Good evening StockBandits!
Three out of the big 4 indexes I watch put together a bounce last week as they lifted from their August pullback lows, perhaps setting the stage for a showdown between bulls and bears in the case of the NAZ. The DJIA was the holdout, but the others are now in rebound mode and all eyes are on the strength of the current bounce. Although they’ve for now stopped the bleeding, the bulls still have plenty to prove at this stage.
We’ve gotten a steady pullback since early in the month, and that has proven to be welcomed by bulls and bears alike. Bulls wanted an opportunity to put more cash to work, while bears desperately wanted some relief. The retreat from the high has also been a healthy one. Rallies which go nonstop eventually tire out and reverse, whereas advances followed by pauses and minor selling can certainly persist.
Right now, the big question on the minds of traders is whether or not that was it. Is this a dip we can aggressively buy just like the others since November, or is there still some selling to come? Those are certainly fair questions, and I’ll let the charts speak for themselves.
I will say just as a reminder that predicting the next move is never a requirement for success in this game of trading. What’s needed are some clean charts with opportunity to run and a well-defined stop, and a willingness to step out and take on a little risk when those opportunities arise. Quickly admitting defeat when wrong and trying to let winners mature is the aim, so just be sure to maintain that mindset as we head into a new week and arguments arise of whether or not the pullback has completed. Having a directional bias is alright, so long as the technicals back it up for the timeframe being considered.
Let’s get to the charts.
NAZ – The NAZ has lifted quickly from its pullback low and now is working on filling a gap from two weeks ago. Beyond that, resistance still looms. 3669 is the first level to watch, followed by the high at 3694.
SP500 – The S&P The S&P has rebounded from 1639 but volume isn’t confirming this lift. Toss into the mix the fact that this index has not yet reclaimed former support at 1671, and there are plenty of reasons to remain cautious in the short term. Some continued churn beneath 1671 would come as no surprise at this juncture.
RUT – The RUT got back above 1036 last week but now faces a gap to 1047. If it’s able to fill that void, there are still a pair of resistance levels beyond that at 1056 and 1063, respectively. That means lower highs are still intact for this small-cap index, warranting caution in the near term.
DJIA – The DJIA held the 14887 level last week and is getting a modest bounce from that level, as expected. However, it’s a long climb back to 15400 broken support, so it’s difficult to expect lasting upside just yet.
Notable Names:
SINA is looking ready to exit this bullish wedge to continue its uptrend, but volume over the last 2 days is not picking up the way I’d like to see for initiating a swing. Furthermore, this base could stand to tighten just a bit more as well. If it clears $82.75 on Monday, I’ll just take it for the initial move as a momentum play.
ABX is acting well here and a push through $20.35 sets it free for another advance. The trouble with a swing here is that the risk/reward isn’t very compelling considering the distance to a downside stop and an upside target, as next resistance is the $21.65 area. As such, I like it for an intraday play for Monday rather than a swing if it can clear $20.35 and get back on the move.
SSYS is sitting near highs and could break out any day. Volume here is also not picking up with a pair of modest advances in the last two sessions, preventing me from being interested in a swing. However, it could make for a good momentum play above $107.25 for Monday, so I’ll simply look to participate in the initial breakout move if that level is cleared.
KORS is at key resistance here and could break out as soon as Monday. I like it for a momentum trade above $73.05, but will be out by day’s end as a swing stop is just too far away.
MNST is trying to turn lower here and a break of the small rising trend line at $59 opens the door for a quick decline. I’ll take it for a trade beneath that level, but a swing stop is just not clear here and this stock has been reversal-prone, making it ideal for shorter timeframes.
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.
CREE is sitting in a bear pennant here and a break below $56.10 confirms the pattern. I’ll get short there for a swing with a buy stop above this base in case of an upside reversal. Prior levels from late spring could get tested, so I’ll utilize them as targets.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
