Good evening StockBandits!
The NAZ and RUT are still streaking with today’s advance making it 8 straight for each of them. The S&P, you may recall, had a decline of 0.49 last Wednesday which prevented it from being included in the previous sentence. SPY painted its 8th consecutive daily advance today, and the /ES (e-mini S&P 500 futures) actually made it 11 straight today. Living just about 3 miles from Byron Nelson’s ranch, I can respect a streak like that.
The only problem with a streak like that is that it’s so limited in terms of opportunities. Those who threw caution to the wind during the last pullback (both legs) have quickly been rewarded, but those of us with an eye on risk recognize many new buys as a chase here, and many shorts as premature. The back-and-forth is a step in the right direction, but things will certainly improve once we see some rest – basically, anything other than another sharp reversal.
Despite today’s strength, the NAZ remains the only one among the bunch sitting at new 52-week highs. The DJIA has a lot of overhead to deal with, the S&P is still facing 1850, and the RUT has both 1167 and 1182 to clear before it’s facing blue sky.
The buying has been impressive on this rebound, but with volume still not confirming the bounce and price extended even further now, this is a time when the path of least resistance seems anything but up in the short term. I’m sitting with light exposure and awaiting more basing action to set up new plays.
Let’s get to the charts.
NAZ – The NAZ got 309 points off its low of less than 2 weeks ago today, which represents a 7.7% lift in 8 1/2 sessions. Aside from the numbers, the appearance of this straight-up move leaves this index looking undeniably stretched. Toss in the facts that upside volume has been quiet and that none of the other indexes have broken out with it, and a compelling case can be made for a little profit-taking.
SP500 – The S&P gained just a couple of points today, but was still able to keep the upside pressure on. Tonight it sits 10 points from 1850, the all-time high set just over a month ago. Having lifted 6% from the low in just 8 1/2 sessions, this index also looks very extended and overdue for some rest or retreat.
RUT – The RUT has bounced 7.3% in the last 8 1/2 sessions, but still hasn’t reclaimed the 1167 level. That’s where the January breakout took place for a few days before a failure led to a quick 100-point pullback.
DJIA – The DJIA failed to make headway today with the others as it continued to respect the 16174 level. This index remains extended with the large V-shaped bounce, and tonight sits more than 450 points off its all-time high.
Notable Names:
APOL is trying to break out here but upside volume today was well below average. Rather than trusting it for a swing, I’ll opt instead for a single-day play on Wednesday if it shows some upside continuation with a push through $33.25.
YELP is sitting in a bull pennant here after a nice jump post-earnings. A turn up through the small descending trend line at $92.50 could spark a quick rally as it tries to regain some of the recent momentum. I like it for a single-day play if it clears that level on Wednesday.
CSIQ is at the upper end of a large triangle and may try to clear declining resistance soon. Given that this pattern still needs much work, I’ll look to participate in the initial push higher as a single-day play on Wednesday if price is able to clear $39.70.
JCI has pushed higher in 7 of the last 8 sessions but may be running out of steam. The pace of the lift has slowed considerably with only incremental gains in each of the past 2 sessions, and upside volume is falling rapidly. Price has also reached the area of the lower portion of the trading range from late 2013, so I’m watching the steep rising trend line for a single-day play on the short side for Wednesday. I like it with a $48.70 trigger as that could easily spark a quick round of profit-taking.
New Swing Trade Candidates:
These stocks look ready for imminent multi-day moves. Pattern confirmation occurs with a move through the entry level. Initial stop and target levels are also provided.
MAN was listed here last night and today lifted just a bit further to challenge the lateral trend line I shared. Volume is still light, so I’m watching rising support for a possible break to trigger an entry on the short side for a swing trade. I’ll have a protective buy stop just above the bounce high, and will be looking for a retreat back toward the recent low where the stock found support earlier this month, as well as last October and September.
LNC has rallied to create this rising wedge pattern but price is still well shy of the highs and upside volume has been diminishing. I’m looking to get short if price breaks rising support at $49.10 with a protective buy stop just beyond today’s high and looking for at least a return to the recent low.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
