Good evening StockBandits!
The high-level standoff continued today as the indexes spent another day beneath breakout territory. Today we saw minor declines across the board, but it was hardly a day of significance due to the light volume, narrow trading ranges, and limited net changes that occurred. It seems the bulls are still not yet eager to take profits, yet the bears have little to work with up here near all-time highs aside from the fact that the market remains a bit stretched and perhaps overdue for a dip. That’s leaving very few incentives to buy or sell at current levels, hence the relatively tight consolidation we’re still caught in.
I noted over the weekend that this tight rest phase after such a sharp advance really sets up a bull flag type of situation, so should we see new highs reached, the bulls have a shot to regain that exceptional momentum we’ve seen since the June lows. However, if this stalemate ends with a turn lower, we could see some profit-taking quickly accelerate as market participants rush to lock in recent gains. Stated otherwise, despite the quiet, tight nature of this high channel, I am starting to expect much more of an emotional move once it gets resolved – regardless of the direction.
Keep in mind we’re still in the thick of earnings season, so it remains important to keep one eye on the earnings calendar. I use EarningsWhispers and Yahoo! Finance primarily, in order to avoid any big surprises. Before long, earnings will be off the radar once again and we can trade purely from the technicals, but at the moment scheduled fundamental news remains a factor that I don’t want to overlook. Even tonight there were several other nice setups which are due to report either this evening or sometime tomorrow which I elected to ignore until the news has passed.
There are a handful of new swing candidates this evening I’m setting up. I want to point out that there are some long and short candidates, which can help to get me positioned in the direction of the next break. Additionally, a couple of them only have a single target, which in both cases is due to earnings approaching in just a few weeks, giving them less time to work.
Let’s get to the charts.
NAZ – The NAZ pulled back just a few points today but remains in this high channel waiting for a catalyst to break out or break down.
SP500 – The S&P also sits in a high short-term channel here with little room to move either way. Essentially a 1% advance or decline would put price outside the channel and could spark the next move.
RUT – The RUT looks a bit more like a rounded top here but it hasn’t broken down yet. It has been respecting 1038 and 1036 lately, including today, so a break below there could bring heavier selling. Should it make a new high, expectations would then be set for a return of the momentum we saw off the June low.
Notable Names:
YHOO is resting on rising support here after a quick rip and dip since earnings. This stock may need to base a bit more if it undercuts the rising trend line.
CHK is at key resistance here and a breakout could generate renewed interest in the name. Some additional basing action would be ideal for the bulls, which could help a breakout to stick.
TSLA was looking tired a couple of weeks ago after a hard retreat from fresh highs, indicating it was ready to consolidate for awhile. Instead, it has made new highs, crushing shorts along the way. Price is now approaching the upper end of this uptend channel, which would be a logical area for a rest if reached.
HDS is still on my radar here and I’d take it for a momentum play Tuesday if it clears $22.05 to make a new high. Otherwise, continued consolidation here may soon set up a swing.
SHLD is perking up since finding support and could catch a quick bid if it clears the small downtrend line at $44.20.
ABX is wedging here but is nearer to rising support, so I’m watching for a possible retreat in price. A break below $17.10 could produce a quick selloff for a momentum play for Tuesday, although earnings are due out Thursday so there’s not enough time to warrant a swing.
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.
PKG is in a wedge and should resolve it soon. If price clears the upper trend line at $53.40, I’ll get long for a swing with a stop below the base. Earnings aren’t due out until October so there’s ample time for this play.
DLTR is challenging the descending trend line right off the recent high and a turn up could resume the longer-term uptrend. I’ll get long for a swing if price clears $53.25 with a stop just beneath the pullback low. I’ll be looking for a rally similar to the last breakout if this one triggers an entry.
JOY has carved out some multi-day resistance which I can now use for a swing stop, whereas last night that was not readily apparent. I’ll get short for a swing if this one undercuts $47.75 to confirm this bearish pattern.
IRBT reacted negatively to earnings after carving out 2 short term lower highs. The bounce attempt of the past few days has been pathetic, so I’m looking to get short upon a turn lower through $33.95. I’ll have a protective buy stop above the bounce high and will be looking for prior levels to get tested as downside targets.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
