Good evening StockBandits!
There was no first-of-the-month strength today as traders apparently had greater interest in spending their money on Cyber Monday deals instead of stocks. Without a catalyst, stocks began the new week chopping around for the morning. Much of that time was spent in negative territory, but the averages never got very far from the flat line. A mid-day bounce took the NAZ, S&P 500 and DJIA each to their session highs (and slightly positive on the day), but the RUT stayed weak and refused to participate. As the afternoon kicked in, so did more selling. Each index closed the day right near their lows, but it was the more speculative small-cap RUT which led the way on the downside with a 1.2% decline.
Mainstream media may point out that the S&P 500 held 1800 and the DJIA held 16000, but there’s nothing magical about those numbers technically. Each of the indexes are still above their breakout zones from last month, making today appear so far to simply be some healthy profit-taking. We haven’t seen pullbacks very often, and when they have arrived, they’ve been short-lived. Time will soon tell if this one will fit the same description, but there was no technical damage today despite the uninspiring performance.
Interestingly, there are plenty of stocks right now which are correcting. With a market just one session removed from its highs, that either points to a narrowing of strength, or perhaps some rotation. Whichever way you slice it, the bottom line is that there should continue to be some opportunities for us on both the long and short sides of the market, regardless of which way the indexes go. My preference is to be positioned on a net basis (long/short) in the direction of the overall trend, which is still up. However, shortable setups will present some trading opportunities and perhaps a natural hedge as well, so it’s important here to keep an open mind.
Let’s get to the charts.
NAZ – The NAZ pulled back to fill a minor gap from last Friday, but overall remains well above the prior pullback low of 3911 and still has room before the breakout zone would be tested.
SP500 – The S&P established no new levels today, pulling back quietly right to 1800. 1775 was former resistance turned support two weeks ago, making it an important level to keep on the radar should we happen to see further weakness. Note the lack of progress over the past 5 sessions – this is still a rest phase so far.
RUT – The RUT was heavy today and went out right near its low. It’s also just a few points from 1123, a level respected from beneath and where it showed some hesitation breaking out. Higher lows are still intact though, with 1096 still 33 points away.
DJIA – The DJIA neared the lower boundary of the channel today but held inside it. We’ll eventually exit this channel, and it wouldn’t take much here to see a little spurt lower if more profit-taking kicks in.
Notable Names:
GLD looks poised to test the summer low of $114.68 in the days ahead. It has been weak for the past month, and today accelerated lower to reach new multi-month lows.
CSIQ is on my radar as a minor pullback within an uptrend, but price isn’t perking up just yet so I’m going to leave it on watch. The descending trend line currently sits near $30.10, so price is still a few percent shy of that level and therefore not knocking on the door just yet.
TSCO finished well off its session high today but remains in good overall shape as it nears the apex of this ascending triangle pattern. A breakout at $75 would interest me for a play on the long side, but with price currently hesitating, I’m going to leave it on watch for another day and see how it acts on Tuesday.
AOL is perhaps ready for a trend line break to end its minor pullback of the past few weeks. A push through $45.70 could quickly bring about a test of the high, so I like this one for a single-day play for Tuesday.
BITA is trying to hook back up here and some follow through would interest me for a single-day play above $33 on Tuesday. That could bring a quick test of the high, but this stock has shown some indecision lately and therefore just doesn’t interest me for a multi-day swing.
EGN is starting to break down here and I’d like to participate in follow through should it happen to occur. I like this one for a single-day play on the short side below $70.50 for Tuesday, but a swing stop would be wider than I’m willing to accept.
AEGR is a very volatile stock, as can be many biotech stocks. As such, I’m interested only in a single-day play here. Price is hugging rising support and a break below $69.50 could spark more selling as another lower high gets carved out on this daily chart.
New Swing Trade Candidates:
No new swing candidates tonight, waiting for patterns to further mature before adding to existing positions.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
