Good evening StockBandits!
The RUT was the story index of the day, not because it’s the only one that finished green but because for the first time ever it needed a comma in its quote once it cleared 1,000. The excitement didn’t last long with it topping out on the day at 1001.50 before finishing back beneath the 4-digit threshold, but it’s a milestone nonetheless.
Elsewhere, the market took a rest to kick off the new week. In this kind of environment, a one-day-at-a-time approach is best, and a single day of rest is beneficial. Whether you’re a bull or a bear, you take what you can get. Anyone underinvested during this run has felt the frustration of being left behind in a sense, whereas anyone fighting the advance by shorting into it has just been run over.
My hope is that we’ll see some additional rest in the coming days, and technically there’s certainly a case for that. The fact remains that this is not an ideal spot for adding to long-sided exposure in most cases, simply due to the absence of well-defined downside exits. So I’m staying light and keeping timeframes abbreviated for new plays as we head into tomorrow. In those cases, I’m only interested in participating in the initial moves rather than committing capital for multi-day swings in case we finally get some long-awaited profit-taking.
Let’s get to the charts.
NAZ – The NAZ tagged 3509 today and then backed off about 13 to its finish at 3496. This index has quite a bit of room to pull back if necessary before any meaningful damage would occur, and the first level that shows up on the daily chart is the top of the unfilled gap at 3370. I would expect the first dip to get bought, as shorts are eager to cover and bulls still in many cases have cash they’re eager to put to work. We’ll see, but first some selling needs to follow today’s extremely minor reversal. Note that this index opened at 3490 and closed at 3496, so intraday there was actually a little bit of demand following a soft open.
SP500 – The S&P has already completed its measured move out of the trading range from 1530 to 1597. That isn’t to say it cannot or will not go higher, as it certainly could, but after seeing this run and the completed measured move it would be an ideal time for some rest.
RUT – The RUT just added 11% off the mid-April pullback low but actually still has a little room before its measured move would be completed. That isn’t a requirement for this index of course, but today it still made a little headway.
DJIA – The DJIA finished its 500-point measured move today and then backed off a very small amount. This isn’t much of a reversal, but it just might lead to some rest which is badly needed. The measured move was to 15380 as described here on May 5th, and today it got 11 points past that before backing off.
Notable Names:
GIS is potentially seeing a character change here. One day doesn’t necessarily end a trend, but given the larger-than-normal bar and heavy volume and the broken rising support, there are reasons to pay attention here. Whether it’s this stock or any other, taking note of the price action objectively can prove very beneficial.
RHT is a stock that has repeatedly respected its descending channel and after a big ramp right into resistance (which I highlighted here last week), this stock sold off today to pull back once again. The stretched nature of 12 straight advances in conjunction with price reaching major resistance was not something to ignore.
ANF was listed here last night but did not trigger. The stock still has a viable pattern here for a momentum play, although for the same reasons outlined here last night I’m just not interested in taking it for a swing.
LOCK edged slightly higher today after being listed here last night but still did not clear the $10.25 level I’m watching. I’m going to give it another chance tomorrow for a momentum play but will not enter until that level gets cleared.
CRUS is perking up here in price to challenge short-term resistance at the trend line, but volume is not. For that reason, I like it more for a momentum play through $23 with room to run toward $24 rather than as a swing.
CF is shaping up a bit here with a pair of higher lows since its April low, and now price is challenging a small descending trend line. A break above $192 could bring a quick rally to or through $197, which is next resistance.
DLX may be stalling out here to carve out a lower high on the daily chart, so I’m watching it closely for a potential short sale. This isn’t an ideal setup for a swing but a move below $38.50 may be worth a momentum play.
New Swing Trade Candidates:
No new swings tonight, staying light with the broad market so extended and waiting for better setups to emerge.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
