Good evening StockBandits!
Stocks found rejection at key resistance areas today, unable to clear important zones of resistance. The S&P 500 again failed to hold 1850, the RUT was unable to break 1182 once more, and the DJIA fell back to the 16174 area. With the NAZ having broken out last week, it still has a little breathing room to the downside but did respect Monday’s high in today’s session as the late-morning highs got faded.
I mentioned a couple of nights ago that this is shaping up to be a potentially pivotal week for the broad market, and so far that’s still on the table. Up against key levels, we either break out or roll over, there’s not much middle ground. The bulls have fought back over the past 3 weeks to create a chance for a breakout, and the bears are anxiously waiting to see if overbought conditions at resistance will provide an opportunity. There’s a sense that some pressure has built and we’re rapidly approaching a decision point.
My trading plan is to keep seeking out setups on both sides of the market. We’ve seen ample strength of late, but there are still stocks which are exhibiting weakness and therefore presenting shortable setups. Likewise, not all bullish stocks are extended and there will be some pockets of strength to turn to. The key for me is to (1) take what the market gives by not forcing too many trades or overstaying my welcome, and (2) maintain an eye on risk for every new setup that comes along. That helps to ensure I’m first protecting my capital with a secondary chance to grow it. By keeping my priorities in that order, I can stay in the game and remain open to the inevitable good plays that will surface.
Let’s get to the charts.
NAZ – The NAZ stayed within Monday’s range today and posted a minor decline in the process. This equates to a day of much-needed rest, with 4246 being the recent breakout level which bulls will want to defend.
SP500 – The S&P again cleared 1850 intraday only to fall back below it by the close. This is a major hurdle for this index, and until we see a solid breakout, flat to down would be the path of least resistance. It’s important to note that every day of rest right now is critical as this index is still a very long way from the February low of 1737.
RUT – The RUT got within 3 points of a breakout again today, but couldn’t make it happen and ultimately pulled back to finish near last night’s closing level. This index is also extended, making this a very logical spot for some rest.
DJIA – The DJIA keeps dancing around the 16174 area, which was first resistance last November. It’s struggling to get free of this level, so if the bulls let another rally or two fizzle, we could see a retreat kick in.
Notable Names:
TSLA was the story stock of the day today, up over $41 for the session at one point. This is what it looks like when momentum is hot, and shorts are paying dearly for trying to fade it. It will cool off at some point, but this is not a spot for entering – long or short.
JPM is starting to turn lower here and other major financial names have a similar look to them. I point this out due to the financial exposure in the S&P 500 which is struggling so much to get over 1850. That breakout may not happen without the help of the banks.
CBOE is on my radar but I’d like to see price stabilize before setting up a play. Just a pattern in the making that I wanted to share with more comments on the chart.
MYL is a small pattern and a drug stock as well, which are two reasons I’m only interested in a single-day play. I like this bull flag and will look to get long if price can clear $52.15 on Wednesday.
GOGO is just coming off short-term support and clearing a small descending trend line. Upside follow through with a push above $20.65 looks great to me for a single-day play.
WWWW is still in the same pattern tonight just beneath short-term resistance so I’m looking to set up the same single-day breakout play if price clears $37 tomorrow. With many recent gaps and indecision I’m just not interested in an overnight swing.
TWTR has struggled to show follow through so I won’t be counting on a multi-day move here. However, it is leaning on support tonight and a break below $54 could trigger some sell stops, good enough for a single-day play for me on the short side if that level is taken out.
AMBA is breaking rising support here and lately that has led to some continuation. I’m only looking for a single-day play here but will aim to get short upon a break below $30.70 if it happens on Wednesday.
New Swing Trade Candidates:
No new swing candidates tonight, sticking with existing positions while waiting for new swing-worthy setups to surface.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
