Good evening StockBandits!
The market showed some letup today as Friday’s strong rally saw no real follow through to speak of. Three of the four indexes I watch were able to post green numbers on the day, but none were of any real significance as each finished just a short distance from where they ended last week. The highs were set in the opening half hour of the day, and from there we simply saw some choppy grind with a slightly negative slant to it.
My watch lists remain very limited tonight, which is a bit surprising given the trading range we’re seeing near the highs. Many stocks just look like they need more basing activity to help patterns mature or to further validate short-term key levels. That doesn’t leave a lot in the way of new setups to play, so this is a time to exercise some patience. It’s easy to get caught up in the excitement of a market near highs, but there’s just not much to do at the moment. Patterns need to build and stocks need to exhibit better momentum than what we saw in today’s narr0w-range session.
Let’s get to the charts.
NAZ – The NAZ edged to a new multi-year high today but backed off 13 points from its best level of the day. The weak finish gives this chart the look of some letup, suggesting the bulls aren’t feeling highly motivated just yet.
SP500 – The S&P got within 2 points of its high today, then backed off a few points into the close. The narrow-range bar it painted and the missed opportunity to break out suggest this index may stay range-bound a bit longer. We’ll see.
RUT – The RUT keeps testing the area of support (1123) in recent sessions and today finished slightly lower but still north of that key level. This index is range-bound with room to move higher within the range. The last dip stopped at 1111, giving us another level to keep on the radar in case of further weakness.
DJIA – The DJIA followed Friday’s big lift with a very small gain of just 5 points today and a very narrow range bar. That’s not the sort of upside follow through the bulls are proud of, so it will be interesting to see if they can keep it in gear or if instead this bounce serves to carve out a short-term lower high.
Notable Names:
TWTR was the story stock of the day today, rallying over 9% to threaten (but not break) the IPO day high. This stock is now up over 20% in just 5 sessions, leaving it ripe for a rest. There has been a lot of strength here, but coming right off the low it looks like a short squeeze and that makes this extremely difficult to chase.
BIDU is a stock that certainly has shown historically that it’s able to move with momentum, yet the past couple of breakouts above resistance levels have produced only short-lived and limited upside. Today it broke out but I don’t trust the move, based on the recent character of this stock.
GLD is still trying to turn around and today saw a second attempt to clear the descending trend line since last week. This ETF now needs some upside follow through to help carve out a higher low, but the potential is now there.
DDD is in danger of carving out a lower high but there’s still room for a lift here in the short term. I like it for a single-day play above $77.50, but this setup isn’t appealing to me for a swing.
LULU is holding up after a minor pullback and now a turn up through the trend line at $70.85 looks good for a quick rally back into the mid-$70’s. I like this for a single-day play but for a swing the risk/reward isn’t very enticing so I won’t keep it overnight.
SCTY was listed here last night and it offered some progress on the downside today but looks to have more potential. I’ll give it another shot for a single-day play on Tuesday if it breaks $51.20.
GME is respecting short-term support for now but a turn lower and break of $44.70 could spark another round of selling and distribution. I like it for a single-day play on the short side for Tuesday, but the risk/reward for a stop vs. next support isn’t favorable enough for me to take it for a swing.
CTRP bounced two weeks ago but has seen zero follow through, leaving it looking heavy here as it rests on multi-day support. A break below $46 on Tuesday looks good for a single-day play on the short side, although I’m really just looking for a quick test of the recent low.
New Swing Trade Candidates:
No new swing candidates tonight. Watchlists are limited and I’m sticking with existing positions while waiting for more new opportunities to surface. Risk/reward and sloppy patterns are the biggest holdbacks right now with new setups.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
