Good evening StockBandits!
Today we saw the market lose some steam as the relief rally slowed considerably, pointing perhaps to some short-term fatigue – and understandably so. The rally which began off the lows of last Thursday carried the NAZ and RUT each nearly 4%, which is a lot of ground to cover in such a short period of time. Almost anytime we see such a quick move in either direction, it’s quickly followed by some digestion. Today’s pause may have been the start of that.
The next few days will be highly important for the bulls who are looking to avoid the creation of a lower high on the daily charts. Should we happen to see some intense selling kick back in at this stage, it would certainly lend some credibility to the notion that the tide may be shifting. Otherwise, we’re still in high-level trading ranges, and therefore it’s difficult to expect much lasting movement in either direction until we either take out the highs or start heading lower with some renewed emotion.
In terms of new setups, there are still very few which look compelling to me. I was able to book a very nice gain in GME today as both targets were hit during the session, taking my current portfolio down to just 2 open positions (VCLK long and a 1/2 position in ACM short). That’s very light exposure to say the least, but the fact is that the sharp declines into last week and the sharp lift we’ve seen since then have simply created a lot of V-shaped charts in the short term and few stocks have based during that time. While I’m starting to notice some failed bounce candidates into this stalling bounce, that’s about it and there isn’t much else to pick from until we see some basing action and consolidation of this move.
Let’s get to the charts.
NAZ – The NAZ couldn’t make any progress today, giving it a stalling-out look here 37 points shy of the recent high. This index is short-term stretched and the gap to Monday’s close would be the first downside target of 3233. The fact that a lower low is already in place brings greater importance to this area with potential for a lower high to be formed if the selling returns.
SP500 – The S&P stalled out today at 1583, 14 points shy of the high. That opens the door for a lower high to develop here if the bulls prove unable to keep the bounce going.
RUT – The RUT finished at its high of the session today, ending at 934. That said, it’s still in danger of creating a second lower high unless it can clear 951. It already has a lower low in place as well, showing a gradual decline within the broader 954/894 trading range.
DJIA – The DJIA reversed lower after being up earlier in the session. That in itself isn’t a big deal, but it does point to some short-term fatigue and opens the door for a potential lower high here. Key levels are 14887 (resistance) and 14380 (support).
Notable Names:
AAPL still can’t seem to get out of its own way here. Last night’s earnings proved to be a non-event as the stock finished nearly unch today. The short-term low is $385 and former support is $419, keeping this stock in correction mode.
PG is this week’s reminder of why holding positions into earnings can turn ugly quickly without the ability to manage risk. This is why I adhere to that rule. This stock had been technically strong, going out at highs last night, only to give up more than $5 today in an abrupt change of character following earnings. Quarterly reports are scheduled fundamental events, and there is no edge in the information game for retail traders.
HTZ is basing here and needs to tighten further before I’ll be interested in a swing. This company is set to report earnings on Monday, which might negate the pattern, but it’s on my radar in case this setup matures further to offer a post-earnings play.
DE is still working lower despite a multi-day bounce. This rebound came on weak volume and looks likely to result in another lower high, so there’s still no change of character here. Staying objective when reading charts can prevent premature entries.
LNKD is still looking bullish here at the highs and I’ll give it another shot tomorrow as a momentum play if it can clear $188.75. Today it didn’t do much but the breakout is sticking so I hate to ignore it. An adequate stop is just too far away for a swing.
UNXL is wedging here and a turn higher through $36.25 could produce a quick pop for momentum players. This stock remains very volatile and a swing stop is too far away, so I won’t be taking this as an overnight.
MPC is hugging rising support here and a turn lower through $81.50 could see some quick selling kick in. I’ll take it for a momentum play on the short side, but not for a swing as earnings are due out on Tuesday.
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.
STT is past earnings and is starting to stall out here. This could result in a lower high, so I’m interested in getting short for a swing trade if this one breaks rising support at $57.80 with a stop at a new bounce high. I’ll initially be looking for a retreat toward the recent low, with an eventual target closer to the unfilled gap from Jan.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
