Good evening StockBandits!
Today the indexes continued their respective rebounds from the opening lows of last Friday as the DJIA and S&P 500 each pushed into new-high territory following a dip right off the opening bell. A late-day round of selling erased some of the gains, however, leaving both of those averages beneath their respective early-April peaks despite temporarily clearing those levels earlier in the session.
The NAZ and RUT each backed off their highs as well, with the latter actually finishing negative on the session. The weak finish perhaps points to a bit of short-term exhaustion after an impressive lift from Friday’s morning lows. Anytime prices become short-term stretched, it’s natural to see some sort of a reaction and that’s what the late move appeared to be.
Technically, we’re still in a mixed environment. The DJIA and S&P each are holding above their recent trading ranges, while the NAZ is caught inside its channel. The RUT tested the 932 level both yesterday and today, only to finish beneath it both times. That was former support which is now serving as resistance, and it brings an interesting dynamic to this market to see the more speculative index struggling to reclaim a key level. Whether that again proves to be a precursor to weakness (as it did Easter week) or if instead it points to rotation into large-caps remains to be seen. Either way, whenever I’m getting mixed signals like this I prefer to stay selective and naturally hedged if possible by way of holding both short and long positions.
Let’s get to the charts.
NAZ – The NAZ continued higher today and although it ended in the green, it stumbled into the closing bell. That suggests some fatigue is kicking in after this 81-point lift from the low set on Friday, which is not surprising. This index remains range-bound and now we could be in for another test of the 3200 area if the late weakness finds follow through.
SP500 – The S&P challenged 1573 again today, clearing the early April high only incrementally before backing off into the bell. This index is still holding its recent breakout above 1563 just narrowly, but has room down to 1530 before it would do any downside technical damage.
RUT – The RUT might be providing yet another tell here after this rejection at the 932 area today. This index failed to break out with the others two weeks ago, and since then saw the deepest pullback. Today’s bar has potential to become a short-term lower high, so the next couple of days may be very important for this index.
DJIA – The DJIA is oblivious to the struggles in small-cap land and instead this index made a new intraday and closing all-time high. This keeps Main Street excited about the rally, but as traders this is the least important index of the bunch given that it’s only 30 stocks.
Notable Names:
WMT is breaking out here but this is a difficult move to trust given how short-term extended price is on this push through the prior high. As price becomes extended, pullbacks are a natural reaction. A pullback here would abandon today’s buyers, so this is not a move I’d be interested in chasing.
FSLR is the poster child this week for leaving protective stops in place. Despite recent weakness in this stock, today it surged higher as the company guided higher for EPS and revenue in the most recent quarter. This sent shares screaming higher, prompting a few halts as circuit-breakers kicked in. Anyone caught short in this name had to scramble to cover, and those needing to manually enter orders were caught in a fast-moving market. Always, always keep stops in place because one day you just might need them!
AMBA is a pullback candidate here as it sits just beneath a small trend line at $14.50. A turn higher might produce a quick spike higher, although I don’t see a clear stop to set for a swing. That makes this more of a momentum play for active traders.
SCTY is one solar name that lifted nicely today but may find follow through tomorrow. Here it’s challenging multi-week resistance, and a new high at $20.55 could invite more buyers into the picture. I like this as a momentum play, although the near-term support is too far away to set up a swing in this due to the very wide stop it would involve.
NTI is on my radar here as it bounces back in a feeble fashion after its most recent rollover. This stock is still in correction mode, and I’m simply waiting for this base to tighten a bit more before setting up a play. Rising support is at $26.40, and I particularly like the weak upside volume that has accompanied this weak rebound. One more bar would help this wedge mature.
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.
DK just cleared resistance several times but couldn’t hold any of the attempts. It then rolled over and has bounced back just partially over the past few days on weak upside volume. A turn down through short-term rising support at $37.20 would trigger a short sale for me, and I’ll have a protective buy stop above the bounce high. I’ll be looking for a test of the recent low as a first target and set a slightly more aggressive second target. Earnings are due out late this month, so it has some time to work.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
