Good evening StockBandits!
The indexes each registered modest gains today, which technically counts as some follow through to Tuesday’s incremental breakout on the S&P and the key levels the NAZ and RUT had reclaimed. It was far from an impressive day, however, and the market is starting to appear a bit fatigued after this 4-day V bounce. Volume has been falling and price has slowed its upside pace, suggesting a rest might finally be in order.
Today’s notable move came in the DJIA, which tagged the 16588 level right on the number before backing off a bit into the close. While I certainly understand the importance of key levels and use them in my trading daily, it never ceases to amaze me anytime a major index goes right to a number and then stops. Last week it was the RUT which went right to 1147, and we’ve seen it happen elsewhere in recent weeks too (NAZ 4371, S&P 1883, etc.). With the amount of money in the market and the many millions of participants, it’s simply validation to me that I’m not the only one watching the levels I’m sharing with you each day.
I noticed this evening that quite a few individual names are looking tired as well. There are a number of stocks which look very vulnerable to lower highs after this sharp V-shaped bounce and the subsequent stall-out we’re starting to see in the price action. That doesn’t mean an automatic sale, but it certainly opens the door for some profit-taking and we could see that accelerate if the bulls aren’t quick to maintain a bid.
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Let’s get to the charts.
NAZ – The NAZ is looking stretched after a 4-day lift and today’s mediocre gain of just 8 points, including a finish 10 points off the high on a pretty narrow range day. 4246 is the number it cleared Tuesday which all eyes will be watching on any pullback. Note also the potential for a 2nd lower high if 4344 isn’t cleared soon.
SP500 – The S&P posted another gain today but ended the day just 7 points past the 1883 breakout zone. That’s not a lot of breathing room for this index, so we’re still on watch for a possible breakout failure. If it sticks, we could see a measured move of 35-45 points past the breakout zone.
RUT – The RUT also has a potential lower high here despite a huge lift in the last few sessions. 1182 is the level it cleared on Tuesday, so any drop beneath that will elevate concerns and could prompt additional profit taking. For now, it has 10 points of breathing room so we’ll see if we get some basing or some actual selling once this bounce runs its course.
DJIA – The DJIA finally reached its December high today of 16588, but it stopped .06 shy of it. An actual breakout could take place as soon as tomorrow, but heavier volume will likely be needed than what we’ve seen in the last couple of days if a breakout is going to last.
Notable Names:
X is basing here after a nice rally and now is facing a small trend line. I like this setup for a single-day play if it can clear $27.95 and get going again.
HRS is at the top end of a multi-week trading range but just saw a quick rally within the channel. That makes a tight stop somewhat out of the question here, so I’ll instead opt for a single-day play to participate in the initial move higher if price can break out and make a new high at $75.40.
FEYE was facing short-term support a few days ago but held it and tried to bounce. Today that bounce failed and price is once again facing another possible breakdown. This is a volatile name and a swing stop would be too wide for my taste, so I’ll instead opt for a single-day play on the short side if price undercuts $60.
SINA is caught in a sloppy downtrend with lots of recent volatility and some gaps as well. That’s not the type of price action I’m willing to enter a swing trade in, so I’ll just take it for a single-day play on the short side if it breaks rising support at $60.90 to start a new leg down. If it breaks, a quick test of the low is not out of the question.
KORS is failing at former support here, which is now acting as resistance. There’s also rising support from last week’s pullback low, so I’m watching for a possible turn lower in this stock. A break below the trend line at $94.20 looks good to me for a single-day play as price gets rejected from this key area.
New Swing Trade Candidates:
No new swing candidates tonight.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
