Good evening StockBandits!
Morning skittishness was once again overcome by afternoon enthusiasm as the NAZ climbed back from the red to finish flat and the S&P, RUT and DJIA each posted gains. This is becoming a bit of a predictable routine of late as mild profit-taking never really takes hold and the buyers step in to defend even the smallest of pullbacks.
We’re in a momentum market right now which isn’t exactly characterized by giant daily gains so much as it’s just so incredibly persistent on the upside. The RUT, for example, has posted just 2 declines in the past dozen sessions, both of which were mere 2-pt dips. The S&P 500 broke an 8-day streak yesterday with a tiny 2-point pullback, then rebounded today to make new multi-year highs again. The DJIA has just gone 12-for-14 without a single triple-digit day, highlighting the fact that the market just keeps creeping higher without looking back.
This can be a frustrating environment for those who always measure their performance against that of the indexes, but the year is long and there will be pullbacks. If you’re currently lagging by that measure, don’t fret. Keep staying attentive to the good setups, stay disciplined with entries and stops, and trust that your time to outperform is coming.
I wanted to post a few swing updates tonight on positions which I feel warrant some adjustment for me:
POT stop tightened to $42.70 below today’s low. I will close the position by Wednesday’s closing bell as earnings are due out Thursday pre-market according to EarningsWhispers and I do not hold into reports.
ADS stop tightened to $155 below today’s low. I will close the position by Wednesday’s closing bell as earnings are due out Thursday pre-market according to EarningsWhispers.
PXD stop tightened to $111 as it is approaching Target 1. If that level is reached, I’ll take off half at that level then tighten my stop to breakeven for remaining shares.
GME negated its pattern today without ever triggering, so it joins other stocks of late which have been removed as candidates for me (DLTR, FSLR, JOY, SHLD, etc.).
Also, if you aren’t taking notice of the Bullish/Bearish watch lists, there are some great additional ideas in there if you’re willing to look. Today for example, a pair of great moves came from the Bullish list as both DVN & YPF vaulted higher, each of which had been on the Bullish list for the last couple of days. From the Bearish side, FSLR broke down hard to offer momentum players a quick move. I put stocks on that list which I’m watching for further development as potential swings, but those which fire early can sometimes produce big moves for the more active traders. Simply copy/paste them into your charting program and spend a couple more minutes each night and you’ll likely discover some additional ideas worth taking note of.
Let’s get to the charts.
SP500 – The S&P bounced right back after yesterday’s break of “the streak” and once again tonight sits at new multi-year highs. It has more than 2% of room to pull back before 1474 would be threatened, although with the follow through we’ve seen since the breakout it will likely take more than a simple pullback to shift the mood.
RUT – The RUT posted another gain today to make it 8-for-10. 7 of those gains saw this small-cap index finish roughly 1 point (or less) from its session high, which goes to show that the buyers are keeping upside pressure here. At some point, this massive run will see a correction, but without volume data (which isn’t tracked for this index) we’ll need to take our cues from the price bars and as of yet they haven’t changed their tune.
DJIA – The DJIA just won’t stop yet and traders are breaking out their Dow 14,000 hats. The session low has been set in the morning 12 of the last 13 trading days, which makes buying the early dip a Pavlovian response for traders of late. One has to wonder what sort of selling we finally see when that fails to continue one of these days. At any rate, the trend is solidly up with room to breathe before the most recent breakout zone at 13661 would be tested.
Notable Names:
YHOO saw a sell-the-news reaction today as the stock had traded up last night after hours when it reported earnings, then gapped up this morning. Today’s open was just 8 cents from the high before a quick retreat painted a nasty reversal bar on this daily chart. Just goes to show, the fundamentals might be worth watching but it’s the price action which should be used as a timing mechanism. Once good news starts getting sold, it often indicates it’s time for a more extended rest phase to begin.
ABX is an example of why I don’t like to enter positions on key level breaks if price has become extended. I noted a few weeks ago how the S&P 500 needed to rest beneath 1474 before breaking out as that would give it the best shot at sticking. ABX had sold off hard for several sessions right into support, broke it, then reversed back today. What happens in these cases is that price becomes stretched and somewhat exhausted, which lowers the likelihood of the key level breach being able to last. The recoil often puts price back on the other side of the level, resulting in a failed breakout (or breakdown in the case of ABX). Take a look:
FIRE is coming into a key level and I’ll be watching this one for the next few days to see if it can tighten up a bit before threatening to break down and fill the gap from last February. Price has been driven lower since February (downtrend line) and now is approaching key support. If this one can move laterally for several more days, it would present a better opportunity for a potential play on the short side.
New Swing Trade Candidates:
These stocks look ready for imminent multi-day moves. Pattern confirmation occurs with a move through the entry level. Initial stop and target levels are also provided.
ADBE is in an ascending triangle pattern and has been basing nicely for a few weeks after its November-December rally. It’s nearing the apex of this triangle and we should see a resolution soon. Given that the trend is up, I’m looking to get long if this one can clear $38.90 to start a new leg up. Earnings for the most recent quarter were reported back in December, so it has time to work before another scheduled announcement.
MTB has spent nearly 4 months caught in a trading range and is currently sitting at the upper end. Rising support has been established in the past few weeks to give a tighter area for stopping out should a breakout fail, so I’m looking at a buy if this one can clear $105.50. The height of this channel is roughly $9, which is the projection from this type of pattern. I like the risk/reward, but it needs to break out before I’m a buyer.
KMB is trying to leave a high-level channel here. A push through $88.50 would clear today’s high and set this one free to begin a new leg up. I’ll be using rising support as my stop, which makes this an attractive risk/reward setup. The height of the channel is about $6, so there’s some room to run if it can confirm a breakout.
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Trade Like A Bandit!
Jeff
Closing out POT for the 2% gain ahead of earnings tomorrow (42.89)