Good evening StockBandits!
Early enthusiasm this morning saw the bulls gaining some steam as June resistance was approached. It wouldn’t have taken much to push through those short-term levels and open the door for additional upside toward the trading range highs, but instead the buying stalled out. The lack of continuation gave way to an afternoon pullback, and by the final hour of the session the bulk of the gains had been given up. In that final hour, however, a complete gap-fill was avoided and a rebounded lifted them from their session lows.
It’s Fed week with a 2-day meeting coming to completion with a 2pm ET announcement on Wednesday. With the past few sessions each painting different color bars on the daily charts, it’s difficult to expect a lot of additional strength ahead of the main event of the week. Anything’s possible, but we may not see much lasting momentum ahead of Bernanke & Co. It’s also quadruple-witching week, so as several derivatives roll over to the next expiration it will no doubt cause some ripple effects in stocks.
Tonight, it seems almost too easy to pick on the bulls here given their inability to produce any lasting upside. The bears haven’t either, for that matter, but they don’t retain the intermediate-term trend title like the bulls. Spikes higher have come with some regularity of late, yet it’s all led to a whole bunch of nothing. Each bounce has been met with selling, leaving the market channel-bound and reminding traders like us to abbreviate holding periods until something can stick.
My plan is to remain picky and lay low until setups come along I just can’t live without. Based on the cross-currents of this week, doing less may be better.
Let’s get to the charts.
NAZ – The NAZ was up as much as 45 points at one point this morning before backing off. It did see a bounce of about 16 points in the final hour, however, which left it with a respectable gain. Overall, the open-to-close net change was less than 3 points, as it gapped tot 3449.97 and then closed at 3452.13 The number to watch if we see any further strength is 3484.
SP500 – The S&P put up a solid day today, ending less than 10 points from the 1648 level it keeps respecting (including today). This keeps it slightly contained for now, although a push through that level could produce a lift back toward the highs.
RUT – The RUT again respected 992 today, getting within half a point from it before backing off. This index bounced 5 points in the final hour and ended with a 6.4 point gain, so it had given back nearly all its morning gains at one point. The channel is still intact, and we seem to be back in the alternating-colors mode with frequent changes of direction.
DJIA – The DJIA neared 15300 today but retreated, ending about 120 points from it. It was a solid showing for this senior index, although nothing meaningful occurred. It’s still channel-bound, in the short term and over the past month.
Notable Names:
GOOG just held a higher low and now has a chance to confirm it. This stock is gradually turning back up after a multi-week pullback, and this price action tells us the big-picture trend hasn’t changed yet.
CLDX was due for a rest and now it’s getting one. Price is moving laterally but staying relatively close to upper resistance. I’m going to keep this one on watch for another day or two and see if rising support becomes a bit more clear while $16.50 resistance is further validated.
AMBA is breaking out here and could see some acceleration. The overall price action in recent weeks has been pretty sloppy with quite a few wide-ranging bars, so I don’t like it for a swing. Last night it was listed here as a momentum play, and it made a little progress today overall. I like it for another shot tomorrow as a momentum play using $18.30 as a trigger.
SOHU cleared a trend line today and I like this setup for a momentum play should it show some follow through on Tuesday by crossing through $67. A swing stop isn’t real clear here so I’ll just take the single-day play if it goes.
MELI is still caught in a falling wedge pattern and needs to clear the upper trend line in order to start making any meaningful headway higher. If that happens tomorrow through $115.50, I like it for a momentum play as the first move could be a good one. Lasting upside has been fleeting for several weeks though, so I don’t intend to keep it for a swing and am most interested in capturing the initial move through the trend line rather than counting on follow through.
VHC is undercutting rising support here on heavy volume and could make for a nice momentum play on the short side Tuesday if it shows a little follow through to Monday’s weakness by breaking $22.95. A swing stop is too far away for my taste.
MPC is struggling to lift for more than a day at a time and keeps getting met with supply each time it attempts to rally. Here it’s sitting on multi-day support and if it breaks $78.60, it would mark a multi-week low. I like this setup for a momentum play on the short side for Tuesday, but as a swing the setup just isn’t quite as defined.
New Swing Trade Candidates:
No new swing candidates tonight, waiting for better risk/reward opportunities.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
