Good evening StockBandits!
The scheduled main event of the day (FOMC) actually proved to be the main event of the day as stocks flatlined ahead of the 2pm announcement and subsequent press conference. The policy statement’s minor changes and the light-volume bounce of the last couple of days paired together to provide reason for some profit-taking, so that’s what we got. A sharp selloff ended with about 45 minutes to go in the day, and we got a V-shaped bounce into the bell. It wasn’t enough to erase the day’s losses, although it cut about half of them. Overall, upper resistance was respected, keeping the short-term trading range intact for now.
Today’s volume did increase a bit, but it still wasn’t heavy. Just as last night I discussed the chances for continued range-bound price action, the prospects seem similar as we head into tomorrow. There’s room on both the upside and the downside now before price would threaten resistance or support, so unless we see some meaningful post-Fed downside follow through tomorrow, it could take a bigger catalyst to disrupt the short-term indecision.
It’s important to note here that this rest phase for the broad market is healthy. Given the magnitude of the rally off the February low, some basing action like this is a healthy way to digest that type of move. If we do happen to see additional weakness from here, it’s going to raise questions about lower highs.
The year is long and at this point setups just aren’t very plentiful. I’m OK with that, and over the years I’ve encountered many such times. I’ve found that the best way to handle it is to keep putting in the work to prepare for each day, dig through the charts, and maintain high standards. When nice candidates surface, set them up. When mediocre candidates surface, stick with abbreviated trade times (ie: single-day moves).
* If you have a couple of tickers you’d like to see included in tomorrow’s video, hit reply and send them my way!
Let’s get to the charts.
NAZ – The NAZ stands roughly 61 points above 4246 support, and roughly 64 points shy of 4371 resistance. That’s about as close to the center of the range as it can get, so the odds-on bet right now is that we continue to chop around until one of those key levels gets pressured.
SP500 – The S&P is about 23 points off the 1883 high and roughly 20 points off last week’s pullback low, leaving it caught between levels here as well. It is only 10 points from the 1850 breakout level which it’s been trying to hold, so that is the first level to deal with to the downside should we happen to get more selling.
RUT – The RUT is caught between 1212 resistance and the 1182 breakout zone. Today’s decline erased much of Tuesday’s advance, although it’s still positive for the week. This index badly needed some digestion, and so even though it’s been erratic lately this is still healthy to see.
DJIA – The DJIA carved out a lower high two weeks ago at 16505 (vs. 16588), and the bounce of Monday and Tuesday may have created another short-term lower high. Today’s decline didn’t break last week’s pullback low to confirm that lower high, but it’s now within reach.
Notable Names:
GLD got a bit too hot and has seen a quick 3-day pullback. It’s now back in a congestion zone it spent a few weeks in recently, which may allow this slide to slow down.
TLT keeps respecting key levels. It has cleared key support and resistance in recent months, but only for a day or two before returning. Over the past few weeks, it has tested resistance and support on multiple occasions. Tonight it’s near the center of its range, but eventually one of these levels will give way to a longer-lasting move.
NKE is a stock to keep on watch right now. It is churning near resistance and could produce a breakout move soon. I’m not setting up a play just yet, as I’d like to see price close near the $80 area so it’s in close proximity to new highs.
WWE has shown exceptional momentum in recent months and for the past couple of weeks it has built a wide bull flag. This pattern is too wide to set up a swing, so instead I’ll take it for a single-day play if price can clear $32 to make a new high.
LVLT is at upper resistance here and could soon clear the hurdle. I like this for a single-day play to participate in the initial breakout move if it happens with a push through $39.20.
VECO is stabilizing after a short-term pullback and has closed at nearly the same level in the past three sessions. A turn up through the trend line at $42.20 could set it free for a quick lift, in which case I’ll take it for a single-day play.
DGI is still sitting at short-term support and may finally be ready to go. I’m setting up this play one more time for a single-day play if it breaks $31.10 for a short sale. It’s been volatile of late, so I’m just not interested in a swing.
RAX weakened today after a short-term bounce and may be setting up for another tumble. It recently broke multi-week rising support. I like it for a single-day play out of this small base if price breaks $34.20.
WBMD is sitting at short-term support here and a breakdown at $40.95 would make a new correction low. I like it for a single-day play on the short side if that break occurs, but no swing stop is evident and there’s some congestion in the high $30’s which price may soon respect.
New Swing Trade Candidates:
No new swing candidates tonight. Volatility in the broad market has left bases sloppy and follow-through lacking, so I’ll continue to wait patiently for quality patterns.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
