Good evening StockBandits!
Today’s action was much more tame than what we saw on Monday, with narrower ranges and fewer reversals. We finished higher across the board, although it wasn’t as if stocks ran higher all day. The S&P 500 and DJIA each posted gains, but remained contained as they stayed beneath their respective resistance zones. The NAZ and RUT also made some headway, although they are still well shy of their prior bounce highs.
We’re not seeing great conditions at the moment for trading on anything but the shortest of timeframs. The senior indexes have held up relatively well, but the more speculative averages are still struggling, which makes for a mixed market. Individual charts largely need more work, and we are right in the thick of earnings season. Those elements make for good reasons to do less right now, at least until some of the dust settles or we get some basing action. Until then, it’s extremely easy to force trades and lose objectivity. Stay selective right now and remember that better opportunities will come than what we are currently getting.
Tomorrow should prove to be an eventful day with plenty of economic news in the morning, followed by the FOMC at 2pm ET. We may see traders sit on their hands until the news is out, particularly if the early econ releases contain no surprises.
Let’s get to the charts.
NAZ – The NAZ filled its opening gap once again this morning, but rallied into the afternoon to post a solid advance. It wasn’t able to take out Monday’s high, but isn’t far from there after today’s lift. 4185 is still the big number to watch, so there’s ample room for a rally here if the bulls want to build on the higher low from yesterday.
SP500 – The S&P edged past Monday’s high to show some follow through, but stopped shy of 1883. It’s just a few points away from it tonight, so tomorrow could end up being the day where we finally see a lasting breakout or a meaningful rollover from this very pivotal area.
RUT – The RUT managed only a modest 3 point advance today as it stayed inside Monday’s range. Today’s range was narrow, so perhaps tomorrow we’ll see some expansion. There’s ample room on the way back up to 1160 (the next big level), whereas 1102 will need to hold in order to add validity to Monday’s higher low.
DJIA – The DJIA added to Monday’s gains to close just 53 points from the key level which has been in place since December. We’ve seen just a single breakout attempt through that level (early April), so any subsequent push past that level will need to stick. Such a breakout would also confirm the potential higher low which was painted on Monday vs. the April low. Otherwise, another reversal within the range could occur.
Notable Names:
GOGO reacted today in a big way to headlines that AT&T is looking to offer in-flight wireless service, which this company currently dominates. Although that’s certainly big news, the fact is that price has been in a downtrend with a series of lower highs and lower lows. The news flow is frequently in unison with the trend.
RTN is working on a potentially bearish pattern, although it needs more work. Price just made a lower low after being rejected at highs last week, so I’m watching to see if a bear flag is going to mature. Until then, it’s on my radar.
GPRE is again set for a quick pop after a multi-day pullback. A push north of the trend line at $29.10 looks good to me for a single-day play on the long side. Price just carved out a lower high, which is why I’m not looking for lasting upside as a swing.
TRN just pulled back and a trend line break above $73.05 looks good to me for a single-day play on the long side. Price could easily test the prior highs where it has twice failed between $79 and $80.
CONN was listed here last night as a potential play but it did not trigger today. The descending trend line above price remains the pivot, although it gets lower daily. I’ll take it for a single-day play on the long side for Wednesday if price can clear $46.55. Prior lifts in recent weeks have been characterized by 1-day spikes, so that’s all I’m looking for here.
LUV turned back up today but volume sagged, which is why I’m not considering it for a swing tonight. That may change, but if price breaks out on Wednesday with a push through $24.55, I’ll opt for a single-day play to participate in the initial move higher.
PETM is at rising support here and a break below it could bring a quick test of the $65.50 area which has served as resistance and support since early February. I like it for a single-day play on the short side upon a break below $67.45. A stop above the bounce high would be needed for a swing, which just isn’t a very enticing risk/reward relationship.
New Swing Trade Candidates:
No new swing trades tonight, staying in cash while waiting for better risk/reward opportunities to surface.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
