Good evening StockBandits!
The bounce from key levels which began last Thursday morning carried over into this morning, then quickly stalled out. Stocks began the new week on a slightly upbeat note as bulls felt little fear after holding support zones last week. However, we didn’t see much follow through and ultimately the buying pressure lacked the fuel needed to build on the strength of late last week. Ultimately, we saw a narrow-range day with mixed results after lethargic price action.
To see such a sharp two-day bounce get followed by relative inaction today isn’t surprising. The angle of the bounce was steep, to say the least, and we’re still caught in trading ranges. The early strength today provided traders with reason to raise a little cash as prices entered the upper portion of the trading range, even though the upper boundaries haven’t yet been tested.
I’m looking to keep my timeframes abbreviated for most new trades, although there is one more new swing candidate I found tonight which I’ll highlight momentarily. There’s a chance this bounce is stalling out to create a lower high, although that’s just one possible scenario that could play out in the days ahead. It’s important to keep an open mind here and stay cognizant of the fact that the trading ranges are still intact.
Let’s get to the charts.
NAZ – The NAZ gained just a few points today after finishing off its session high with weak volume. It’s just above the center of this range, giving it plenty of room to lift further or pull back before anything truly meaningful happens.
SP500 – The S&P rested today with an incremental loss on the session after being up a little earlier in the day. It’s also in the middle of the range, so expectations here should be limited. There’s a chance this index carves out a lower high, so we’ll watch for that possibility as well.
RUT – The RUT finished strong on the day for its third consecutive advance. It still has room to lift further before the highs would be challenged, so it’s critical to consider the trading range despite a few days of upside.
DJIA – The DJIA ended the day slightly in the red, and now sits right in the middle of its trading range. After seeing this index fail at resistance a few weeks ago, it’s possible that this area evolves into a lower high, although more selling from here would need to occur almost right away. Expect continued chop while this range persists.
Notable Names:
BEN is an example I wanted to show tonight of a stock that has changed character. Previous pullbacks in recent months have been much more limited in their depth and duration, whereas this one has taken several weeks and has carried much deeper. Pay close attention to the rhythm of stocks, because when it changes, it’s telling you something.
RCII is facing a possible breakout here from a trading range that has been intact since the fall of 2011! The ideal scenario would be a pause up here before a breakout occurs, after which a measured move (height of the channel) could be expected. A rest just shy of resistance would also help to establish a nearby stop.
QIHU was listed here last night as needing to tighten, which it still does before I’d consider a swing. However, as a momentum play it may be gearing up for a move here. I’ll look to get long for the initial breakout move if this one clears $45.60 on Tuesday.
AEGR is facing short-term resistance here and a breakout through $75.90 could produce a nice pop. This stock has become increasingly volatile since early May, and is a drug stock, which leaves me less interested in a swing.
NFLX is coiling just beneath trend line resistance and a push through the $224 level could set it free for a quick lift. I like this for a momentum play but not an overnight due to the capital it ties up.
SWI is facing short-term support and a break below $39.50 could spark more selling pressure. I like this for a momentum play given the brevity of the recent selloffs.
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.
AXLL is in a downtrend and has rested and attempted to bounce in recent days. This sets up a small wedge which could easily be resolved lower to continue the trend. I’ll get short for a swing trade below $42.20 with a stop just above this base in case of a reversal. I’ll ultimately be looking for a similar sized move to the previous selloff which would also take this stock down near support from late last year.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
