Happy Easter StockBandits!
The major indexes were able to post new 52-week highs by the end of last week, despite some choppy price action for much of the 4-day week. Thursday’s breakouts were incremental, placing great importance on follow through going forward to avoid an immediate failure. There’s not a lot of room to pull back and still hold the breakouts, so the early portion of this coming week could prove very important. Monday will mark the start of Q2, and the beginning of the quarter typically has a bullish bias to it and that may help the bulls’ cause.
One thing I found of interest on Thursday was the fact that the index which has led the way higher since November, the RUT, did not participate in the breakout to new highs along with the others. Granted, it’s only a few points away from new-high territory, but it’s interesting that suddenly it’s the one lagging. It’s either just a matter of time, a warning sign, or some healthy rotation into large-caps. Whatever it is, I suspect we’ll know soon enough whether it’s something to be concerned about.
On the swing trading front, I was taken out of a couple of shorts last week to put me a bit longer on a net basis. I’m still content with that positioning given the uptrending market, but will remain selective with new trades and adding exposure until we see more of a consensus among the indexes and some greater conviction on these breakouts. Along the way, I’m of course looking for prudent spots to reduce risk via tightening stops.
Let’s get to the charts.
NAZ – The NAZ eased past short-term resistance on Thursday for a breakout from this 60-point trading range, although a 4-point breakout above former resistance isn’t exactly a power move. Nonetheless, the quarter ended strong and the bulls are in great shape here to build on this breakout and leave this base behind, possibly for a measured move up to the 3320 area.
SP500 – The S&P pushed past 1564 on Thursday to close out the week and Q1 just 7 points shy of all-time intraday highs (1576). This index is sitting at its all-time closing high, so by that measure the bulls have reason to celebrate already. This index has ample room to run after this multi-week rest, which is exactly what the bulls needed. The question now is can they build on it?
RUT – The RUT failed to break out on Thursday with the other indexes, which is somewhat perplexing given the relative strength this index has shown since November. This is likely just healthy rotation as this index isn’t yet exhibiting any bearish characteristics. A push through 954 would put it back in new-high territory.
DJIA – The DJIA broke out Thursday with a modest 52-point advance. That doesn’t give this index much breathing room on the downside to avoid a failure, although it’s been resting for a few weeks and therefore the bulls have no reason to exhibit fatigue here. Stranger things have happened, but this is a bullish look and technically the bulls have a nice opportunity here to press their advantage.
Notable Names:
LULU has broken key support and based beneath it, carving out some new short-term support since mid-March. A break below $61.40 could offer a quick momentum short, but the absence of a well-defined stop here prevents me from setting it up as a swing.
KSU is still working and on Thursday it stepped up a notch by leaving the 2-week channel it has been building since my original trigger. This looks very good for higher prices, although nothing is guaranteed. I like the base-on-base look so we’ll see if it can produce continuation in light of these favorable technical conditions.
MET is pulling back here in a counter-trend channel after its most recent rally off the February low. Price needs to turn up to break the upper channel line, although so far it seems to be lacking the drive necessary to do it. A push through $38.30 opens the door for a new leg up to begin, but the action here just isn’t all that compelling for me given the lack of strength and the fact I already have several long positions. Stated otherwise, this is not a bad setup at all, it just doesn’t look like one I can’t live without at this stage.
CF is basing right here above key support and could break down anytime. $189.50 is the magic number for more selling to kick in, although more basing in this area would setup a far more favorable pattern in my opinion. A breakdown now would be more of a momentum play at least until better-defined swing resistance emerges.
HP is respecting short-term support and a break below $59.85 paves the way for a deeper correction in this stock after its failed breakout a couple of weeks ago. If better-defined resistance can emerge here, I’d be willing to set up a swing short in this one, although at the moment there’s no clear-cut level for a loss cut order to be placed should it happen to break down and then reverse back up.
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.
REXX is perking up here after seeing some recent strength and short-term dips getting bought aggressively to create some rising support. A push through $16.65 triggers a buy for me as this one heads higher, possibly for a test of the 2011 high near $18.
JNPR has a couple of lower highs in place in recent months and the downtrend still looks intact with this descending triangle pattern. A move below $18.40 triggers a short sale for me with a buy stop above $19 resistance and a final target being a measured move from the break of the prior low.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
