Good evening StockBandits!
The three day streak of afternoon selling was snapped today as stocks rallied throughout the morning then added to their gains (albeit at a slower pace) during the afternoon. We did see a small dip into the closing bell, but it didn’t bring stocks down much from their session highs. In the end, the DJIA made a new all-time closing high, the RUT made a multi-week closing high, and both the NAZ and S&P were able to erase the vast majority of the declines of the past few sessions.
The constant theme since the pullback which ended in early October has been brief and shallow dips which quickly get bought. That has held true once again this week as bears remain skittish while bulls stay extremely confident. The trends are up, and we’ve yet to see a negative change of character – only minor signals which simply haven’t played out yet. As such, my watchlists tonight contain more bullish setups than bearish, although there will still be some opportunity on the short side even if the broad market continues to rally. The key I believe is to stay open to good setups while staying cognizant of overall positioning. I’m holding a mixed bag tonight of longs and shorts, but am net long, which I’ve found to be wise during an uptrend.
As for new setups tonight, there aren’t a lot to point out. Although the market just paused for a few days (and a few weeks in the case of the RUT), many names still look extended here. That means generally small bases abound, which just isn’t conducive to aggressive allocation towards the multi-day swing timeframe. So for Friday’s session, I’ll be focused on one new swing setup alongside a few cash-flow setups for single-day plays.
Let’s get to the charts.
NAZ – The NAZ reclaimed 3966 today by just a few points, and it did so on light volume. Volume aside, price is back above the level it needs to be in order to make another attempt at the high, now just 25 points away. Wednesday’s low can also be viewed for now as a short-term higher low vs. 3855.
SP500 – The S&P saw slightly stronger volume today as it gained over 14 points to finish just 7 points from its high. This constitutes a successful test of 1775, making Wednesday’s low another short-term higher low for this index.
RUT – The RUT has a bit of a wedge look as of tonight with a higher low and a lower high. This could be resolved to the upside with relative ease if the bulls want it, given that tonight’s close was just 4 points from the high. Until then, this small-cap index remains in a trading range so it’s important to wait for a breakout here before jumping to any conclusions. the intermediate term trend is up, but for the short term this index has been moving laterally for a month.
DJIA – The DJIA bounced right back today to make a new closing high at 16009. That leaves it just 21 points from the all-time high of 16030, which could easily be cleared. For now, the uptrend channel remains in play as the slow grind higher continues.
Notable Names:
CTRP is a good example chart I wanted to highlight tonight. The stock had been working on a bullish pattern (ascending triangle), only to resolve it lower (red circle on chart below). Last week while I was out, price bounced back to test that breakdown zone, and has since rolled over. I missed the opportunity for a trade on the current move, but believe this stock has just undergone a significant change of character and will now be watching for failed bounces to offer shorting opportunities.
ICON is working on a large bull pennant here and still looks like it needs time. Price is sitting in the center of the consolidation area, so I’ll keep it on watch until price begins to pressure resistance and upside volume improves.
PHM is looking ripe for another pop here after a few days of rest to digest the prior run. Higher lows remain in effect, and a push through $18.70 could produce a quick rally back toward the $19.30 congestion zone from this summer. I like this for a single-day play for Friday rather than for a swing given the weak upside volume it exhibited today and the somewhat sloppy base it’s currently sitting in.
NBL is getting squeezed from both sides in this symmetrical triangle pattern but the overall trend in recent months is up. I’m watching for an upside resolution, but not yet for a swing given the finish off the session high today as well as the reduced upside volume. Instead, I’ll take it for a single-day play for Friday if it can clear $74.70.
FNSR is at support here and a break below $20.90 would mean a new correction low and would likely trigger some sell stops. I like this one for a single-day short sale for Friday if the breakdown occurs, but it has some support just above the $20 level where I’d expect prices to attempt to stabilize.
TSLA was listed here last night but did not trigger a trade today. The same pattern is in effect here so I’ll again be watching for a single-day play on the short side for Friday if price breaks $118.90 to continue the correction. I liked today’s finish well off the session high and the weak upside volume, both of which are bearish given the close proximity to support.
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.
CL is turning up here on expanding volume with a strong close today to face a possible breakout any day. A push through $66.20 will trigger a buy for me as a swing trade. I’ll be looking for a measured move based on the $4 height of this pattern, with a protective stop just beneath rising support.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
