Good evening StockBandits!
It was another ho-hum day for the bulls today as another dip got bought. A minor downside gap to start the day was met with a feeble initial bounce attempt, followed by more selling and a move below Monday’s intraday low. For a little while, it looked as though the market might actually see some meaningful profit-taking as the potential was there for some accelerated selling. However, stocks stabilized and a mid-afternoon higher low on the intraday chart sealed the fate of the bears as stocks recovered into the bell to leave the averages little-changed and not far from last night’s closing levels.
The bulls have momentum on their side right now, and that’s a difficult thing to fight. Trading on the short side right now is tricky, despite the temptation many are feeling here to pick a top. Rather than getting in the way of strength, the best bets on the short side are in those stocks which are already exhibiting some bearish price action and relative weakness. At the moment, dips are still being viewed as second-chance exits for trapped bears and bulls are still eager to put cash to work on even the slightest of discounts.
Let’s get to the charts.
NAZ – The NAZ backed off a bit today but once again we saw supply quickly absorbed. The morning weakness brought out at least some buyers, leaving this index nearer to its session high than the low by the closing bell.
SP500 – The S&P snapped its winning streak today but the pullback was paltry. No change of character has taken place here yet, and this index has some 22 points of cushion before it even tests the breakout zone from last week at 1530. Bulls still have the all-time high of 1576 in their sights.
RUT – The RUT finally finished in the red today but not by much. Should this tiny pullback happen to find follow through, next levels to watch are 932 (prior resistance) and 916 (unfilled gap from last week).
DJIA – The DJIA painted another green bar today with an intraday rebound from the red. Main Street is loving the “Dow All-Time Highs” news they’re seeing every evening, but some rest at this stage would actually help to prolong this rally by preventing it from becoming too extended.
Notable Names:
AAPL just can’t get it together and the downtrend is still intact. Since turning lower in September off the $705 level, this stock remains beneath the primary downtrend line. It needs to get above that line before making any lasting progress on the upside, and therefore remains vulnerable to continued corrective price action until then.
Why I Use TC2000CRM is becoming a failure-prone stock. A few weeks ago it broke down from an uptrend channel only to quickly reverse back up to make new highs. In recent days it had consolidated in a bull pennant but today it broke down hard on heavy volume to negate that pattern as well. Stocks which become erratic like this one should be avoided regardless of their liquidity or activity as the price action simply becomes unreliable.
NKE is seeing an important shift here after carving out a lower high and then breaking uptrend support today on heavy volume. This is a bearish change of character and bounces going forward should be viewed as selling opportunities.
FAST was removed from my Swing Candidates list tonight after breaking down from the bullish consolidation today. This turn lower negates the pattern, so I’m no longer interested in a play. It never cleared the trend line so no position was started.
BG is bumping up against resistance here and may see a bit of a pop if it can clear $75.75. However, the unfilled gap from last month is likely to prevent big upside in this stock, so this isn’t a swing setup for me.
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.
HP remains in an intermediate-term uptrend but in the short term it has pulled back quietly to test support. That area has held, and now price is being squeezed between the descending trend line off the recent high and lateral support. I suspect this one will resolve in the next day or two, so I’ll get long if it turns up through $64.50. Should it happen to resolve lower, it would negate this pattern and subsequently be removed.
SODA was listed here last night as a short sale candidate but did not trigger today. Rising support (which I’m using as a pivot for an entry) has slightly changed, as well as my intended stop loss, so I’m relisting it tonight with my new levels for the trade. My targets remain the same, as does the setup itself after some recent bearish developments (lower highs, lower low, broken utprend channel, volume not confirming this bounce, etc.).
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
