Good evening StockBandits!
The highly-anticipated jobs report on Friday delivered some fireworks with a huge spike higher in the futures an hour ahead of the opening bell, but the knee-jerk reaction was the high of the day for the futures. Stocks opened higher, but the big 3 indexes each painted their highs in the opening moments of the session before retreating back toward the flat line less than an hour later. From there, we saw some modest buying which took the market out in the green, although the day’s range had been set in the opening hour.
On the week, the gains were steady to keep the uptrends which began in November intact. The NAZ and S&P each saw important breakouts to new multi-year highs, while the DJIA and RUT each were able to achieve new all-time highs. There’s no question that the trend is still up for the market right now, although there are still bearish charts in individual stocks remaining. Often times after a multi-month rally like this, the rising tide has lifted (nearly) all boats. However, at the moment there are either some stocks sending a warning signal or they’ll benefit from some rotation once it comes along.
Rather than predict what’s happening next, it’s far more important to simply stick with high-quality setups. Not only does that help in timing better entries, but it also helps to reduce risk and generally will leave us positioned in the direction of the prevailing trend.
I’m working the charts regularly in search of good plays, and in times like this when the market seems to rise daily, it’s sometimes difficult to stay patient with new setups. The tendency of traders is to lower their standards and “just buy something” rather than staying methodical and level-headed. I’m fighting that same tendency here, but sticking with my game plan even if on some nights that means no new swing candidates. There are some I’m eyeing as we head into Monday’s session, and I’ll share them here after a look at the indexes and some notable names.
Let’s get to the charts.
NAZ – The NAZ made a more convincing breakout last week than the previous push past 3196 (which didn’t stick). Monday continued the bounce from the prior week, followed by a breakaway gap Tuesday and strength which continued through Friday. This index is now some 138 points above the low just two weeks ago after going 7-for-9 during that stretch. That’s a big move, but the bulls have momentum right now and that’s not something to fight.
SP500 – The S&P cleared 1530 last week to break out from its high channel and start a new leg up. This index is now closing in on its all-time high of 1576, a level which stands just about 2% away from current prices. A rest here would greatly benefit the bulls, although the idea of new all-time highs may be a more pressing matter. After all, few want to sell when the market seems to be rising every day.
RUT – The RUT continued its win streak on Friday to post its 9th consecutive advance. That’s an impressive feat, but perhaps even more impressive is the rally through the previous high to post new all-time highs. This is the more speculative index among the bunch, and it’s hitting levels never seen before. There’s clearly still an appetite for equities.
DJIA – The DJIA went wire-to-wire last week in the green to make new all-time highs and negate its broadening top or megaphone pattern. That’s quite bullish to say the least, although in the short term a pause would be healthy.
Notable Names:
HRS is breaking through a major level here but is doing so after a multi-day selloff. That makes this a tough play to initiate, simply knowing that a bounce could come at any day. Nonetheless, the path of least resistance is now down with key support having been undercut. Lower highs have been in place on bounces since the fall.
Why I Use TC2000
BVSN is a pop-and-drop stock and here it’s making one of its signature moves. While these single-day advances are impressive, they rarely last and typically result in a fade back to levels seen prior to the excitement. This is a great example of why it’s so important to book the “gift” types of gains when they come along, whether in this stock or any other like it.
Why I Use TC2000
M is gearing up for a breakout on this weekly chart. It tends to be a very slow mover, so I’m not looking to swing this one, but it has some room to rally toward a prior high and well beyond if a measured move takes place.
NFLX is set up here for momentum players if it can clear upper resistance near $186. It may stretch its legs for a $200 print in the near future if so, but I’m still not interested in a swing due to the gappy nature of this stock and the current distance from a technical entry to an appropriate stop loss.
YHOO is constructing a high flag pattern here but this is currently a very small pattern and often times the size of a pattern is reflective of the expected move out of it. Stated otherwise, larger patterns tend to produce longer-lasting moves and smaller patterns like this tend to be better for quicker plays.
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.
FAST is in a tight wedge or symmetrical triangle pattern here and looks ready to resume its intermediate-term uptrend. A turn up through $52 triggers a buy for me, and I’ll use rising support for a stop. The height of the triangle equates to $3, which also matches a prior high from last March.
MON has been channeling for a number of weeks and now has rallied up toward key resistance. A breakout through $104.30 starts a new leg up and triggers a buy for me. I’ll be using rising support for a stop, and will look for a measured move of $6 out of this base for my target. Earnings are early next month so there’s time for this one to go, but I’ll be out ahead of the scheduled news regardless.
ALDW has been building this narrowing base or symmetrical triangle pattern for the past few weeks. Price has become quite compressed here, and a breakout could occur any day now. A turn up through $27.80 triggers a buy for me, and I’ll use lower support as my initial stop. The height of this triangle is roughly $3, and this stock could carry at least that far. I’ll be setting my conservative 1st target just inside that projection, and a more aggressive 2nd target slightly beyond.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
