Good evening StockBandits!
It’s good to be back in the saddle after a wonderful vacation last week. My wife and I celebrated our 15th anniversary in beautiful Cabo San Lucas, and it couldn’t have been better. Our two boys stayed with their grandparents, and I shelved the market for a little while and just relaxed! While it was hard to check out and leave paradise, I am excited about the remainder of the year and I’m more rested than I’ve been in many months. Here’s a quick look at one of the views we enjoyed each day, as well as a shot with my prettier-than-ever bride:
Back to the market, the indexes didn’t do a whole lot of interest last week. They are coming off a minor pullback and this morning’s weak open and prompt rally hinted that the bulls aren’t yet ready to just roll over and relinquish control of the tape. The significance today was not based on a large move or new highs, but simply the presence of a psychological (and technical) edge which the bulls are still enjoying.
Currently, the major averages are again basing near their highs. The refusal to back away from highs is something we’ve seen since late June, so instead of pullbacks we simply get some lateral rest. That’s the phase we’re in at the moment, as few are willing to sell. A little concern would go a long way toward producing a deeper dip, but complacency is running high. We’re entering the final stretch of summer with traders taking vacations before school begins, at which time we should see volume return to higher levels and if we’re lucky, some greater volatility to go along with it. Movement creates opportunity for us, which means that laying low during periods of stagnation like this is best. It’s only temporary, but helps avoid overtrading when the short-term trend is sideways.
One good thing right now is that earnings season is largely winding down, so although there are a few companies still set to report in the coming days, the bulk of them are now behind us. That’s positive and should soon produce not only more trade candidates (as compared to many overlooked setups in recent weeks due to scheduled fundamental news), but also should allow more of a purely technical approach. Periodically, the market gets fixated on earnings season or political events or global unrest or any of a slew of other items, and that’s part of trading and something we each have to accept. However, I always enjoy the periods when the price action is the primary focal point like it’s shaping up to be for the next little while. All we need now is some momentum to surface.
Let’s get to the charts.
NAZ – The NAZ finished near its session high, but remained in its short-term range and saw light volume on the session. Until we get out of this range, expect to see continued choppy price action. Bigger picture, there’s a stair-step look here which is quite bullish.
SP500 – The S&P did little today with another narrow range day and continued light volume as price stayed in the center of the range.
RUT – The RUT closed strong and although it’s still in its range, could make an attempt at an upside exit soon. We’ve only seen a few days above 1056.
DJIA – The DJIA again respected 15400 today on a closing basis, keeping it at the bottom end but still inside this 200-point trading range it has spent the majority of the past month inside.
Notable Names:
HLF is working on an ascending triangle pattern here, which is a bullish base. This stock could be ready to go soon, although I’d prefer to see volume pick up a bit ahead of a breakout attempt, and see price get closer to upper resistance.
SCTY is resting here after a hard decline, but soon could be ready for a trade. I’d be looking at a short at that time as a new low is made, but for now I’m keeping it on watch to see if it can build out a slightly larger and more reliable base.
CRI has carved out a few lower highs in recent weeks and could see some downside acceleration on the next break. Another day or two above short-term support would add credibility to this setup, so it’s on watch for now.
AEGR is looking ready to turn higher, but a swing stop is still wider than I prefer. As such, it looks good for a single-day momentum play if it’s able to clear the trend line at $94.50 on Tuesday.
ZLC is perking up here with a strong finish today and expanding volume. It looks ready to break out of this large ascending triangle pattern, although a stop beneath the base is too wide for my preference. For that reason, I like it just for a momentum play on Tuesday above $9.65 to participate in the initial breakout.
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.
SGEN is trying to turn back up here after a minor pullback, allowing price to reset and form a new pivot at the trend line. A move through $42.60 will trigger a buy for me as a swing trade as a new leg up begins. I’ll have a protective stop beneath the base and will be looking for an eventual move similar to the last breakout which occurred at $40 two weeks ago.
CME has been working its way lower for many weeks but still hasn’t really broken down hard yet. The post-earnings reaction was negative and then lateral, leaving it in its current base. I’ll get short for a swing if it breaks $70.70, and will be looking for a test of prior levels on the downside as targets with a protective buy stop above this base.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
