Good evening StockBandits!
Premarket strength set the tone for an upbeat start to the week, but the opening gap to the upside got quickly filled. Early gains just haven’t been trusted lately, so traders were quick to hit bids. After a test of Friday’s lows though, we got a bounce and before the first hour of trading had passed, we were already at new session highs. The fun didn’t stop there, as stocks rolled over, took out the morning low and went deep in the red into early afternoon. One more bounce lifted us back near Friday’s closing levels by the closing bell.
It’s a bit exhausting just reviewing the day, but that’s the kind of day it was! The reversals were frequent and intense, yet ultimately they meant nothing. You could say it was the longest route stocks could have taken to end up where they did.
The daily charts are largely still sloppy, as the changes of direction we’ve seen lately have been sharp and sudden enough that price just hasn’t been allowed to do much basing. We have momentum names generally oversold, we have prices beneath resistance zones, we have earnings announcements galore, and we have the DJIA and S&P 500 exhibiting relative strength to the NAZ and RUT, which sends mixed messages.
The bottom line to all of this is that it’s still a flipper’s environment. I’m sitting on lots of cash while waiting for better swing opportunities, but for tonight all I see of interest are single-day setups, so I’ll take what the market has to offer and refrain from forcing anything beyond that.
Let’s get to the charts.
NAZ – The NAZ painted a wide-ranging bar today with a 97 point range, yet ended the day 9 points lower from where it opened. The net change was even smaller, making this a potentially pivotal day for the bulls. If we see a lift beyond today’s high in the next few days, then 4185 resistance could soon be tested.
SP500 – The S&P closed higher by 8 points, ending just 11 points shy of 1883 resistance. The test of 1850 held and this index is again facing a potential breakout now to the upside. Numerous tests of resistance have failed, but it keeps knocking on the door.
RUT – The RUT gave up just 2 points on the day despite being down 21 at its low. It’s still beneath 1123, but stopped 7 points shy of 1095, making a potential short-term higher low at 1102.
DJIA – The DJIA led the way today with a 0.65% gain. Upside volume was lacking, but price is now within 120 points of the resistance level which goes back to December. We’ve seen just one push through it, which took place in early April and promptly failed. But now price is back to the upper portion of the range and the bulls again have a shot. This range is roughly 550 points high, so a measured move to the upside could invite a rally to the 17150 area.
Notable Names:
CMG is back down to test the upper end of the unfilled gap from last October. We saw an earnings gap back then to the upside, then a test of that area in late January. That gap extends down to the $439 area, so there’s still room for this stock to tumble further if this level fails to hold. It’s not one I trade often due to the capital it ties up, but serves as a good reminder tonight that prices have a memory and levels are not easily forgotten.
LUV is working on a high channel pattern here and a little more strength could invite an upside breakout. The last two sessions price has retreated slightly, but an uptick in price and volume would put this one on my radar in the next couple of days.
ORCL is a big-cap tech name which has actually held up nicely in the past few weeks. Rather than selling off hard, it has spent some time basing. This looks poised for higher prices once the NAZ stabilizes, but tonight this base is still a little too loose for my taste given the pace at which this one typically moves.
BBY is turning back up after a pullback and some stabilization and in the past this type of move has found follow through (including in February). I like this one for a momentum play on the long side if price can clear $25.80.
ATI is stabilizing here after a minor dip and a few days of rest. A turn up through the trend line at $40.80 looks good for a single-day play on the long side as price heads back toward highs.
CONN is making some steady headway into the large gap from February. Here it’s sitting beneath a short-term trend line, so I’ll grab it for a single-day pop if it clears $46.70 on Tuesday.
AEM is a setup I actually liked for a swing, but a check of the earnings calendar showed it’s set to report earnings this week on Thursday. Instead, I’ll take it fora single-day play on the short side if it breaks rising support at $28.45. There’s an unfilled gap to last Tuesday’s close which is about $1 lower.
New Swing Trade Candidates:
No new swing trades tonight, staying in cash and waiting for better risk/reward opportunities to surface.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
