Good evening StockBandits!
Sunday evening weakness in the futures markets indicated a poor start for US stocks after the weekend, but an overnight reversal to the upside and some positive economic data painted a much different picture by the time the stock market opened. The opening gap to the upside was quickly followed by additional strength, producing solid advances for each of the indexes. That kept the NAZ in its recent range above 3966 and the S&P 500 above 1775 while the DJIA and RUT each rebounded from their short-term lower lows.
The snapback rally after a brief pullback has been the ongoing playbook in recent months, but don’t be too quick to jump to conclusions – the week is far from over. With the FOMC meeting on Wednesday, anything’s possible and we could see a little bit of everything. We’re also nearing the end of December, which has a slew of cross-currents I’ve mentioned here multiple times since the start of the month. These things are likely to keep the price action tricky, so assumptions can be very misleading.
I added one swing position today (FNSR listed here last night) but as we head into tomorrow I’m looking only to single-day plays for new trades. Market leadership looks to be narrowing, patterns need more time to mature for better risk/reward scenarios, and on top of that there’s just not a lot of interesting setups here. Rather than force new trades, I’m following my intuition here based on 13 years of full-time trading that less is more right now.
Let’s get to the charts.
NAZ – The NAZ added 28 on the day but between the bells it only tacked on 10. That shows some limited intraday interest, and we also saw a finish nearly 14 points off the session high. Volume picked up, but overall price is sitting right in the middle of the range, making it tough to expect follow through.
SP500 – The S&P tested 1775 twice last week and then rallied away from it today to finish 11 points above it. That leaves this index range-bound as well, with room up to 1813 before key resistance would get tested.
RUT – The RUT was the leader today with a 1.1% rally, although it still stopped short of reclaiming 1123. It’s now 20 points off its low from last week, but with a confirmed lower high and a key level still overhead, it’s tough to embrace the bullish side just yet.
DJIA – The DJIA regained some ground today but the high was set in the opening few minutes and was followed by a slightly negative drift for the remainder of the session. Like the RUT, there’s already a lower high confirmed here and that leaves this index with plenty left to prove before last week’s low can be considered a floor of any type.
Notable Names:
FB is extended here after running 5 of the past 6 sessions and getting within $0.33 of the all-time high today. This stock is due for some rest and this is a logical spot for a pause, although stocks don’t always move in a logical fashion.
QIWI was sitting in a compression pattern just over a week ago. Although it looks tight after the 4-day rally it just painted, the fact is that at the time it looked to need a little more tightening. Nonetheless, the breakout was swift and the push which followed was impressive. Today’s bar and the weak finish well off the high suggests it’s finally ready to pause, but this is a great example of what these compression patterns can do.
PAAS is looking ripe for a move here so I’m eyeing it for a play for Tuesday. I like it for a single-day play if it sees a low-level breakout through $11.35, which could open the door for a quick rally toward $11.80 to fill a gap. This stock would require a wide stop for a swing and would likely require considerable time as well since these low-level bases often see some tests. I’d prefer to just participate in the initial push through resistance if it happens tomorrow.
GOGO is still pulling back here and I’m going to respect that, but it’s a lively stock and a trend line break is not at all out of the question. A swing stop would be wide, so instead I’m just eyeing this for a single-day play for Tuesday if it clears $30.10. After this pullback, it could jump and the initial move is the one that interests me most.
QIHU broke down today despite my hope for a bit more basing action as mentioned here last night. There’s opportunity here for a momentum short though, so I’ll take it for a single-day play Tuesday if it undercuts $75.70 to make a new pullback low. A swing stop is still just too wide for my preference.
QCOR is hugging short-term rising support here so I’m looking for a possible turn lower. There are already lower highs in place over the past few weeks, so this bounce could easily fail. I like this one for a single-day play on the short side for Tuesday, as it fluctuates quite a bit and the initial spike lower is the one I’d prefer to participate in.
YELP has recovered since the initial head and shoulders breakdown attempt a few weeks ago, but now price is hugging rising support. A break below $63 looks good for a single-day short sale for Tuesday as price heads back down toward recent support. Price has been a bit indecisive of late, and a wide stop would be needed for a swing, which is why I’m not looking to keep it overnight.
New Swing Trade Candidates:
No new swing trades tonight, sticking with existing positions heading into Tuesday’s session.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
