Good evening StockBandits!
The first trading day of the year was certainly a change of pace from December’s ramp, but the bulls did what they needed to do on Friday which was to simply show up. That stopped the bleeding for the most part (sans NAZ), keeping the short-term high-level trading ranges intact for now. Stated otherwise, we still have some levels to work with, which is a different scenario than the melt-up environment we’ve seen so much of lately.
It’s interesting to see some of the big names in tech struggling here and the resulting effect they had on the NAZ in the last two sessions. That relative weakness is a bit of a standout, with stocks like AAPL, TSLA, NFLX, and FB unable to impress anyone. Meanwhile, some of the financials are firming up to help the blue chips with names like BAC, JPM, WFC and GS helping the cause.
In real estate, they say it’s all about location, location, location. With market trends, it could be said that it’s a matter of rotation, rotation, rotation. That’s what we’re getting for now, but certainly something to keep on the radar in the days ahead as we see whether or not this market will take a longer-lasting breather or keep stretching its legs.
One last thought…I think it was nice how the new year came mid-week, allowing for a two-days-on, two-days-off situation. There’s still time for you to review what’s behind us (if you didn’t over the holidays) and get a plan in place for your process as 2014 gets underway. Deciding what you’ll do all year in terms of strategies is unrealistic (due to a variety of market conditions which are likely to come along), but getting a routine down for preparation each week or each night will serve you well. Make the time to do that if you haven’t already.
Let’s get to the charts.
NAZ – The NAZ has slipped in 4 of the past 5 sessions, leaving it range-bound for now. The high at 4177 is about 1% away, while an unfilled gap to 4104 and the prior breakout zone at 4081 are levels to watch on the downside.
SP500 – The S&P backed off its high to start the year, but it may simply be carving out a high-level trading range here. We have an unfilled gap down to 1818 and the prior high/resistance at 1813 which could serve as some support, and on the upside the high at 1849 is the big number to watch.
RUT – The RUT again respected a lateral level last week as it pulled back to fill a gap and test the 1147 area which was resistance from November. As of tonight, it is sitting right between that level and the 1167 high, giving it a little room on both sides to fluctuate.
DJIA – The DJIA has only seen 1 decline off its fresh high of 16588, but considering the magnitude of the run off the early December low there’s certainly more room for some profit-taking. The next downside level to watch is 16174 (prior high), while 16588 is the upside number to watch. Friday’s bounce did see a finish well off the session high and reduced volume, both of which are technical aspects to take note of here as a new week begins.
Notable Names:
AAPL is again respecting a lateral level here as it comes into the $539 zone. That area was resistance in October and then became support a few weeks ago. Coming off declines in 6 of the last 7 sessions, this could be a logical area for a bounce to kick in for this tech leader, but the bids will need to emerge soon if so.
BAC is one financial stock which shined last week with a breakout through $16. This is helping the S&P as other names in the group perk up as well. Any pullback to fill the gap from Friday morning or to test the $16 area are likely to generate interest on the buy side but the test will need to hold.
TWTR has bounced for 3 sessions after a swift pullback. Price looks like it may be losing some steam here with a weak finish Friday to close not far from short-term rising support. This one is so volatile right now it’s really for the intraday trader, but a stall out here would create a lower high.
YNDX is setting up here with a bullish base in the form of an ascending triangle pattern. A breakout through $43.75 would interest me for a long-sided breakout play, although this will only be a single-day play for me if it goes. I’m basing that on the light upside volume on the past 2 advances as well as the fact price isn’t yet pressuring upper resistance.
GMCR is looking ready to go soon after a shallow dip. A turn up through $76 could quickly bring a test of the recent high or beyond. I like it for a single-day play rather than a swing given the relatively close proximity to next resistance (both short-term and intermediate-term from a few months ago).
FB broke out through its prior high and then rolled over hard. Late last week it bounced to repeatedly attempt to reclaim the breakout, but was unable on each attempt. I’m watching the small rising support for a downside break and will take it on the short side upon a move through $54.40. This is a small pattern so I’ll just be taking it for a single-day play if it goes.
PCYC is a very volatile stock and also a drug stock, which makes it highly sensitive to headlines. Price broke key support a few weeks ago and has bounced back but failed to reclaim it. It’s now in a bearish wedge and I like the looks of it for a play on the short side. I’ll take it for a single-day play below $104.70, but won’t hold it overnight due to the headline risk and wide stop it would require as a swing.
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.
RKUS saw a big correction during the fall before several weeks of low-level basing. After price stabilized, it broke out a few weeks ago through resistance on strong volume and has since pulled back to test it on light volume. I like this setup for a continued recovery and will get long if it clears $14.25 to break the short-term descending trend line. I’ll be looking for an eventual move back toward support from last fall as a target with a stop beneath support just in case it fails.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
