Good evening StockBandits!
Shrugging off short-term overbought conditions and a pre-existing 5-day streak of gains, stocks pushed higher again in today’s session to extend the rally. Volume was (not surprisingly) still light, which leaves the current lift looking accident-prone.
The standout move of the day was the S&P 500, which was able to clear the minor bounce high from 2 weeks ago, yet again failed to clear 1883 on a closing basis. The others also approached prior levels, although both the NAZ and RUT stopped shy of their prior bounce highs despite 1% advances. There’s a sense that if the music were to stop now, traders would rush for a chair and we see another round of selling in expectation of lower prices. However, prices haven’t relented yet.
I’m a bit frustrated by the lack of setups at this juncture, just as you may be. The V-shaped bounces of the past few weeks have each failed, with the current lift being the lone exception at the moment. Whether or not it fails, we’ll see, but the conditions tonight are such that I’m extremely reluctant to be aggressive on the long side until some rest or a pullback has been seen. Additionally, most of the potentially bearish setups on the charts tonight pertain to lower-high scenarios where weakness hasn’t yet emerged. The end result are bouncing stocks which look extended and in no shape to buy, and bearish charts which are still getting a lift.
The combination of those conditions just makes for limited trade candidates for me, period. But toss into the mix the heart of earnings season just now getting underway, and the list grows even thinner for trades lasting any longer than a few hours. I’m staying selective and patient here, taking what little the market is offering, and reminding myself of times in the past when forced trades proved costly.
Let’s get to the charts.
NAZ – The NAZ painted its 6th straight green bar today, with 5 of those advances having taken place on below-average volume (including today’s). The prior bounce high of 4185 is the next level to watch, now not far away. If the lower highs streak is to continue, that level will hold. Otherwise, the bulls have a chance to shift the mood and the watch for a higher low on the next dip will begin.
SP500 – The S&P nudged past 1883 today but couldn’t hold it and price slipped back beneath it by the closing bell. This index is extended after this 6-day lift, and with it now facing key resistance, Wednesday could prove to be a critical session.
RUT – The RUT added 1.1% today and finished just 5 points from the prior bounce high of 1160. This index has bounced 60 points off the intraday low last week of 1095, which equates to 5.48% in just a week. That qualifies as stretched, and leaves me very cautious when it comes to new buys.
DJIA – The DJIA reached the upper edge of its range today, stopping shy of the December high before a mild late-day pullback of 51 points. The range remains intact, and upside volume remains nonexistent on the current lift.
Notable Names:
TCK is just starting to push past a descending trend line here after today’s upside reversal, and could run further. I like this post-earnings reversal, but only for a single-day play. if it clears $22.40 on Wednesday, I’ll grab it for a continuation move.
TWTR is stalling out here after a bounce and still has lower highs intact. A turn down through rising support at $45.45 could spark some selling after this big bounce, but with earnings due out in just 1 week this is just a single-day candidate for me.
MA is still stalled out here after the bounce and volume continues to dry up. A turn down through the trend line at $73.50 would mark a multi-day low and serve as a pivot for me on the short side for a single-day play. Earnings are due out next week.
TRIP is stagnating here after a bounce from the recent low and upside volume is waning. A turn down through $84.30 sets up some short-term profit-taking, so I like this one for a single-day play on the short side if that break occurs on Wednesday. Earnings are due out in 2 weeks, so it would be a very limited window of time for a swing to work.
GES is hovering above key support here and a breakdown play on the short side has some appeal to me. I’ll use $26.60 as a pivot for entry if a new low is made on Wednesday, but a swing stop would be very wide here and I’ll instead opt for a single-day play to participate in the initial move lower.
New Swing Trade Candidates:
No new swing trades tonight. Back to cash after closing out RAI today.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
