Let’s get to the charts, and tonight since I had an afternoon commitment run much longer than expected, I’m going to be a little more brief on my comments.
NAZ – The NAZ edged past 4177 resistance and even last week’s intraday high of 4182 to close at 4183. It was an impressive day, but it doesn’t give this index a lot of breathing room, especially considering the others have yet to break out.
SP500 – The S&P finished 11 points from its all-time high after a big lift today. Today’s bar was nonetheless an inside day, so while it negated much of the decline yesterday it did not completely erase it.
RUT – The RUT bounced 1.3% today to lift within its range after holding 1147 on the close last night. 1167 is the big number for a breakout here, but until then it’s still range-bound.
DJIA – The DJIA rallied 115 today but stopped shy of reclaiming 16400, the low end of the range it broke down from yesterday.
Notable Names:
P is facing another breakout after lots of recent momentum and a short rest. A push through $34.50 sets it free to run again, and I’m interested in a single-day play to participate in the next pop.
GILD may need a little more time but it could still try to play catch-up to some of the other biotechs that have been running. A breakout through $76.20 looks good for a single-day play on the long side, but I’m not interested in keeping it overnight.
VRX has a similar inverted ‘h’ pattern like P, but is in a completely different sector. The traits are similar though here with lots of recent momentum, a rest, and now price pressuring the high. A breakout above $136 looks good for a quick lift but I’m not looking to hold it overnight.
SOHU just pulled back from the $80 area but could quickly test it if price can clear the descending trend line at $76.40 on Wednesday. I like it for a single-day play if that level is cleared.
ROST broke rising support last week and now is testing short-term support. A break below $72.90 and this one could finally accelerate lower. I’m interested in a single-day play here on the short side if that level gets broken on Wednesday.
New Swing Trade Candidates:
None tonight.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
