Good evening StockBandits!
The big turnaround we saw on Tuesday found follow through today as three of the four averages (DJIA excluded) that I watch daily broke out from their respective ranges to reach new multi-year or all-time highs. Morning strength was followed by a few hours of mid-day choppiness and then new highs late in the day for the RUT and NAZ. Meanwhile, the DJIA moved back into its range by reclaiming 16400, and the S&P made an incremental new high – and I do mean incremental – with a close .02 points above the prior high close from New Year’s Eve.
So, we have breakouts but it’s not unanimous at this point. It’s certainly a start and the bulls look to have regained their edge after letting things slip badly on Monday, but once again it will all be about follow through. We’ve not seen much of that in the past few weeks, but with blue sky beckoning above, perhaps the strength will build.
I find it interesting that there are still a good number of bearish charts out there, and my bullish/bearish watchlists are nearly evenly split tonight. I’m currently short two swings and took some heat on them today, which isn’t fun, but I still think there will be some good opportunities on the short side even if the market is able to push higher. The key is just not to fight the overall trend, so in my case I’d like to find some long-sided exposure as well. It’s just a matter of better risk/reward profiles surfacing than what most of today’s setups have to offer.
Earnings season is just now getting underway. This week, the big names are banks and brokers, but we’ll see many more industries represented starting next week. As a reminder, it’s incredibly important to know when your stocks are reporting earnings to avoid the surprises which are so typical. I don’t ever want to hold a trade into an announcement because I simply can’t manage my risk on a large gap, and they are frequent during earnings season. Of the many earnings calendars out there, I use EarningsWhispers and Yahoo! Finance primarily, and it’s always a good idea to reference multiple calendars to for greater accuracy. They’re great sites to bookmark as quarterly reports start rolling in.
One last thing…if there are a couple of tickers you’d like me to review in tomorrow’s Charts on Demand video, hit reply and send them to me!
Let’s get to the charts.
NAZ – The NAZ produced a solid day of follow through to last night’s incremental breakout and finished just a short distance from the high of the session on increased volume. A measured move could take it to 4250 out of the range, so we’ll see if it has more gas in the tank after a quick 121pt spike from Monday’s low.
SP500 – The S&P made a new intraday high today and an incremental new closing high as well, finishing .02 above the best close from December. This index has a shot at a new leg up here, but it’s going to take much more than an incremental new high.
RUT – The RUT reached new all-time high territory today as it pushed past 1167 to exit the 20pt range it has spent the past few weeks in. Next level to watch will be 1187, a measured move out of the range.
DJIA – The DJIA still has work to do but today it did reclaim 16400 to get back inside the recent range. The high stands at 16588, and new highs in the other indexes without the DJIA making highs would be very unusual, so we’ll see if it can continue to strengthen and clear the hurdle.
Quick Hits:
MCO isn’t the tightest pattern but it does have well-defined resistance at the upper trend line. A push through $77 could set it free for a quick lift back toward the recent high, so I like it for a single-day play on the long side if it gets through the $77 pivot.
SFUN is also facing a descending trend line here and a push through $90.30 could produce another spike higher. I like it for a single-day play if it can push through that level, but am not willing to keep it overnight due to the wider stop it would require.
OLN is facing declining resistance here and a break above the trend line at $28.80 looks good for a single-day play as price heads higher to challenge the recent high.
GILD is edging higher here to get closer to lateral resistance and could break out soon. A new high at $76.20 appeals to me for a breakout play, although I’d only be interested in participating in the initial move higher through this key level.
APA is back testing support tonight and is facing a potential breakdown to start filling the unfilled gap from August. I like this one for a short sale to participate in the initial break of this important level as a single-day play. I’ll be using $83.80 as a trigger to indicate support has been broken and the selling has resumed.
New Swing Trade Candidates:
No new swing candidates tonight, waiting for tighter setups and better risk/reward profiles.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
