Good evening StockBandits!
The market finished green today again, but it was just a technicality for the bulls given the minute gains we saw. The indexes keep tiptoeing higher here, unable to sprint higher after the runup from the June low, adding to the idea that the broad market has run into some high altitude. When higher ground is reached, some time for adjustment is typically needed. We’ve yet to actually pause or see some profit-taking, but the stampede has slowed to a crawl.
I’m reluctant to try to short this move, just because picking tops isn’t my game. My watchlists are also still lopsidedly bullish as so few stocks have remained weak during this rally. There are some which are not as extended as the indexes, so they are my focus right now when considering new trades. However, market weakness once it arrives (and one day it will), it’ll weigh on almost everything. That’s the difficulty here in adding exposure. There’s just not a lot to choose from on either side of the tape – especially right in the thick of earnings season. Selectivity is absolutely critical here.
I had an article today on MarketWatch discussing some interesting similarities between the current lift and the spring rally. Here’s the link to it in case you’d like to read more and see the visuals I shared.
Let’s get to the charts.
NAZ – The NAZ gapped lower last Friday but rallied intraday, then gained a few more points today to keep working on filling that gap. Thursday’s close was 3611 and the intraday high was 3264, which are the upside levels to watch. Should we see weakness kick in, the unfilled gap to 3520 is the next level to watch.
SP500 – The S&P drifted a bit higher once more today, painting an intraday of 1697. It’s interesting that the “breakout” through 1687 hasn’t brought about more strength than an 8 point advance to tonight’s close, but this index is very extended and that’s giving this rally a bit of a thin-air appearance.
RUT – The RUT edged slightly higher today as well to make another new all-time high. The pace has slowed in recent sessions, so any profit-taking could easily bring the unfilled gap to 1020 into play on the downside.
Notable Names:
CME was set up for a play last week but never triggered and ultimately resolved this tight wedge on the downside. That negated the play, so there was no harm done. However, these compression patterns certainly offer some advantages when it comes to decisive levels to watch.
AUY just took the first step toward a possible change of character today with a primary downtrend line break to the upside. This stock now needs to pull back to establish a higher low, at which point more of a lasting recovery can begin.
CST is parked right in the center of this big wedge but these two trend lines get closer by the day and a play may set up soon. I’m keeping it on the radar and would be interested in a trade on the long side given that this wedge has occurred well off the low since it went public in April.
ZLC is getting tight here and if it goes on Tuesday, I’ll be interested in a momentum play on the long side through $9.75. If instead this pattern tightens a bit further, I may consider it for a swing. Tonight, the distance to a swing stop is still a bit wide for my preference.
GMCR perked up today and now a push through $76 sets up a momentum play for a few possible points of upside. There’s some big resistance just above $80, so I’m not interested in a swing with this type of risk/reward.
CAR is starting to roll over away from this lower high and I like it for a momentum play on the short side for Tuesday on any break through $31.50. That would break today’s low and point to continuation.
MELI was listed here last night but did not trigger today for a momentum play on the short side. The same setup is still present, so I’ll again utilize $104.90 tomorrow as the breaking point for a quick retreat if rising support fails to hold.
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.
P is nearing the apex of this triangle or pennant and a turn higher through $18.55 could spark some interest. I’ll get long there for a swing trade, and will have a protective stop beneath this base in case of failure. I’ll have a target near the recent high and a more aggressive target a bit higher. Earnings are due out late next month, giving this one some time to work.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
