Good evening StockBandits!
When price gets extended, every single day of rest counts. Tuesday was a day of rest for the market, and today we got another as the indexes proved unable to make any meaningful headway in either direction. The major averages ended the session slightly positive with minor net changes, but generally respected their recent highs.
We’re at a spot here where prices have seen a tremendous run over the past few weeks, and therefore a rest is in order. How long it lasts is anybody’s guess, but the fact we’re getting one is certainly helpful. I saw my bullish watchlist essentially double from last night, simply because of the effect of one more bar on the charts and the basing action it afforded quite a few stocks. A little more of it would be gravy and could set up a slew of plays in the days ahead.
I’ll be patient in adding exposure, as it’s not the sure-thing type of play I’m seeking so much as it is the favorable risk/reward setups that I truly want. As patterns and bases tighten and mature further, it narrows the risk associated with the technical entries, thus making those plays much more attractive. With a stretched market needing rest, a few key earnings reports apparently has been a good enough reason for traders to slow their roll and take at least a short breather.
By the way, be sure to submit any charts you’d like reviewed in tomorrow’s video.
Let’s get to the charts.
NAZ – The NAZ made an incremental new high today, but the narrow intraday range of just 15 points and the quiet volume point to this being more of a routine session than anything else. We could see this index get going again very soon and it remains bullish, but should we happen to see some profit-taking kick in I’ll be watching the breakout zone and unfilled gap below.
SP500 – The S&P again had a shot at breaking out today, yet did not. It’s likely just a matter of fatigue after a big advance, which is fine and every day of rest here is of great benefit to this chart. Some additional rest before a breakout attempt is made would be the ideal bull scenario, whereas any profit-taking could bring a gap fill to the 7/10 close of 1652. Let’s see what happens.
RUT – The RUT also posted an incremental new high today and keeps hugging uptrend support. A break below the dashed line could bring a gap fill to 1020 or possibly a test of the 1008 breakout zone. Any continued rest or profit-taking from here would be a significant help to this index technically, as it’s very extended here. That isn’t to say it cannot or will not continue higher, but simply that aggressive buying at this stage involves higher risk of a natural pullback by way of profit-taking once it kicks in.
DJIA – The DJIA is consolidating here just beneath key resistance at the prior high, which is technically very good to see. This is a way of digesting the recent run without giving up ground, although it’ll likely take its cues for the next move from the other indexes since this is only comprised of 30 stocks.
Notable Names:
TMUS is moving more laterally here in the past few weeks and that has brought price into the rising support trend line for now. This offers a good example of trade management, as a break below this line would suggest price is undergoing a change of character. It wouldn’t necessarily change the trend, but it would certainly change the pace of the trend. Anytime I see a trend line like this, I’m reminded to respect it when it has this many touches.
YHOO was a nice example today of just what can happen after earnings are out. Plenty of traders can be caught out of position and scramble quickly to either establish or unwind positions. There isn’t always a need to take an earnings gamble in order to participate in a move, and today this one saw a big lift between the opening print and the closing bell.
CLDX is still on my radar here and I’m rooting for a bit more rest in hopes of setting up a swing. I like how this pennant is developing, and any tightening of it would simply translate into narrower risk for a trade as the distance from a technical upside entry gets closer to a downside stop.
PCYC perked up a bit today after a 2-day dip and this looks good for a momentum play above $106 for Thursday.
CTRP is approaching breakout territory but this pattern is still somewhat broad for a swing. For this reason, I’d only take it for the initial breakout move as a momentum play through $35.50 on Thursday.
WLT still looks good so I’m going with the same play I set up here last night for Thursday’s session: a momentum play on the long side if price can cross resistance and clear $12.75.
FCX is holding the gap from a few weeks ago and today turned slightly lower after being up earlier in the session. A break below rising support at $27.95 sets up a momentum play for me on the short side for Thursday.
AEM is also hugging rising support and I like this setup for a momentum play on the short side for Thursday if it breaks $27.70.
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.
CTSH is sitting in a tight bull pennant tonight and that means potential follow through along with a tight natural stop beneath the base. I’ll get long for a swing trade if price clears $71.80, and this one has some time to work with earnings due out Aug 6th according to Yahoo! Finance. I’ll be looking for a test and eventual fill of the gap from April as my targets.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
