Good evening StockBandits!
It was another lackluster day for the major indexes with mixed results and minor net changes. Volume improved slightly from Monday’s light levels, and once again we saw morning weakness scooped up by the buyers. That’s no guarantee that this range gets resolved higher, but it reminds us that both bulls and bears are buyers right now into dips. Pair that with the existing trend being up, and it might just take a catalyst to move stocks lower because complacency sure isn’t doing it. It’s a “no worries” type of market, so we don’t have to trust it but it will likely serve us well to go with it until it changes. (And eventually it will.)
Days like today reiterate the case for abbreviated timeframes in momentum names. Two stocks listed here last night for single-day plays today made excellent moves with VJET running over $3 past the trigger and SOHU moving nearly $2. That’s providing some cash-flow for now, but my swing exposure remains limited. Today I was stopped out of TSCO for a small 1.6% loss, but triggered into NOW and it got off to a decent start. Overall, there’s just not a ton of trading to be done here as the indexes continue to churn in short-term trading ranges just beneath their highs. That will change, but until then the name of the game is taking what the market’s giving even if it means the better moves are for single-day plays.
I’m still seeing primarily bullish charts out there, as my watch lists exhibit, but there are stocks showing weakness as well. The bulls haven’t shown any signs of letup, and this rest we’re seeing is actually healthy. As long as that remains the case and the trend stays up, that’s the direction I’m going to primarily be positioned in not only by intention but also by way of the sheer number of bullish candidates vs. bearish.
Let’s get to the charts.
NAZ – The NAZ rebounded from early weakness today to post a modest gain of 3 points. Tonight it’s still range-bound, which is very healthy after the October run even if it means some choppy sessions lately. The bulls are holding their ground quite well here, but an upside break is needed to set this index in motion again.
SP500 – The S&P lifted from its session low but still finished negative by a few points today. Overall, it’s still in very good shape here for another breakout soon if the bulls want it. We’ve consistently seen limited and brief dips in recent weeks, so buyers are keeping the pressure on for now.
RUT – The RUT respected Monday’s range today but it finished lower by a few points. That left it once again near the center of the trading range between 1087 and the 1123 high. I expect more choppy action with limited follow through until this range gets resolved to open the door for longer-lasting momentum.
DJIA – The DJIA continued its string of clings to 15600 today, holding 103 shy of the high from last week but not giving up much ground at all. This is a rest phase at the top end of a 1000-point trading range, leaving the door of possibility open for a resolution higher if the bulls want it.
Notable Names:
MTDR is a setup I’d like here for a swing if not for earnings being scheduled for Wednesday after the bell (according to Yahoo! Finance). As such, I’ll instead opt for a play to participate in the initial turn back up if we see a trend line break on Wed at $19, with an exit prior to the closing bell in order to avoid earnings.
SPLK keeps testing $64.50 but hasn’t yet broken through. I like this one for a single-day play on the long side for Wednesday if it clears $64.60 ($0.10 past resistance), but this tends to be a sloppy stock from day to day and I don’t expect follow through, so it won’t be keeping it overnight.
UA has been driven lower by a descending trend line but is still holding above multi-month rising support. A turn up through the trend line at $81 sets up a possible short-term lift toward the unfilled gap near $84 from 2 weeks ago, so I’ll take it for a single-day play on Wednesday if it gets north of the trend line.
MPEL is nearing a resolution to this compression pattern but I’d prefer to see it tighten just a bit more before setting up a swing. Waiting would build up a bit more pressure, and simultaneously entail slightly less risk given the tighter stop under that scenario. For Wednesday, it looks good for a single-day play above $34.40 if the trend line break occurs.
SGEN is looking ripe for another retreat here as it tests multi-week support. A break below $38.10 could trigger some stops for those hoping this level holds, so I’m looking at it for a single-day play on the short side for Wednesday to participate in the initial breakdown move. There’s not a real well-defined swing exit, plus it’s a biotech stock, so I won’t be keeping this one overnight.
AGCO is nearing the apex of this small rising wedge or bear pennant (if you include the sharp decline which preceded it), so I’m looking for a play on the short side here below $57.95. Next support isn’t far below (near $56), so I’m only looking to take this for a single-day play since the risk/reward for a swing isn’t very appealing due to the limited downside I’m expecting here.
New Swing Trade Candidates:
No new swing candidates tonight, sticking with existing list while waiting for patterns to mature for new plays.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
