Good evening StockBandits!
Another week, another positive start today as some morning weakness was met with enough buying to leave each of the averages positive by the closing bell. The RUT, which showed glaring relative weakness last week via a 2% slide, got back in gear today with a solid 1.2% gain to lead the way. Elsewhere, the gains were much less impressive with plenty of intraday indecision, but the bulls continued to maintain the upper hand on this market as each of the indexes turned higher within their respective short-term consolidation zones.
The bid beneath this market remains in place, and that’s keeping the downside very contained on any pullback attempts we’ve seen lately. That means the market is having to correct more by time (lateral movement) than by price right now, which is the next-best thing the bulls could hope for behind higher prices. After all, in the minds of the bulls if prices aren’t climbing, at least they aren’t retreating. The result has been just a few days of basing action, but a much-needed rest from the nonstop lift we had gotten for much of October.
There are still a ton of bullish charts out there, it’s simply a matter of letting the bases mature a bit when it comes to setting up new plays. Some tightening patterns or further validation of key levels would help, so I’m trying to patiently let that happen. With a market that’s almost refusing to roll over and so many stocks in uptrends, the temptation is to “just get long” and hope for continuation. On the practical side, however, good trading is about managing risk at all times, and that type of approach lacks a downside exit plan. With more strength, it would work great, but should the rally happen to falter a bit, it becomes far more tricky.
One other note is that the data provider for the charting service I use had an outage today, so the data on the charts below may be slightly adjusted before the night is over. It is believed to be correct according to a Worden representative, although the data provider is going to resend data once more later this evening to ensure accuracy. I say all of that simply because if your numbers show something slightly different, that’s why.
Let’s get to the charts.
NAZ – The NAZ lifted slightly today on what looks like diminished volume, but held within its short-term trading range. This basing action could soon be followed by additional strength, although each day spent between support and resistance helps to further digest the October rally.
SP500 – The S&P kept its dip from last week shallow with another small advance today, leaving it just a few points from the all-time high of 1775. This gives an excellent picture of the underlying bid beneath this market as bulls aggressively buy dips and bears are quick to cover shorts.
RUT – The RUT validated 1087 last week with a test from above then bounced back hard today to recover half of what it had given back last week. Tonight it’s still range-bound here, so it will need more time before a directional resolution can be expected. The uptrend is very much intact and the dip last week may even prove to be yet another higher low.
Notable Names:
POL is a stock that keeps maintaining its uptrend channel with every dip to rising support being met with buying. Today it turned up again from rising support, although upside volume looks very anemic. For that reason and the pace at which this stock tends to move, it’s not of interest to me for a trade. I just felt the rhythm and repeat price action was worth pointing out because it’s the kind of thing I look for in charts when working my watchlist.
CSX is working back up toward resistance and could soon be a breakout play. For now, upside volume is failing to impress and price is still a couple percent from resistance so it’s not yet knocking on the door. In the meantime, this pattern could tighten further, which would be positive.
TSLA is set to report earnings on Tuesday according to Yahoo! Finance. I’m not looking to trade it with that major event, but today we saw price lift well away from the $158 level it has repeatedly respected, including tests last week. The buyers are defending that level for now, but with earnings on tap anything’s possible for this momentum stock.
AVGO looks good here for a single-day play on the long side for Tuesday if price can clear the trend line at $45.70. It had turned away from it on Friday but today a small advance left it not far from the trend line. I’d expect a quick test of the high upon a trend line break.
VJET is getting some traction here after a couple of days of hesitation last week when it cleared the short-term trend line. This is a new issue with little history to go on, but I like it for a single-day play above $36 for Tuesday as it could quickly run toward the high. I couldn’t find an earnings date for this one so I will not be holding it overnight.
N was listed here last night but did not break down. Price only lifted fractionally, and the same setup is still in effect. I’ll take this one for a single-day play on the short side on Tuesday if it breaks support to make a new correction low at $97.50.
PWRD is still not quite tight enough to initiate a swing, but it looks good enough for a single-day play on the short side if it undercuts the lower trend line of this rising wedge at $16.95 on Tuesday.
SOHU is resting on multi-day support here and could see another quick round of selling if it breaks $65.40. I’ll take it for a single-day play on the short side if it undercuts that level on Tuesday, but it’s still short-term oversold in my opinion to consider a swing. It does have a few points of room before it would test August support, which it could easily reach in a day given its ability to move.
New Swing Trade Candidates:
No new swing candidates tonight, sticking with existing list.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
