Good evening StockBandits!
Today was a case of correcting by time rather than price as the major averages held their position to close for the second straight day in essentially the same spot. A morning pullback offered yet another chance to buy a shallow dip, which the bulls did, right on cue. The slow grind back up made for a choppy day and another narrow-range bar on the daily charts. Needless to say, there were no meaningful technical developments.
With the market staying aloft the way it is, many are quick to call for a top or bubble-like price action. Although nothing precludes a hard selloff from here, a more objective view of this move is that periods of recent indecision have been resolved higher. Price then caught some momentum, and as of tonight has yet to endure any profit-taking.
Those who are eager to short up here should keep a couple of things in mind…
The first is that there are very few bearish charts out there. If the broad market is the jet stream, why fly against it if you don’t have to? Granted, it’s not easy to find great buys right now, but the bottom line is that until the overall price action shifts in a meaningful way, the long side is the one to favor.
The second thing to keep in mind is that tops tend to be much more of a process than an event. So whenever the market does peak, it’s likely that we’ll see some failed bounces pan out over the course of some time (several weeks?), during which the bulls get their hand slapped more than once. Until then, they’re aggressive and the trend is still on their side with nowhere else to park money.
I’m again sticking with single-day plays heading into Wednesday, as the setups I’m seeing I just don’t trust for lasting moves in this extended tape.
Let’s get to the charts.
NAZ – The NAZ stayed in a 19 point range today but managed to close incrementally higher, giving the bulls another psychological win. 4344 is close by, with the high of 4371 not far beyond. Should we see a pullback kick in, 4296 is going to be the first downside level to watch with the unfilled gap.
SP500 – The S&P backed off half a point today but still finished at the high of the session. That’s been the norm for a few weeks now and it just goes to show how intent the bulls are right now in controlling the closes each day. 1955 is the high and there’s an unfilled gap to 1940 which should be the first downside level to monitor in case of a dip.
RUT – The RUT painted an inside day today, finishing 7 points from Monday’s high. Should we see some profit-taking kick in, there’s an unfilled gap to 1153 that belongs on the radar. After a big multi-day move, more rest would greatly benefit this index.
DJIA – The DJIA paused today but still finished a little green, 25 points off Monday’s intraday high of 16970. There’s room for a pullback if we get some profit-taking, but with 17k so close by the bulls may make a run at it just to cross it off the list before a rest kicks in. We’ll see.
Notable Names:
TWTR is still acting well here and I’ll give it another shot on the long side if it can clear $35.55 to show some continuation on Wednesday. The unfilled gap may serve as a bit of a magnet for this stock which has been gradually improving in the past few weeks.
FEYE is another one that’s shaping up and now faces some resistance. A push through $35.60 looks good to me for a single-day play on the long side as it attempts to fully close the gap to $37.13 from early May.
CAMP is at resistance here and could see a pop if it gets through. I like it for a single-day play on the long side if price can clear $20.05, which would free it up to head back up toward the gap from April.
GLW was on watch for me here last night but perked up a bit today. With price nearing a decision point, we could see a move out of this base any day. I’m only interested in a single-day play here but a push through $21.85 would get me long for the initial move higher.
N is looking vulnerable here after a modest decline today. I listed it last night but it did not trigger, so since the same pattern is still in effect, I’ll set it up again for Wednesday for a single-day play on the short side with a break below $78.50. It’s a volatile stock with the potential to move several points, possibly back down to quickly test last week’s low.
New Swing Trade Candidates:
No new swing candidates tonight. Previously listed candidate CERN was removed today as it did not trigger an entry and price has rolled over to negate the bullish pattern.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
