Good evening StockBandits!
Stocks pulled back a bit today with the high of the session being set early in the day. That’s a complete shift from the norm of late where we’ve seen early weakness and afternoon strength, as I noted last night. Perhaps dubbing it a “routine” did the trick, but either way we saw some mild profit-taking kick in ahead of the FOMC report. While the headlines revealed nothing unexpected, we did see another round of selling post-Fed which left each of the averages in the red by day’s end.
The standout index was the RUT, which actually posted a trend day on the downside en route to a 1% loss. That’s been the big outperformer in recent weeks, so to see it finally relent should keep things interesting over the coming sessions as we see whether the selling there will accelerate or if instead the buyers refuse to let up. Either way, it will take quite a bit more selling before it would be considered a change of character. The bulls have done an excellent job of not only pushing past key levels but also in holding above them, which gives the RUT as well as the other indexes some breathing room even after today’s mild dip.
Don’t forget that tonight is the last chance to submit your stocks for review in this week’s Charts on Demand video, set to be published tomorrow. If you haven’t participated yet, submit a couple of tickers and I’ll add them to the list.
Swing trade SOHU stopped out today as it undercut $48, I tweeted and commented on my POT exit this morning to book the 2.1% gain at $42.89 ahead of earnings tomorrow, ADS hit my adjusted stop from last night at $155 for a 1.2% loss ahead of earnings tomorrow, and my stop for PXD is now at breakeven for remaining shares after the stock gapped above target 1 this morning for a quick 5% on half the position.
Let’s get to the charts.
NAZ – The NAZ pulled a peek-a-boo type of breakout today by nudging past 3161 by a mere 3 points before pulling back to finish at 3142, 11 points lower than the previous close. That’s not much of a pullback, but a few things stand out as cautionary signals here. The failure to hold above short-term resistance, the inability to attack the first lower high from October at 3171, and the presence of distribution days (despite no real retreat in price) should not be ignored here. If we see rising support get cracked at 3133, it could spark some more noteworthy selling. Price is nearing a resolution to this wedge, so the potential for a bit bigger move is also a matter of timing.
SP500 – The S&P also briefly cleared yesterday’s high before finishing in the red, although volume is showing nothing of concern for this index. It still has some 27 points before it would be facing a test of the 1474 breakout zone.
RUT – The RUT made the headline move today, just as it has lately so many times. This time, however, it was a 1% decline with room to tumble further to potentially test 883 and 868, respectively. It did bounce slightly from its low into the close, but the stretched nature of this index since late-December leaves it in a vulnerable spot to additional selling here.
DJIA – The DJIA gave up a little ground today but volume remained quiet, indicating this is just some garden-variety selling for now. This index has roughly 250 points before the breakout zone would get tested, but that scenario shouldn’t be counted out given the strides it has made in recent weeks. With 2 of the last 3 sessions being red, perhaps we’re finally seeing some fatigue set in here.
Notable Names:
CCL is churning near the upper end of its channel, which is generally positive to see as that often occurs before a breakout. However, the last 3 sessions have each been accompanied by weak finishes for this stock, indicating it’s not perking up the way I would expect ahead of a breakout. I’m leaving it on watch for now for that reason.
NFLX is still quite lively here a week after earnings. The intraday ranges have been very wide, making this one far better suited for the intraday traders. The current base needs quite a bit more work before this would be something to eye for the swing timeframe.
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.
JBHT is building a bull pennant here after some nice upside momentum recently. Today it pulled back but did so on light volume and also stayed within the pennant area. I am going to go ahead and set up a trade in this one to get long through $68.75, looking for a measured move for my final target.
DDS saw a breakaway gap in early December and since then the stock has respected that level. A number of times it has cleared $85 but couldn’t hold it, and now it’s looking a bit stagnant. A turn lower from here could accelerate, and I like the risk/reward on the short side for a play against resistance. I’ll get short below $83.50 on a multi-day low and will be looking for tests of prior support zones from recent weeks to set my targets.
GME was listed here a week ago with a wedge pattern which never generated an entry. That pattern was negated yesterday, and now a slightly different (still bearish) pattern has emerged on the chart with this rising channel. I’ll look to short this stock beneath rising support at $23.40 with a stop above this week’s high and targets at prior support levels. This channel has the potential to carve out yet another lower high (red arrows) since this one turned around in December.
Trade Like A Bandit!
Jeff
