Good evening StockBandits!
The stalled-out price action we saw yesterday on the heels of a bounce from recent support suggested the sharp initial rally was running on fumes. I also noted last night a few times that should we happen to move lower from last night’s levels, that it could evolve into a short-term lower high. Today we saw widespread weakness early in the day. A decent bounce from the lows of the first few minutes of the session failed to hold as late selling kicked in to bring the market off its highs. The trading ranges are still intact, but one has to wonder if the lower high which is currently in place is a subtle hint that this range ultimately gets resolved lower.
I’m certainly not here to make predictions, and quite honestly I don’t care which way this range gets resolved. The simple fact that the market has actually spent a few weeks basing after such a persistent rally from the mid-April low is very good to see, as it’s allowing stocks (and the indexes) to build some new bases and establish some levels to watch in the days ahead. However, as traders, it’s imperative that we stay objective and keep an open mind for what’s evolving before our eyes. Right now, I’m wondering if this lower high scenario is quietly bearish for the near term.
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Let’s get to the charts.
NAZ – The NAZ now has the look of a lower high which sets the short-term tone as we wait to see if a return to the lower end of the range is underway. It still has some room before 3370 would be met, but a breakdown there could quickly see the early May gap filled to 3340.
SP500 – The S&P also has a lower high for the time being after today’s 1% decline. Next big level is 1597 which this index nearly tagged last Thursday.
RUT – The RUT lifted a bit off its low but still shed 1.1% today. The 970 level is support and may get tested again shortly unless we get another reversal. Those happen often within trading ranges, the only question is whether or not this lower high will carry any weight and possibly lead to a downside exit from the range.
DJIA – The DJIA has given back a chunk of the gains from late last week and now has the look of a lower high in place. That will be the thing to watch until proven otherwise, along with the 14887 area which is next support should this weakness continue.
Notable Names:
TLT saw a possible key reversal day today on heavy volume. This is a beaten-down ETF which tracks bonds, and although this isn’t in itself a buy signal, it’s something to keep an eye on given the relationship between bonds and stocks.
QCOR gapped up huge this morning and then promptly reversed lower. Seeing this chart, I just had to share it because it offers such a great reminder. If you get a gift by way of a gap, take at least part of it off because there’s certainly no guarantee it will hold.
BBRY is failing to reclaim broken rising support in the past few sessions and now could turn lower once again. It has been sliding steadily lower since mid May, and might not be done yet.
TSLA is still basing and these two converging trend lines are now $10 apart. The next one to break could give some direction for the next move in this high flyer.
MM is facing resistance here after seeing dips get bought to establish some rising support. I like it for a momentum play above $8.70, as there’s room to run toward $9.95 before the unfilled gap from February would be challenged. Rising support is too far away to set up a swing for my preference.
TMUS is coiling just beneath resistance and a breakout through $22 could produce a quick pop. I like the relative strength in this stock but would want to see a slightly tighter triangle before taking it for a swing.
TPX is starting to look heavy again and a break below $42.50 could quite easily spark another round of selling. Another day spent between these two trend lines would tighten this pattern up enough for a swing, but if it happens to go Wednesday I’ll simply take it for a momentum play on the short side.
DK is threatening to break down from a multi-month channel here. A break below $33.50 could do the trick, and I like it on the short side for a momentum play Wednesday if that level is cracked. A swing stop is still too far away.
TSO is breaking rising support here and could see some follow through Wednesday, possibly to test a previous pullback low. I like it for a momentum play but a swing stop would below above the $60 level, which is too far away.
New Swing Trade Candidates:
No new swing candidates tonight.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
