Good evening StockBandits!
Today was nearly a carbon copy of Tuesday with an opening upside gap which saw only a partial fill before a bid came in. That lifted the market enough to exceed the morning highs as the final hour of the day arrived. Just like yesterday, however, we saw a late-day slip just enough to ease off the highs. In the end, we finished green once again but with very little intraday buying (the NAZ gained less than 1 point from the open to the close).
The lack of additional strength following these opening gaps just points once more to the fact that the market has sustained some technical damage and traders aren’t as aggressive on the long side as they have been since November. The churning we’ve seen even on these last two advances shows that the strength is being used to unload shares, presumably by those who missed their exits on the way down and now sense an opportunity to raise cash at more advantageous levels than the lows we just saw.
My game plan at the moment is to remain patient with letting the bounce play out, as I expect it will result in another lower high and provide some shorting opportunities soon. The fact that the bounce has primarily happened by way of gaps leaves me feeling like I’m missing very little on the long side at the moment.
Be sure to submit your chart requests if there are some tickers you’d like me to review in this week’s Charts on Demand video.
Let’s get to the charts.
NAZ – The NAZ opened today at 3375.70 and closed at 3376.22, a whopping 0.52 points higher intraday. The bounce is still underway so I’m respecting it for now, but it’s happening on light volume and we aren’t seeing buying between the opening and closing bells. It did close 6 points above 3370 to reclaim that level, but may not be able to stick unless the bulls can exert some greater force than we’ve seen so far.
SP500 – The S&P closed slightly above 1597, but the bulls sure don’t have much of a cushion here. This index is also bouncing on weak volume, making it very difficult to trust. The previous bounce high was 1654, which is 51 points higher than the close today, which leaves the door wide open for a lower high on this rebound.
RUT – The RUT bounced to 968.68 today, stopping shy of 970 before backing off to 963 at the close. This is for now a rejection at a prior key level, so we’ll see if there’s any upside continuation into the end of the month or if that was it.
DJIA – The DJIA got slightly back above 14887 today but did so on lighter volume again. The prior bounce high was 15340, which is some 430 points higher. That gives this index the chance as well to create a second lower high on the bounce.
Notable Names:
YHOO was a good example today of how a broken rising trend line can often times get tested from below. Today the stock lifted for the second straight day on light volume to test the breakdown area, then backed off. This still looks like a trend change and this bounce is apparently being used for raising cash. I can’t blame those who are doing so after the quiet lower highs in recent weeks, the hard breakdown, and this feeble bounce back attempt.
DDD bounced a bit more early today and also failed to reclaim its broken rising trend line. This one turned lower from there, and now I’d expect to see more sellers become active. A breakdown offers a first chance to exit, a snapback to test offers a second. The market doesn’t often give third chances.
AET was a breakout setup with lateral resistance highlighted here just 3 nights ago, and today the stock was able to clear the $63 level. It didn’t last long though, which is what can so easily happen when the market is simply gapping higher and then stagnating intraday.
IRBT is sitting beneath a pivot here and a turn up through $38.05 could produce a pop. I like this for a momentum play, but not for a swing. The last breakout lasted just a day, so I’m only interested in capturing the initial turn up if it happens.
ZLC is trying to stabilize here after a pullback. A turn up through $8.80 could invite more buyers to the picture. Upside volume the last two days has been lackluster, so I’m only interested in a momentum play here rather than a swing, as there just doesn’t seem to be that much conviction on the part of the buyers.
UA is stalling out after a 2-day bounce. A turn lower through $57.40 would open the door for more selling, so I like it for a momentum play on the short side if that break occurs.
DVA is still looking ripe for a breakdown as noted here last night. I’m setting up this momentum play once again with a $121.20 trigger on the short side if it gets broken. I think the first break could take it toward the $117 level, so I’m interested in participating in the initial break. The stock just hasn’t based enough for a swing, as there’s no clear upside exit tied to this chart.
ALK is working lower and is sitting on 3-day support here. A break below $50.20 looks good for a momentum short, although this base is just too small to warrant a multi-day swing.
New Swing Trade Candidates:
No new swing candidates tonight, waiting in cash for better opportunities. The bounce is underway and once it stalls out there should be better setups for shorting.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
