Good evening StockBandits!
The first quarter came to a close today, and it was an appropriate ending with one last cross of the flat line for a couple of the indexes. A strong open today sent stocks gapping higher to set the early tone. Although the RUT put together a trend day with a steady advance to lead the way, the NAZ, S&P 500, and DJIA each largely respected their opening hour highs with only modest gains between the opening and closing bells. Nonetheless, it was a solid enough bounce to take the NAZ and RUT from negative territory for the quarter and finish positive (by less than 1%). The DJIA finished down less than 1% while the S&P was the only index to see a net change larger than 1%, up 1.3% for the quarter.
Those tiny net changes just go to show how little lasting follow through we’ve seen, and we’ll kick off Q2 right near the starting line for 2014. It’s been one reversal after another regardless of which timeframe you’re watching. It all has added up to a minor net change overall. There have no doubt been many who have tried to leverage up this year after a solid performance by the broad market in 2013 only to grow frustrated with the lack of overall movement. It’s one more example of why it’s so important to continually stay attentive to the character of the price action rather than predict what’s going to happen next.
With the NAZ bounce looking less convincing than that of the S&P 500 (due to its ability to hold the 1850 range boundary of late), we’ve still got a mixed market. I’m therefore considering plays on both sides and simply trying to stick with the best setups I can find. I’m down to a half position in my lone swing trade RGR after it reached Target 1 today, and have aggressively tightened my stop for remaining shares using the support level it just broke last week. For tomorrow, there are a handful of cashflow/single-day plays along with a pair of new swing candidates which have a little time before earnings are due out.
Let’s get to the charts.
NAZ – The NAZ put together a solid advance today with a 1% lift, but it couldn’t overtake Friday’s intraday high on a closing basis and upside volume was below-average. Tonight that leaves it beneath broken support, making this bounce hard to trust.
SP500 – The S&P ended just 11 points from the all-time high after a 2nd consecutive lift within its range. There’s a sense that some pressure is building here, so perhaps the exit will be a decisive one once it finally happens.
RUT – The RUT couldn’t hold onto gains on Friday but today it sure did, ending just 1 point off the session high and only 9 points from the 1182 level it broke last week. That’s the next big level on the way back up.
DJIA – The DJIA suddenly has the look that it could break out to a new all-time high with relative ease. That’s a bit of a shift for this index given that it’s the only one which hasn’t cleared its December high. Bulls would love to hit Main Street with news of an all-time Dow high.
Notable Names:
PRAN had one of those moves today that nobody could have seen coming. However, it’s noteworthy that it had already technically broken down from its large wedge pattern last week. Biotechs are high-risk for a reason, and this type of move is just one reason I’m so careful when considering any overnight play in this group.
SGMO bounced back today but gives us a good example chart to discuss. Traders love to fade streaks, but being just a little bit early can prove quite costly. Today’s bounce recovered less than 2 days of the 7-day decline, reminding us that it’s never a bad thing to wait for some strength before considering a buy on weakness.
FSLR is at the upper trend line of this bull pennant and this one could rip again if it reclaims some of the recent momentum. I like it for a single-day play above $70.75 for Tuesday, but only if it clears that level.
ATI is also sitting in a pennant here and a push above $38 could set it free for higher prices once again. This would only be a single-day play for me, as the next pop is all I’m interested in.
FEYE is oversold on the basis of lost ground in the past few weeks, but in the short-term it has put in some low-level rest and could crack again. I like it for a single-day play on the short side for Tuesday if it undercuts $60 with room to fall toward the mid-January support near $55.
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.
RAI is in a tight wedge or symmetrical triangle here and I like the risk/reward for a swing. I’ll get long if price can clear $53.75 to break the upper trend line, and I’ll look for a rally back toward the high with a stop beneath the base. Earnings are three weeks out, so I’ll look to tighten my stop aggressively if this one starts to get going and will be completely out prior to the announcement.
UNH has earnings due out April 17th, so there’s not a lot of time for it. However, it has had a few quick rallies since the February low of $3-5, so I’m willing to give it a shot. I’ll look to get long through $82.40 with a stop beneath the base, looking for a similar-sized move to the prior lifts. Here again, I’ll aggressively tighten my stop due to earnings approaching, and will be out prior to the announcement.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
