Good evening StockBandits!
Stocks took a much-needed breather today, pausing to rehydrate after Tuesday’s fat gains. Rather than trend, today’s tape was characterized by narrow, choppy ranges with prices moving laterally. There was no real attempt to build on yesterday’s rally, but neither was there the threat of giving any of it back. Ultimately, we finished within spitting distance of last night’s closing levels as traders showed reluctance to take any meaningful action.
Today’s action was probably the best-case scenario for bulls. Had we ramped further, the extended condition of the tape would be ever more glaring, which would beg to get sold. Had we sold off, it would have diminished the significance of Tuesday’s lift. Instead, the rest day we got simply lets the bulls bask for another day while the bears continue to fret about whether the market will ever sell off again. By the way, it will.
For now, our job remains the same, which is to continue working the charts in search of quality setups and favorable risk/reward profiles. The Monday selloff and subsequent ramp certainly made for some sloppy charts, but basing days like today will ultimately be the remedy. Rather than chase extended moves or set up 1:1 plays hoping for a move in the right direction, this is a time to be selective. There’s a LOT of year left, and plenty of good opportunities will come. The key is not to lose our objectivity in the meantime via impatience.
* Hit reply if there are some tickers you’d like to see me cover in tomorrow’s video.
Let’s get to the charts.
NAZ – The NAZ held steady today with a 6 point advance, essentially resting for the day. This was a needed rest, but more would certainly benefit this index given how short-term extended it is over the past 3 sessions as well as over the past month.
SP500 – The S&P respected Tuesday’s high today and paused for the day with a fractional loss by the closing bell. This index is also extended from Monday’s low, as well as from the Feb. low from a month ago. It has some room down to 1850, which could serve as initial support on a dip.
RUT – The RUT gave up just 2 points today, which equated to a day of rest for this index. It’s still 41 points off Monday’s low, which is 3.5%, leaving it very short-term extended. It’s also seen a massive 12% run off the February low, so any and all rest is welcomed.
Notable Names:
CTSH is trying to get going again here and could see another upside pop. Given the loose base it has built over the past two weeks, I’d prefer to just take it for the initial move as a single-day play if it can clear $105.80.
SODA is attempting to bottom out after a big correction. A few weeks ago it jumped along with GMCR, and has pulled back to create a higher low. It’s been quiet in recent sessions, but a trend line break might be embraced as a pivotal moment. I like it for a single-day play if it can clear $40.60.
LULU is struggling here and has more room to pull back if it falls out of this wedge. A break below $49.65 looks good for a single-day play on the short side as it retraces more of the February lift.
DECK has lifted from its low of last week but volume has been quiet and price is starting to slow down its upward pace. A break below the small rising trend line at $74.35 could trigger another wave of selling. I like this for a single-day play if that level gets broken.
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.
X is respecting former support here, which is now resistance. A turn down out of this small wedge at $24 could start a new leg down, with room to test the prior congestion zone from last fall. I’ll get short for a swing trade if it breaks $24, and will maintain a protective buy stop above the short-term bounce high in case of an upside reversal.
HOS has been trending lower and this bounce may be stalling out. It’s respecting the prior high for now, so I like it for a swing trade on the short side if it breaks $43.15 to the downside with a protective buy stop just above resistance. I’ll be looking for tests of prior levels (dashed lines) as targets.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
