Good evening StockBandits!
A minor gap higher this morning was quickly met with selling, sending the NAZ nearly 30 points lower than its early peak in the first hour of the day. A bounce became a reversal, and by the end of the session a modest advance had been posted. That was helped by an intraday spike in AAPL, which resulted from news that Carl Icahn holds a big stake in the company. It’s funny how especially on an otherwise quiet summer day just one company-specific headline can help buoy the market. Elsewhere, the RUT finished in the red while each of the others gained some ground.
Neither the bulls nor the bears are seeing any follow through right now, as we’re still stuck in a trading range. The S&P hasn’t seen a 3-day winning streak since July 22nd, and the NAZ hasn’t posted a 3-day decline since June 24th. The latter is testament to a lack of downside for nearly 2 months, while the former stat points to plenty of stagnation in the past few weeks. The missing link for 3 weeks has been follow through, which has been replaced by indecision and stagnation.
The NAZ has the best shot at a new high at the moment, as today we saw a nice lift to the top end of the range. A breakout is only a few points away in that index, whereas the others have a bit farther to go. The name of the game right now is discipline. While that’s oftentimes the case, right now it’s important to adhere to exits and wait for levels to be crossed before making entries. In a reversal-prone environment like this, follow through is just extremely hard to come by.
Let’s get to the charts.
NAZ – The NAZ is just 10 points from a breakout here but needs to show some follow through – something it hasn’t been known for in recent days. Volume did improve today, and will need to be strong if a breakout attempt is going to stick.
SP500 – The S&P edged higher today but didn’t impress anyone. Tonight it sits just above the midpoint of its range, needing another 15 points before the highs would be challenged.
RUT – The RUT was the odd man out today with a small decline. Tonight it’s just a few points from first resistance at 1056, followed by 1063. Lots of lateral movement in this index over the past few weeks.
Notable Names:
CME is an example of why I wait for a trigger to be met before entering a position. Last night I posted this for a short sale, but it never broke support to trigger an entry. Instead, it reversed sharply higher to negate this pattern, and tonight is subsequently being removed from my swing list. A break of a key level is my indication that price is on the move in the expected direction, so until that happens I just wait. When price reverses like this, I don’t mind at all.
INCY is at resistance here and a breakout through $27.80 could see a quick pop. I’m interested in participating in the initial breakout if it occurs, but don’t like this setup enough tonight to structure a swing so it will just be a momentum play for me on Wednesday if it goes.
FSLR is starting to break down here and saw some nice follow through from a similar pattern back in June. This is not an ideal swing entry, so I’ll instead take it for a momentum play on Wednesday on the short side if it exhibits some follow through by making a new correction low at $38.50.
SCTY is another solar stock that’s looking vulnerable to a further decline here after a failed breakout earlier this month. A break of $37.40 looks great for a momentum play on the short side for Wednesday.
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.
PRU is a slower mover but has a clean setup here with a wedge within an uptrend. A turn higher through $81 and I’ll get long for a swing with a stop beneath the wedge just in case of a downside reversal.
CAB has based above its recent breakout zone and another turn higher would interest me for a swing. I’ll look to get long if price clears the small trend line at $70.50 with a stop beneath the breakout zone from a couple of weeks ago (dashed line below).
CRI has been deteriorating as I noted here last night but another bar on the base gave it a better look tonight so I’m setting up a swing. I’ll get short if it breaks $69.70, looking for a test of prior levels from May with a protective buy stop just above this base.
SPWR has bounced back quietly in recent days but can’t close strong and volume has been below average. That gives this bounce the look of potential failure, so I’ll get short if price breaks rising support at $22. There are a couple of levels on the way down I’ll look to use as targets with a protective buy stop just above this base in case of an upside reversal after it triggers.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
