Good evening StockBandits!
The indexes posted declines today, and although none of them were particularly scary, the way in which they happened was something to take note of. Early gains were given up with an attempted bounce getting sold as the short-term slide continued. The lack of bids left each of the averages not far from the session lows by the closing bell on the strongest volume we’ve seen in 2 weeks. We did see both the NAZ and RUT validating recent levels, which is always nice to see from a technical standpoint.
Big-picture forecasters are quick to jump to conclusions about the results of the first few days of January, but don’t fall into that trap. There have been years where the end result matched the early direction, just as there have been years where it did not. What matters here is not to conclude where the market will be in 12 months or even 12 days from now.
Predictions don’t equate to profits. Stick with a process of objective analysis, and logical if/then scenarios can be outlined. Letting the market prompt action (or inaction) on our part will lead to less pain and confusion than placing some directional bets and hoping the market soon proves them correct. Stated otherwise, stick with the charts, key levels, and what the price action is telling us.
Right now, we’re in short-term pullback mode right off fresh multi-year (or in some cases all-time) highs. I’m going to stick with the identification of potential support levels and some corresponding trades and let the price action dictate whether buys or sales should be made.
Let’s get to the charts.
NAZ – The NAZ filled the gap to 4104 today, broke that level by 0.25, then bounced 10 points off the low. Despite the validation of that gap, it finished lower on the day and now sits at a new pullback low on a closing basis. Any continuation lower could bring a test of 4081 where it broke out in December.
SP500 – The S&P stayed in pullback mode today, breaking last week’s low even though it only shed 4.6 points on the session. It’s coming into the area of the unfilled gap (1818) and the prior breakout zone (1813).
RUT – The RUT returned to 1147 again today and now sits at the bottom of its 20-point trading range. A breakdown could spark a continued retreat into the 1120’s, perhaps to fill the gap at 1125 or test former resistance at 1123.
Notable Names:
LOCK is pressuring the descending trend line here, and if it clears it could see a quick lift. I’m not looking to trade it though, as I’d prefer to see the bigger base tighten with price staying between the lateral line at $15 and the descending trend line. At this point the pattern is still a bit sloppy so I’d like to see it tighten.
SNDK is still slipping away from $71 resistance after another test of that area at the end of December. This is why I like to see breakouts happen before I get long, as I don’t like the idea of getting stuck long a stock that’s sitting beneath (or slipping away from) resistance.
UA is still chopping around up here but I am not interested in a play. I wanted to share it tonight as an example of what indecision looks like. Price attempted to clear resistance a few weeks ago and still hasn’t made any real progress. Now, rising support has caught up to price and it’s facing a decision point. I won’t be trading it, but this would be the sort of situation where if I were long I’d aggressively be tightening a stop due to the mixed signals it has been sending.
YNDX was highlighted here last night but did not trigger today. I still like the setup for a single-day play as a push through $43.75 could generate some short-term interest. However, once again price isn’t pressuring upper resistance and the upside volume of late remains unimpressive, so it doesn’t appeal to me for a swing.
OPEN is a bit of a fickle stock so I am only considering it here for a single-day play to participate in the initial move if it goes. The setup I’m watching is the descending trend line which could get cleared as soon as Tuesday. Price has stabilized recently from its pullback and a turn up could spark a quick lift.
NOV is sitting between two trend lines but I’m only interested in one of them – the lower rising line of short-term support. Given that lower highs have been in place since mid November, I’m looking at a possible play on the short side for Tuesday. If price breaks $78.70, I’ll take it for a single-day play on the short side. If instead price remains in the pattern and tightens over the next couple of days, that would set up a better swing scenario due to the closer proximity of a protective stop (tighter setup).
NCR is struggling to clear a key level here and now price isn’t far from rising support. A failure to move higher could spark some selling, along with a trend line break, so I like this one for a single-day play for Tuesday on the short side if it breaks $33.55 to participate in the initial move.
New Swing Trade Candidates:
No new swing candidates tonight, just not a lot of setups out there and of those that look ready I’m simply not impressed enough with their price action/patterns to initiate plays for multi-day moves. I’ll stick with existing exposure heading into Tuesday.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
