Good evening StockBandits!
The market stopped the bleeding today after an early bounce attempt was met with selling to take 3 of the big 4 indexes to new pullback lows. From there, a modest early afternoon lift left the indexes in the green for the remainder of the session.
Despite the buyers finding their footing for now, the way today’s rebound took place was certainly far from impressive. The DJIA was up triple digits, yes, but the other indexes saw only minor advances as they recovered only a small portion of what has been given back in recent days.
Perhaps more importantly, upside volume was just downright weak today, showing that there was limited participation in the rebound. That may be indicative of shorts unwilling to cover and/or bulls unwilling to buy this dip just yet, but either way it makes today’s bounce look rather feeble.
In the bigger picture, the trends remain up and the bulls aren’t yet being threatened. There’s still ample room for a pullback to continue before the worry of a lower low would come to light, so for now this still appears to be healthy profit-taking. It is also going to result in some better bases for new plays, although for now there isn’t much to show.
I’m only setting up a single new trade tonight, unwilling to force new positions in what may be the early stages of a deeper correction. As higher-quality bases come to light, I’ll make them my focus, but for the moment I’m staying selective with limited exposure and am naturally hedged with both short and long open positions.
Let’s get to the charts.
NAZ – The NAZ added just 16 points today after yesterday’s 45-point selloff, which by a pure comparison makes today’s snap-back rally unimpressive. Volume was absolutely anemic, which also lends to the idea of this bounce needing a lot more before it becomes convincing. The broken trend line is at 3164 and that’s the level the bulls will want to reclaim.
SP500 – The S&P got back above 1495 today, but not by much. It regained only about 1/3 of yesterday’s losses and did so on very light upside volume, leaving it well short of the broken uptrend line (1517) and looking like this bounce could also be short-lived. That’s no prediction, simply an observation of the character of today’s bounce.
RUT – The RUT tested 894 to the number today, which is the number I highlighted here last night. From there it was able to lift modestly, but still looks quite vulnerable after a recovery of just 1/4 of Monday’s losses. A break below 894 ushers in former levels like 883 and 868 as next support zones.
DJIA – The DJIA remains indecisive after yesterday’s new 52-week intraday high and reversal to break below the channel, followed by today’s lift back into the channel. This index seems to be waiting for cues from the others, although Main Street is likely more interested in the fact it’s back below 14,000.
Notable Names:
AAPL is trying to stabilize and has moved laterally for a month now. Today it got within $3 of the January low of $435 and lifted slightly, but it’s far from out of the woods. More lateral movement would be ideal to let the downtrend line catch up even more, at which time a turn up would become a bullish event.
AGU is still selling off. This stock is short-term stretched and is coming into a key level of potential support, which may help it to stabilize. However, this is the kind of setup where it’s too late to short and (most likely) too early to buy. Either way, it helps to depict what happens when the mood shifts as bulls have bailed out bigtime since the failure at resistance.
NUVA pushed past lateral resistance yesterday and then promptly sold off hard, marking a breakout failure. Today the stock broke Monday’s low then vaulted higher to close above resistance and begin filling the gap from last October. This no doubt left some traders frustrated on both sides, but it may have some potential as a momentum play here if it finds some follow through strength to today.
TRLA is returning quickly to its key level of $23.50 after a pop-and-drop move over the past couple of weeks. This level may again provide a play, although I’d prefer to see it get tested and then hold for a couple of days first.
MCK triggered a buy for me yesterday then sold off hard, and last night was looking like it could just as easily stop out. Today it lifted to keep the triangle pattern intact, and now has a second chance to break out. It’s far too early to expect this one to behave perfectly, but for now it offers an example of sticking with the trend lines as important levels since the lower line was held.
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.
ADTN was highlighted here Sunday and I noted the pennant needed more time to mature. Just two days have passed but already these (redrawn) trend lines are cleaner. Price is not yet perking up against resistance, but I’m setting up the play anyway to get long if the $23.35 level is cleared. That would pave the way for another leg up to begin and this stock could then begin to work on its unfilled gap from last July.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
