Good evening StockBandits!
Tuesday’s inside day was lacking in several regards, as discussed here last night. Not only did price fail to recover the prior day’s losses (which would not be out of the question on an upside reversal day), but we also saw the averages unable to reclaim recently broken important levels – all on light upside volume. Overnight the futures turned from positive to negative and stocks gapped lower this morning. A sluggish attempt to rally failed to produce, then stocks made fresh lows on the session after the FOMC. By the closing bell, they were only a few points off their lows and had erased all of Tuesday’s dead-cat bounce.
This is a little different from the numerous V-shaped bounces we’ve had in recent months where pullbacks failed to materialize for the bears. This time, we’re seeing downside follow through. We’re still just 4-5% off the recent highs, so it’s not as if a lot of technical damage has occurred. However, it’s definitely a change of character and it’s unfolding quickly, which isn’t something to ignore.
With stocks again looking extended, I’m sticking with single-day plays for tomorrow’s session. The volatility of the past few days hasn’t allowed for the tight bases I prefer for swing trades, so with prices short-term stretched I’m going to stay nimble. It’s been nice to sidestep this market slide, but once we do get a bounce I think we’ll have quite a few setups to choose from.
** Send me any tickers you’d like me to review in tomorrow’s Charts on Demand video and I’ll put them on the list!
Let’s get to the charts.
NAZ – The NAZ got through 4104, bounced up near it yesterday but failed, then rolled over again today to make a new correction low. It has been a swift shift of direction the past 5 sessions for this index with a 195-point slide. However, it may not be done yet as the sellers have momentum and next support is still a considerable distance from current levels. Downside volume today surpassed yesterday’s upside volume.
SP500 – The S&P is right at the key 1775 level tonight for all intents and purposes, despite a fractional break of it today. The failure to hold this area could quickly result in a slide to the 1746 area, which is next support from November. Downside volume today surpassed yesterday’s upside volume.
RUT – The RUT is trying to undercut 1123 here, which is a major level for the small-caps. They’re now 60 points off their high of just last Wednesday, but a breakdown here could bring a quick test of 1099 as next support.
DJIA – The DJIA continued to slide today, getting within 5 points of the December low I highlighted here the last 3 nights. This index is a bit extended, but can’t seem to catch a lasting bid yet. Next support is nowhere close by, so we may need to see some sort of capitulatory action on the heels of this 850-pt slide before we get a meaningful bounce. Downside volume today surpassed yesterday’s upside volume.
Notable Names:
MGM just two weeks ago looked like it may never again go down, and since then we’ve seen a clean break of rising support and continued downside ever since. Anytime rising support is broken, it’s something to take note of.
UNG is the natural gas ETF and it’s running extremely hot here after a 10% advance today. It’s now up over 35% just since the mid-January pullback low. Searching for pockets of strength in a weak tape can turn up a chart like this, but after a parabolic move it’s just too far, too fast.
CSX is a good example of a post-earnings gap which has proven to be a breakaway gap. I always try to avoid holding stocks into earnings announcements, but in the event you get caught in a gap situation like this, remember that it still may not be too late to bail out. Sellers on the post-earnings gap have seen shares continue to slide, and there are many other examples like this in both directions this earnings season.
SGEN is on my radar for a single-day play. This biotech stock looks poised for a lift if it can clear the trend line at $46.20 and get back on the move. A swing stop is just too wide for the setup, plus it’s a biotech and I just don’t prefer overnights in them due to their gap risk, generally speaking.
GILD is another biotech that looks like it could turn back up any day. I like it for a single-day play on the long side if it can clear the trend line at $81.20 and start to regain some of its recent momentum. Here again, a swing stop just isn’t readily apparent, plus it’s a biotech and I just don’t prefer overnights in them due to their gap risk.
MRVL has been listed here a couple of times this week but hasn’t triggered yet. It held up well again today, so I’ll give it one more shot for a single-day play on the long side if it can clear $15.10 and start working back toward the recent high.
CALD is trying to stabilize after a short-term pullback here and I like the looks of this pattern. A push through the trend line at $14.75 could set it free for a quick lift, so I like it for a single-day play on the long side. As with all the plays highlighted here, I’m only interested in the trade if price can push through the listed level, as I have no interest in owning it beneath the trend line.
LVS is at key support here and a breakdown could trigger another wave of selling. I like it for a single-day play on the short side if it breaks $73.30. This company was set to report earnings this evening, so if it gaps then I’ll pass on it. The setup is tight enough for me and since it’s a single-day play, I wanted to be sure and share it.
SODA is still hovering just above short-term support. A breakdown below $36.25 could spark another round of selling, so I like this setup for a single-day play on the short side if support gets taken out. All I’m interested in here is participating in the initial move lower should it happen to occur.
New Swing Trade Candidates:
No new swing candidates tonight, staying in cash while waiting for new setups to emerge.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
