Good evening StockBandits!
A choppy session with numerous crosses of the flat line (with the exception of the DJIA) finally found a bid in the afternoon to take each of the indexes green by the closing bell for a snapback rally. The Dow had been up all session and ended with a triple-digit gain, while the S&P reclaimed the 1635 level it had broken Friday. The NAZ briefly undercut its short-term trading range, only to bounce back sharply from its session low (down 36) to go out at its high.
It was a messy day with a little something for everyone, but ultimately it was a relief bounce after an ugly day on Friday. The big question now is whether or not we’ll see some additional strength, or if instead the sellers return to raise more cash. Such is the nature of a trading range, and there’s very little we can expect in terms of lasting moves until this range gets left behind.
Last night’s momentum candidates either did not trigger (longs) or did trigger and worked very quickly (shorts GMCR & VIPS). The difficulty in finding follow through in recent sessions simply reduces my interest in multi-day plays at this point for the most part, at least until we can see some additional basing action. It’s also why the single-day plays tend to be a better fit at the moment, due to the reversal-prone nature of prices while caught in trading ranges. I do have one new swing tonight, but I’m staying selective.
Let’s get to the charts.
NAZ – The NAZ saw a break of just 3 points below short-term support before bouncing back hard intraday on strong volume. The bulls are defending the 3422 level for now, but will they chase strength like they did in April & May or simply bid on weakness?
SP500 – The S&P saw a feeble attempt at downside follow through this morning but also rebounded to reclaim broken support at 1635 by day’s end. This further validates the lower end of the range so let’s see if the bulls can hold it.
RUT – The RUT is right in the middle of the range tonight after nearing the lower boundary today. This index is caught in a 38-point trading range, giving it plenty of room to fluctuate here without doing anything real meaningful.
DJIA – The DJIA continues to respect the 15542 high it was rejected at last week, but also has a few hundred points of downside room to the next level (14887).
Notable Names:
TSO is a good example of why I prefer to wait for key levels to be crossed before entering trades. Last night I highlighted it here with a $63 trigger price for a momentum play, and today it got within $0.21 of that level before selling off more than $3 to its session low. Waiting for the break prevented a premature entry, which would have been painful.
SOHU is working on this base, which keeps tightening. It needs a bit more time or strength to get closer to the upper trend line, so this is a watch stock for now for me.
TSLA is still seeing great volatility and today had an intraday range of more than $9. Anytime you’re involved in a stock that moves this quickly, keep hard stops in place to avoid disaster.
BYD is coiling beneath the upper trend line and still looks good for a momentum play after being highlighted here last night.
GLW is just beneath the upper trend line of this wedge, and a push through $15.75 could be worth a trade on the long side. If this can tighten for another day, it may make more sense as a swing, but for now the risk/reward isn’t quite favorable enough for me to take it for an overnight.
DECK could break out any day now. A turn up through $55.40 sets the stage for a short-term pop on the initial breakout, making it a momentum setup for me.
RHP is trying to bounce but doing so on unconvincing volume. It may lift a bit more but should it happen to turn lower tomorrow, I like it for a quick trade on the short side upon a break of $37.80.
ALK has plenty of room for a breakdown if it undercuts $55. A swing stop is just too far away, making this a momentum setup for me.
New Swing Trade Candidates:
These stocks look ready for imminent multi-day moves. Pattern confirmation occurs with a move through the entry level. Initial stop and target levels are also provided.
LCC is still trending higher but over the last 2 1/2 weeks has pulled back to test former resistance (now serving as support). A turn up through the descending trend line at $18.05 will trigger a buy for me as a swing, and I’ll set a stop beneath support just in case of a reversal. I’ll be looking for this one to challenge the recent high as a first target.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
