Good evening StockBandits!
Last week we had some big earnings announcements, we had an FOMC meeting, and then on Friday we had a highly-anticipated jobs report. Funny enough, none of those things proved to be big market movers. We did see a bit of a bounce from the pullback lows on Monday, but the strength was muted and the tape reflected a distinct lack of emotion.
The S&P 500 and DJIA each faced chances to break out again, but failed to punch through their resistance zones and instead just seemed to yawn at the prospects of upside momentum. Elsewhere, we saw the NAZ and RUT lift slightly from their respective pullback lows and potentially create short-term higher lows, but there was no resulting strength and each stayed well beneath their prior bounce highs.
So, what is it going to take to get this market moving again – in either direction?
That’s the million-dollar question tonight because with the exception of individual companies which still have yet to report earnings, there’s nothing really major on the near horizon in terms of scheduled news or events. Either we get some sort of surprise (and those are not typically of the positive variety), or we see the price action just start to improve and ripples get made. Apparently right now though, nobody is feeling left behind and therefore the sense of urgency is missing. That’s why the moves have been of limited size and duration, and we could continue to see this type of churn for a little while longer until emotions are able to intensify to some extent.
** There will be no Monday evening report this week as I am going to be attending a charity event tomorrow afternoon and evening. I’ll be able to access email late Monday night, so if you have any pressing questions or needs just let me know and I’ll do my best to get back to you, I just won’t have time to prepare the report.
Let’s get to the charts.
NAZ – The NAZ added 48 points last week, but price remained beneath both of the bounce highs from April 24th (4177) and April 9th (4185). That leaves this index with short-term lower highs still in place. The outlier factor right now is the short-term higher low we saw created last week at 4014 (vs. the April low at 3946), although a higher high will be needed to truly confirm it as a higher low. The recent action has been pretty uneventful and unemotional, but with this compression we’re seeing (lower highs, higher lows), it should eventually lead to a more emotional move.
SP500 – The S&P cleared 1883 three times last week (Wed – Fri), but never could vault past it and work on a meaningful breakout. The intraday prior high of 1897 hasn’t yet been tested, although we got within 6 points of it on Friday and failed. That leaves this index still at the top end of the range but so far lacking the fuel it needs to break free and clear of it. It doesn’t seem like it would take much from here to produce a real breakout, but without that sort of development the path of least resistance could soon be on the downside if we start to see bulls raise cash again in hopes of reloading at lower levels.
RUT – The RUT finished the week positive last week, but only by a few points. Attempts to rally further on Thursday and Friday were each met with poor finishes well off the session highs, which shows a lack of conviction on the part of buyers. This index is another one with short-term lower highs and higher lows, which means price is getting compressed. Eventually we’ll see expansion, but in the meantime it sends mixed signals.
DJIA – The DJIA gained a little ground last week, but had a trio of chances to break out of its high-level trading range and ultimately couldn’t get it done. We’ve not yet seen a real convincing rejection, as the Thursday/Friday declines both came on reduced volume, but that’s still a possibility. The longer this index churns at resistance without breaking through, it seems the likelihood of a selloff will increase. The good news for the bulls is that they still have a good shot here to make new highs, they just need to produce a breakout to get that party started.
Notable Names:
ATI is trying to push higher here and is already in a strong uptrend. Upside volume is a bit lacking here though, so I’m going to go with a single-day play here on the long side instead of a swing if price can clear $41.70 to make a new high.
JCI is stalling out here after a bounce from fresh lows last week. Note the decreased volume on this bounce and the weak finishes of the last two sessions, which suggests to me that a rollover could occur any day. I like this one for a single-day play on the short side for Monday if it breaks $44.90.
P is another stock in the midst of a downtrend. It just bounced on weak volume and now is hugging rising support. This one looks good to me for a single-day play on the short side if price breaks $23.90 on Monday.
WDAY is losing momentum here as volume sags on this bounce within the downtrend. A break of rising support looks good to me for a single-day play on the short side at $74 for Monday. This is a volatile stock, so I’m most interested in a one-day move than to manage a swing with earnings just two weeks out.
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.
NBL is still building higher lows with the overall uptrend and this pullback looks like another. I’m watching the upper trend line for a break at $72.25 to get long for a swing. I like the risk/reward for an entry there and a stop at a new pullback low, looking initially for a test of the high and an eventual new high.
QCOM recently failed to hold a breakout attempt and then turned lower on earnings. It has bounced slightly since then, but upside volume is waning and price has lost momentum. I like it for a swing trade on the short side if price breaks $78.40 with an initial stop at a new bounce high and looking eventually for a gap fill from mid-March.
YNDX has a series of lower highs and lows in recent months and this bounce has taken place on very weak volume. Price filled a gap last week and now is stagnating and threatening to roll over. I like the risk/reward for a swing trade here if price breaks rising support at $26.10 with a protective stop at a new bounce high and looking for a return toward the April low.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
