Good evening StockBandits!
Turnaround Tuesday arrived today with some upside for the market on the heels of the quick selloff from last week’s highs. The bulls were happy to stop the bleeding, although the strength was relatively modest as only a small fraction of Monday’s decline was recovered. The upside volume which accompanied today’s bounce was also relatively light, so it could be that this turnaround is only temporary. Given the oversold conditions we had as of yesterday, a bit more upside wouldn’t be out of the question, but we’ve yet to see a lasting character change in favor of the bulls.
Tonight I’m going to keep it brief and get right to the charts as there simply isn’t a lot to point out in the way of new trades. The setups I do see each would have very wide stops for swings, so if they happen to get on the move Wednesday I’ll simply take them for single-day plays. Should they prove capable of basing further, then tighter stops could be utilized in the days ahead for possible swings, which I’ll revisit at that time.
Let’s get to the charts.
NAZ – The NAZ painted an inside bar today as it respected Monday’s range. It also didn’t quite recover what was lost Monday, and upside volume was muted, so it’s difficult to expect long-lasting upside based on today’s bar. It’s an ever-changing picture, but with a downtrend already in place with lower highs and lower lows in recent weeks, bounces should be viewed as opportunities to raise cash. The longs I see at this point look best for quick-flip trades.
SP500 – The S&P has twice previously broken below 1850 only to quickly reclaim it and rally further. Monday’s breakdown and the subsequent move back above 1850 sets the stage now for another such move, but the bulls will have to get aggressive again. As of tonight, there’s very little breathing room so any rollover type of move could quickly invite a test of 1823.
RUT – The RUT painted an inside day today as it respected Monday’s range, and also failed to reclaim 1147 on a closing basis despite clearing it temporarily intraday. The trend here is down with lower highs and lower lows, so the long side at this point is only for quick flips and nimble traders. Each prior bounce going back to 1212 has been used for raising cash, so that’s the expectation for the current rebound until proven otherwise.
Notable Names:
BBY is holding up well here and is still on my radar for a possible play in the days ahead. I’m waiting for price to lift a bit closer toward resistance before setting up a play, but I like the accumulation that has been underway in the last couple of months and a breakout could trigger an attempt for a partial gap fill.
JCP is nearing the apex of this symmetrical triangle, but it could still tighten further. As of tonight, it’s just over 5% from the upper trend line down to the lower trend line, so I’m holding off on a swing entry. If price clears $9.30 on Wednesday, I’ll instead just go with a single-day play on the long side. Next resistance is about 10% higher, making a swing entry here only about a 2:1 in terms of reward to risk.
GDP has a recent history of 1-2 day lifts, so that’s all I’m looking for here. I like this one for a single-day play on the long side if it can make a new recovery high at $17.90. Next resistance is from February and stands about $0.90 away.
GPRE is carving out another higher low here and now a trend line break to the upside at $29.05 looks good to me for a single-day play on the long side. Here again, a swing stop would simply be too wide for my taste, as it would belong beneath today’s low, which would be more than 6% away. In a fickle market environment like we’re in, that’s more than I’m willing to give it.
JNPR is still hovering above short-term support here so I’m again setting up a play on the short side for Wednesday. I’ll be interested in a single-day move to participate in the initial breakdown attempt if price undercuts $25. There’s an unfilled gap from January which could see a partial fill.
New Swing Trade Candidates:
No new swing candidates tonight. Sticking with current exposure and maintaining high levels of cash while waiting for better opportunities to emerge. For tonight, single-day plays look to offer the best risk/reward in the current environment.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
