Good evening StockBandits!
The Friday morning dip has been erased to this point by almost all of the major averages. Not only did the downside gap offer bears their first real nice opportunity to cover shorts in quite some time, but it also enticed dip-buyers to come off the sidelines with more cash.
Today we saw a sluggish start to the session with no real catalysts driving price and the indexes each testing negative territory. The tone shifted in the afternoon though with a late-day ramp which lifted the market to finish the day solidly in the green. It wasn’t an impressive move by any stretch of the imagination, but it was a respectable appearance by the bulls to show up fashionably late at a time when doubts have recently been raised as to the health of the rally.
Those same questions still linger tonight, and plenty of market participants still expect this bounce to get sold in the near term. Although we’ve not seen a truly meaningful shift to the bearish side, the possibility is of course always present for a selloff.
The RUT is the index which is struggling the most here technically as it rallies toward resistance at former support (932), whereas the DJIA is holding above its trading range while the NAZ and S&P each are lifting inside of theirs. That gives us a market which remains mixed, keeping us on our toes and reminding us to stay objective and selective while seeking to stay opportunistic.
Let’s get to the charts.
NAZ – The NAZ has bounced back nearly to Thursday’s close with a pair of strong finishes, although today’s volume on the rally certainly stood out as questionable. This index also has considerable room to rally before another breakout attempt would be made, so it’s possible we see continued churn for now.
SP500 – The S&P finished strong today, going out at its high despite a dropoff in volume. This index is back challenging the 1563 level here, so it could be shaping up for a showdown in the coming days between bulls and bears as we wait for a move outside of this high-level trading range.
RUT – The RUT is back to a key level here at 932 after a trio of strong finishes in the last 3 sessions. The weakness on Friday was completely erased, and now this index has fought halfway back up toward its highs. After a quick 2.5% lift from Friday morning’s low, it would be reasonable to see a rest, although nothing is a certainty in this environment.
DJIA – The DJIA is just 71 points beneath its recent all-time high after testing the trading range in each of the past few sessions and holding above it.
Notable Names:
AAPL still has a shot at creating a double-bottom here but it’s almost now or never for the bulls in this stock if it’s going to happen here. A turn up through $430 would add credibility to the test of $419 support we saw last week, but upside follow through would be absolutely critical. Otherwise, a turn lower through that level could invite yet another wave of selling for this troubled heavyweight.
GPS is an example of a stock that in the short term has a clear-cut level it is threatening to clear, but in the intermediate term there isn’t much room beyond for it to run. Here it’s just beneath $37, but it could only run about 2% before reaching next key resistance, so this isn’t a real favorable risk/reward setup for that reason.
ABX is a stock which is still acting weak and momentum players might like trading the short side for a quick retreat if this one undercuts $26. This base is just not very mature or defined so I’m not setting up a swing here.
WLT is another stock which is beneath key support and looking heavy here despite only a few days of rest. A break below $22.60 would offer a quick momentum short sale, although here again the base is just not as defined as I’d like it to be so I’m not taking it for an overnight swing trade.
VIPS is on my radar as a stock which has remained in its uptrend and is currently basing. I’d like to see this ascending triangle pattern tighten in the coming few days to potentially set up a play. With support that rises daily, a tightening of this pattern would narrow the risk with a stop loss that’s closer to the $32.50 breakout zone than it currently is.
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.
AET is flagging here and continues to act well. The previous two advances have each run about $4, so I’m looking for a similar move out of this base. I also like the risk/reward for this play being that my stop will be just beneath the base. Earnings are still a few weeks out so there’s ample time for it to work.
CZR has been pulling back steadily, and the lack of downside acceleration (despite quite a streak of declines) suggests it hasn’t seen a major change of character. This appears to simply be healthy profit-taking, as evident in the below-average volume on the downside. I’ll get long upon an upside break of the channel at $15.10 with a stop at a new pullback low, looking for a rally back up toward the highs.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
