Good evening StockBandits!
Last week’s breakouts to end Q1 came ahead of a 3-day weekend and were only incremental, placing great importance on the bulls’ ability to produce follow through this week to validate those breakouts. Adding to the curious push through to new highs was the fact that the RUT had not participated despite leading the way higher since the November lows. I noted here last night that its lack of participation may simply be delayed or that it could be a warning sign, and that we’d know soon enough whether it was something to be concerned about.
Today we found out, as the RUT turned decisively lower away from the highs it was just a couple of points shy of to retreat all the way back down to the bottom of its short-term trading range. The other indexes also retreated, leaving bulls who bought the breakout trapped – at least for now. One day does not a trend make, but in the case of the RUT it does point to a trend that’s unable to continue just yet. The pause of the past few weeks has been a healthy one and hasn’t given cause for questioning it, but these failed breakouts and the abrupt retreat back into the channels doesn’t give much for the bulls to be excited about in the short-term either.
The other indexes were able to rebound a bit from their session lows, and in the case of the DJIA it was able to narrowly hold above its breakout. The NAZ and S&P 500, however, could not and tonight are back inside their trading ranges.
I’m holding both long and short swing positions, so I’m slightly hedged at this point. Today’s weakness also negated some patterns which had been building, so it does narrow my focus a bit for now. Tonight I am not seeing anything in the way of new setups I can’t live without, so I’m not listing any new swing candidates. When high-quality patterns are available, I won’t hesitate to share them, but when they’re distinctly absent I also will not force it.
The remaining days this week could prove quite important for us as we look to learn whether this is just another headfake or if in fact the sellers have some staying power. The intermediate-term trends are certainly still intact, although the post-rest hesitation to continue higher here is not something the bulls should dismiss halfheartedly.
Let’s get to the charts.
RUT – The RUT sold off hard today to move away from its highs where recent resistance has been found at the 954 area. This index is the more speculative of the bunch, so it’s important to note when money is flowing into or out of it. Last week’s failure to clear highs along with the others was notable, and today we saw some underlying weakness. A break below 932 would be short-term bearish, so all eyes will be on that level as we head into Tuesday.
SP500 – The S&P slipped back beneath the 1564 level today, marking a breakout failure. This index still may gravitate toward the all-time high from 2007 at 1576, although for now it seems hesitant to run toward that area with this move back inside the range. There’s some room down to 1530 where next support stands, so we’ll see if this green/red alternation continues for a 9th straight session or if instead we finally get some follow through.
NAZ – The NAZ fell back inside its range today to finish 24 points beneath resistance. It didn’t have much room to give back, but today’s retreat suggests it’s just not ready yet for a lasting breakout from this range.
DJIA – The DJIA held its breakout by a very slim margin but is the only index to have done so today. This is the least important among the indexes I watch as it is only 30 stocks, so we’ll see if it’s taking on a leadership role here or if instead it will follow the others and fail its breakout in the coming days.
Notable Names:
TOL is pulling back here toward key support and the stock has already created a pair of lower highs. The $33 level has been support since the start of January after a gap higher, so if we see this level broken it could bring a quick gap fill for momentum players. That said, the stock is getting a bit short-term stretched with this multi-day decline, so it’s not in a position here to be establishing a short sale for anything but a quick play.
CHK has pulled back off its highs and has printed a number of red bars in recent sessions while overall moving laterally. Today was a good example as it was only down 6 cents. This stock could catch a bid and make a multi-day high to start rallying back up, in which case it may offer dip-buyers an opportunity on the long side. However, a break below the $20.10 area could find fresh sellers after this brief rest, putting the higher-low scenario in trouble.
UNXL has displayed considerable momentum in recent months, but today it just showed a major character change with a high-volume selloff of great proportions. Today’s 18.4% decline spells the end of the run for now, reminding us all that momentum cuts both ways so it’s imperative to keep a hard stop in place in these kinds of stocks.
PBF has retreated to the lower end of its trading range, and often times this gives a chance to get long “against” support. However, the weak finishes and today’s failure to bounce after an attempt to do so suggests the selling may not be done in this one. I’ll keep it on the radar for now, but paying close attention to the price action can often provide meaningful clues to wait.
GS is working lower since its February channel break with a pair of lower highs and now a lower low. Price is resting just above sh0rt-term support, and a break below $144 could bring some accelerated selling pressure. This stock had been a leader among financials, helping the S&P for the first 6 weeks of the year, but now it’s starting to exhibit a distinct lack of strength and that’s also worth noting.
New Swing Trade Candidates:
No new swing candidates tonight.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
