Good evening StockBandits!
The small-caps have seen the biggest declines from their highs, and today they rebounded the biggest as a bounce finally arrived – for most of the indexes anyway. Technically, it was a divided market as the DJIA struggled to its 5th consecutive decline while the others lifted to varying degrees.
Despite the bounce, each of the averages remained beneath recently broken support zones. The most notable was the NAZ, which again tested the 3624 level but again failed to reclaim it. The S&P, RUT and DJIA each still have room to rally from current levels before former support would be challenged, so this bounce may find some follow through. However, there’s still technical damage that has been done and that should not be ignored here.
Tomorrow we have FOMC minutes as the event traders are watching, and that could be a market-mover, particularly if we haven’t seen momentum by the time 2pm ET rolls around. Otherwise, it’s still late summertime, setups are rather sparse, and we’ve just witnessed a change of character. Stated otherwise, it’s a time to proceed with caution and selectivity understanding that anything is possible here.
I remain slightly hedged here with both long and short positions, and am waiting for better setups to arrive before adding to my existing swing list. My expectation is that enduring a short-term bounce will result in another round of selling, so I’m in no hurry to tighten stops on short positions just yet. Naturally, fewer high-quality longs are available at the moment so I’m not aggressively trying to game the bounce. Tonight I see a handful of single-day plays but that’s all that interests me as we head into tomorrow’s session.
Let’s get to the charts.
NAZ – The NAZ ran right back to test 3624 today and even got 1 point past it, only to finish at 3613. That’s another failure to reclaim prior resistance from July and leaves that level at the center of attention for this index. Should more selling kick in, 3573 is support, whereas a push past 3624 opens the door for the gap to begin filling toward 3669.
SP500 – The S&P finished green today but ended in the center of its intraday range to exhibit more sluggish price action. That doesn’t mean another attempt is out of the question to test 1671 from beneath in the coming days, but it does remind us that the bulls just don’t have it at the moment and caution is warranted.
RUT – The RUT ran its own race today, ending 1.5% higher. The 1008 breakout zone hasn’t yet been tested, and with a bit more strength the test would be at 1036 where support got broken last week.
DJIA – The DJIA finished red for the 10th time in the last 12 sessions as it inched a little closer to 14887. This index is becoming a bit extended here and as it approaches that area it may be a logical spot for a bounce to arrive. For now, 15k is hanging by its fingernails.
Notable Names:
AAPL backed away today, right on cue after filling 95% of the gap to $514 as highlighted here a couple of nights ago. This stock has been very strong but has met a major level and is quite extended after running $125 since it turned higher at the end of June. It now needs rest and I do not see a play here in either direction for this market leader.
JCP reported earnings today and ramped higher to the tune of 6%, negating the bearish consolidation which was taking place beneath broken support. Scheduled fundamental news like earnings announcements and corporate conference calls always opens the door for shake-ups on the chart, which is why it’s so imperative to yield to them when they arrive.
TSO is a great example of how oversold conditions can coincide with a technical level to provide some short-term relief. This stock certainly isn’t out of the woods here, but it was getting very stretched on the downside and today reached prior resistance which served as support. Taking note of the short-term trend is always wise, but so is zooming out a bit to determine which prior levels are being approached.
RGLD has shown some resilience in recent weeks and is trying to rest here. Some additional basing action would help to validate the $63 level it’s currently respecting, which could mean a better setup in another day or two. For now it’s on my radar.
OII is trying to end its pullback and now faces a small descending trend line off the recent high. A turn up through $80.35 looks good for a momentum play here to participate in the initial turn back up. It has some room to lift between here and the early August high, but the risk/reward for a multi-day swing isn’t real compelling. I like it for a single-day momentum play for Wednesday instead, but price needs to clear the trend line first.
ITMN has attempted to stabilize in the past few sessions and now it wouldn’t take much to see a trend line break if the pullback comes to an end. I like this for a momentum play above $14.70 for Wednesday, but here again a swing setup isn’t real appealing considering the broad market is struggling and upside volume here is still lacking.
NOAH actually is set to report earnings tomorrow after the bell according to Yahoo! Finance, so this is one I certainly will only trade intraday. That said, it’s sitting in a beautiful bull flag pattern here and a new high at $18.75 could see a quick return of momentum. I’m interested in participating in the initial move if a breakout happens during regular market hours on Wednesday, but will be out ahead of the closing bell.
OIS is sitting on support here and looks ready for another breakdown. There’s no well-defined stop zone for a swing though, so this is one I’ll just manage via the intraday chart if it happens to break $89 on Wednesday. Also, the next low is just south of $87, so I’m not looking for a huge move here anyway.
New Swing Trade Candidates:
No new swing candidates tonight to add to the existing grid below.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
