Good evening StockBandits!
The market gapped lower this morning after the weekend Russia/Ukraine concerns, leaving traders on the fence when deciding whether or not to buy the dip. We saw the gap met with no strength, and stocks soon slid further into late morning. Once a bounce finally arrived, it stuck, allowing prices to lift for the remainder of the day. On the day, the averages finished lower, but ended up little-changed from the opening levels.
The bulls stepped in to defend lower prices, and anxious bears were pretty quick to cover shorts, both of which left a bid beneath the market for more than half of today’s session. That doesn’t sound the all-clear though, nor does it guarantee those bids will hold steady. It simply points to the fact that the bulls aren’t likely to just run away and hide at the first sign of a pullback. They’ve been conditioned to buy dips for such a long time now that it has become somewhat second nature.
With uncertainty comes the reminder that stocks can indeed go lower, which is something many traders tend to forget in prolonged bull markets or rally phases like we’ve seen in the past few weeks and months. So when unrest like we’re seeing over in Ukraine arises, traders will often sell first and ask questions later. The situation is far from resolved, however, so it could quite easily keep some pressure on the market until the dust settles. For now, some much-needed profit-taking has kicked in and we saw a pickup in fear with the VIX lifting today, so there are plenty of reasons to stay cautious and selective here.
Tonight there are decidedly fewer charts to choose from when it comes to new plays and developing setups, which again is why our focus should always be on quality, not quantity.
Let’s get to the charts.
NAZ – The NAZ had seen a number of finishes off the session highs lately, but today it saw a finish well off the low – despite it being a somewhat rare decline. Price pulled back to test the 4246 area, briefly undercutting it but unable to stay below it. This makes for an initial successful test, although we’ll see if repeated returns to the area get met with the same dip-buying mentality.
SP500 – The S&P gave up 1850 today, leaving it back inside its range between 1823 and 1850. Volume dipped with today’s pullback, showing a lack of panic as prices attempted to stabilize intraday.
RUT – The RUT fell back below 1182 today and subsequently tested the 1167 area, holding it on a closing basis for now. This index is seeing a relatively minor pullback from the high so far, but may not be done yet.
DJIA – The DJIA has repeatedly danced around 16174 in recent weeks, but late last week was able to lift from that level. Today it returned to it, closing just 6 points from it. This is clearly an important zone, so we’ll see how the battle shapes up.
VIX – The VIX just carved out a higher low with today’s jump. There’s still an unfilled gap to 17.23, but beyond that is the 20 level which has only been cleared a handful of times in the past year and a half.
Notable Names:
FSL is on my watchlist tonight but I’m waiting for the pattern to tighten a bit before setting up a trade. This is a nice bullish consolidation, but price isn’t yet pressuring the upper resistance zone so I’m keeping it on the radar for now.
BBBY is shaping up here for a possible pop as it comes off a saucer-like bottom in recent weeks. A push through short-term resistance at $68.50 looks good for some continuation. I’m not interested in an overnight here and will instead opt for a single-day play if it breaks out on Tuesday.
PKG was listed here last night. It didn’t trigger today, but the same pattern is still in effect, so I’ll set it up again for a single-day play for Tuesday using the same trigger of $73.45 to get long for the initial push through resistance.
SWFT was also listed here last night, but again the pattern remains intact after today’s incremental decline. I like this one for a single-day play on the long side if it can clear $24.70 on Tuesday.
FDX is still hugging rising support but a break below the trend line could invite a quick test of the $128 area. I like this one for a single-day play on the short side for Tuesday if it breaks $132.
OII is trying to turn lower here but hasn’t yet broken rising support. A break below $70 looks good for a single-day play on the short side for Tuesday. The risk/reward isn’t all that appealing for a swing, so I’ll just look to participate in the initial breakdown should it happen.
New Swing Trade Candidates:
No new swing candidates tonight, waiting for tighter patterns with better risk/reward profiles than what is currently available.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
