Good evening StockBandits!
The bulls’ grip on the market seems to be slipping just a few days after seeing them defend key short-term support zones. Late last week, buyers aggressively put cash to work to produce a 400+ point Dow bounce in just two sessions, and it appeared as though prices could lift back toward the upper ends of the trading ranges. However, Monday’s indecision raised concerns that perhaps a lower high was being carved out, and in the two sessions since then, we’ve seen that possibility become a reality.
Today, a positive start was quickly sold as the opening gap filled and stocks failed to rebound. The result was a trend day on the downside with the averages each giving up about 1%. This takes us right back near those key support levels as of tonight, only now there are elevated concerns that the next test of them may not hold.
We’ve known this range could be resolved either way, and truth be told, we still await a break. It is not a foregone conclusion that we head lower from here, but the price action is starting to suggest it. The furious bounce of last week was squeezy, which was quite different from the slow-grind, methodical advance we saw off the April low. And now to see it fail so quickly tells us that those with inventory on hand are using even minor strength at this stage to raise cash.
Should the range get broken to the downside, we have some levels to keep an eye on. For now, the key is to let price tell the story rather than predict the next move or place anticipatory bets before the charts give us reason to take action. I’m holding a pair of short positions tonight and will maintain a high standard for adding exposure going forward. This market hasn’t shown follow through for more than a day or two lately, so I’d like to see the boundaries broken to suggest we’ll see better continuation.
Let’s get to the charts.
NAZ – The NAZ completed a bounce failure today on a daily basis by closing 1 point beneath last Wednesday’s close. Intraday, it went lower last Thursday and therefore still has some room, but for now we have a lower high confirmed and the next event to watch for is a test or break of support at 3370, in which case the gap from early May could get filled down to 3340.
SP500 – The S&P lost 13 points today and finished less than 2 points off its low. This index looks poised to test or break the 1597 level with virtually any downside follow through from here.
RUT – The RUT is sitting just 2 points above support at 970 as of tonight’s close, and could break down as soon as tomorrow if the bulls don’t jump to defend this level again. Last week we saw a temporary break of that level which didn’t stick, but another attempt and we could quickly be looking at a test of 954.
DJIA – The DJIA bounced big last week but this week has been giving some back every day so far. Prior resistance became support last week, and now this index is just over 100 points from another test of that zone.
Notable Names:
AMRI was listed on the Bullish Watch list the last two nights. I did not set up a play due to the lighter volume it tends to have, but wanted to post it here tonight just to remind you that the Bullish/Bearish links at the bottom of each nightly report can be an excellent source of additional trade ideas. All it takes is a couple extra minutes to review them and potentially discover another chart or two that fits your eye.
GIMO saw its public debut today, opening at $23.08 and lifting another $5.39 before the close. It went out at its high, making this one to watch. There’s no pattern here, and only a single day of price history, but whenever I see a stock that moves like this one, I make sure it’s added to my core watchlist in case it sets up in the coming days or weeks.
YY is holding the trend line it just cleared a few days ago after a light-volume pullback. A turn up through $29.05 and I’ll take it for a momentum play as it catches a bid.
TSLA is still inside its symmetrical triangle and held up well today despite broad market weakness. A turn up through $100.50 and I’ll take it for a momentum play on the long side Thursday. It could easily head back toward recent resistance.
TPX was listed here last night and I mentioned that if it could spend one more day inside the base that I’d list it for a swing tonight. Today, however, it broke yesterday’s low, which actually expands this wedge rather than tightening it. Nonetheless, I’ll take it for a momentum short Thursday if it undercuts $42.50, as it certainly has room to drop. A swing stop is still just a bit too wide for me at this point.
SBGI is resting on short-term support and a break below $23.75 could be met with a burst of selling. I’ll take it for a momentum play if it goes on Thursday, although a swing stop is still too far away based on the current chart.
DK was listed here last night and made a little progress, but still has ample room for a short-term decline. A swing stop is still not well-defined, so I’ll take it as a momentum play again tomorrow if it breaks $32.90 to make a new multi-week low.
New Swing Trade Candidates:
No new swing candidates tonight. Waiting for tighter bases and a resolution to the broad market’s trading range before looking to aggressively add exposure.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
