Good evening StockBandits!
Monday saw a weak start immediately followed by strength which lasted throughout the session, leaving stocks near their best levels by the closing bell. Today, we saw the complete opposite with a downside gap which never filled and a trend day lower. The S&P again failed to get free and clear of the 1883 resistance zone, and now is turning lower within the range after multiple tests of the apparently concrete ceiling. These frequent failures may eventually lead to some real frustration for those looking for higher prices, so we’ll see if any downside acceleration arrives.
The more speculative RUT and NAZ continue to lag, however, with standout relative weakness. Today the RUT closed just 6 points above the higher low of 1102 we’ve been watching, making last week’s bounce high yet another lower high on the daily chart. The NAZ has made no real progress for about 2 weeks, unable to gather any lasting momentum in either direction as it carves out lower highs and higher lows. Former high-flyers like FEYE and TWTR continue to get crushed, leaving techland with no leadership.
We have testimony from Fed Chair Yellen each of the next two days which has potential to move the market, but aside from that it really boils down to the need for more emotion in this tape if we’re going to see a lasting move. The charts are still pretty sloppy overall, but on the positive side earnings season is largely behind us, which should clear the way for more trade candidates on the multi-day timeframe.
Let’s get to the charts.
NAZ – The NAZ gave up 57 points today and has continued to churn beneath the 4185 level. The pullback low from last Monday is at 4014, and could be seen quickly if we start to see some downside follow through.
SP500 – The S&P is again ducking from the 1883 level after a close just above it last night. The immediate failure sets the stage for another potential test of 1850, which may not hold if this area gets widely embraced as a top. For now, the bulls remain hopeful but aren’t putting enough money where their mouths are.
RUT – The RUT is looking like it wants to head back down to test the recent lows at 1102 and 1095, respectively. Given the lower highs we’ve seen even in the last few weeks, that test may fail, in which case 1082 and 1079 become the next levels to watch.
DJIA – The DJIA is still in the upper portion of its range but has again failed to break out despite numerous recent chances to do so. Next support is just north of 16,000, so there’s plenty of room for a pullback here if prices prove unable to head higher.
Notable Names:
TWTR got crushed today as it gave up more than 17%. Headlines and lockup periods aside, the technicals here have given no reason to be long for many weeks with lower highs on bounces and lower lows being established on selloff waves. This is a downtrend and nobody seems interested in this stock now even after seeing it give up more than half its value since December.
JPM just painted its lowest close in half a year today, and many other financial names are struggling as well (C, BAC, GS, MS, etc.). This isn’t helping the S&P 500 to see financials so weak.
GDP is an example of a failed pattern tonight that I wanted to point out. It had rallied sharply then based in a narrowing fashion over the past few weeks, but today’s hard break of lower support on heavy volume negates the bullish setup. Anytime I see this type of move, I remove the stock from the corresponding watchlist (in this case bullish) and keep searching for patterns in other names.
WFT is a bit extended even after some short-term rest, but could still exhibit some strength. I like this one for a single-day play on the long side if price can make a new high at $21.50.
CRM is carving out another lower high on this bounce as price starts to roll back over. I like this one for a single-day play on the short side for Wednesday if it shows some continuation with a break below $51.50.
WDAY is failing the most recent bounce and I like today’s break of the lows from the past few sessions on heavy volume. This looks good for a single-day momentum play on the short side for Wednesday if price breaks $72.80.
VMW is stagnating here after a bounce within a downtrend and a break of rising support could spark a quick wave of selling. I like this one for a single-day play on the short side if it undercuts the trend line at $92.30 on Wednesday.
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.
FTK has already reported earnings for the most recent quarter, so it’s now about the price action again. Price looks to be in the midst of a potential trend change with the recent hard selloff on heavy volume and the minor bounce on weak volume it has seen since. This rising wedge is bearish so I’ll get short for a swing trade if price breaks $28.10, looking for a test of recent support.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
