Good evening StockBandits!
At the end of last week, we saw the averages with yet another opportunity to push higher after having rallied within their respective ranges. The S&P 500 even tagged the all-time high set earlier this month at 1883 , only to get rejected once again at that level and retreat to stay inside the range. The recent indecision has created a high-level base for the bigger picture which could still support higher prices if a breakout occurs. However, in the short term, it has been a lot of zig-zagging with no follow through, frustrating overactive bulls and bears alike.
The movement within the range has been a bit erratic, which has led to very few high-quality setups. My swing activity has been very limited this month, which works out well given the lack of continuation and the overall market stagnation of the past few weeks. Chasing strength or weakness simply hasn’t paid. In addition, the range itself isn’t set in stone, so it’s not been easy to determine where to fade the moves, for those so inclined.
Right now, the lingering question remains: are we topping or just resting? We’ll have to let time reveal the answer to us on that, but in the interim it’s important to stay attentive and open-minded. If topping is indeed a process (as I’ve stated many times before), then this sort of high-level churning is likely to precede a slide. A lasting turn of direction would then need to be followed by a failed bounce and the creation of a lower high. We’ve yet to see that. Likewise, we’ve not sold off from the highs and after the rebound off the February lows all we’ve done is essentially move laterally. That’s a potentially bullish scenario which we cannot leave out.
The bottom line is that we’re caught in a range and it’s going to take a break before can expect any lasting moves – up or down. I’m setting up a pair of new swing candidates tonight, but feel better about that given there is a long and a short. When caught in a range, I’ve found it of benefit to have some exposure on both sides of the market.
Let’s get to the charts.
NAZ – The NAZ painted a bearish engulfing bar with Friday’s big downside reversal, but still remains above the 4246 breakout zone, keeping it range-bound for now. Friday’s huge volume was tied to the quarterly expiration, which somewhat suppresses the importance of it since it’s to be expected (see Dec, Sept, Jun, Mar and Jan expiration volumes as recent examples). So, I’m still watching 4371 and 4246 as the key short-term levels.
SP500 – The S&P tagged 1883 on Friday but reversed hard as it respected key resistance. Here again, we saw massive end-of-the-quarter / options expiration volume, just like clockwork. The biggest key right now is price, which is still above 1850 but beneath 1883 – the two levels I’m watching.
RUT – The RUT got within 4 points of the 1212 high on Friday, but suffered a similar fate to the others in that it gave up its early gains and finished red on the day. It’s also above the recent breakout zone of 1182, so it remains range-bound as of tonight. Any break below 1182 would be important, as would a break below the March low of 1171.
DJIA – The DJIA painted another massive volume bar tied to options expiration at the end of the quarter, but more importantly it respected the March lower high of 16505, getting less than 50 points from it on Friday only to reverse more than 150 points to finish red. It’s still range-bound for now with room to slide further before the March low would be threatened.
Notable Names:
ALJ is looking ready for a breakout from this bull flag, but it doesn’t have all that far before it will encounter resistance from January. I’ll take it for a single-day play on the long side if it can clear $15.90.
BHI is just beneath a trend line here and a push through $62.70 looks good to me for a single-day play as this one heads back toward the recent high.
LVLT is coiling just beneath resistance here, and could see a decent move if it is able to break out. I’m not expecting lasting follow through given the state of the market, so I’ll opt for a single-day play if it clears $39.25.
WWE continues to base here and may need more time. However, I’m keeping a play set for a breakout through $32 if it happens, as this one has shown explosive movement in recent months once it clears prior highs. A swing stop is still too wide.
CSIQ is hugging rising support and a break below $34.80 looks good to me for a single-day play on the short side, as there’s a couple of points worth of room down to the March low.
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.
LVS has a large falling wedge here which simply marks a pullback. An upside breakout at $82.70 will trigger a buy for me as a swing trade as price heads back toward the recent high. I’ll aim to book profits there if reached, and will have a protective stop beneath the pullback low in case of a reversal. I will only get long if it can clear $82.70, as that’s my indication it’s back on the move.
NLSN has been driven lower in recent weeks and now has a low-level base. A break below $43.60 will trigger a short sale for me as a swing, and I’ll look for a decline toward the February low as a target. Any turn higher through the descending trend line will serve as my protective buy stop.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
