Good evening StockBandits!
The bulls claimed another victory today as the S&P 500 went 12-for-14 to leave it just a few points from a new all-time high. Elsewhere, the RUT closed at a new high and the NAZ saw strength return after Monday’s downside reversal. The session was characterized by a slow grind higher with the majority of the day’s gains coming in the morning with modest additional gains in the afternoon as the buyers simply held their ground.
Tomorrow afternoon at 2pm ET, the main event of the week takes place with the FOMC announcement after a 2-day meeting (which started today). Traders have aggressively bought ahead of the event, although anytime the Fed takes center stage, anything is possible. Tapering is the big topic of discussion, but as usual the fine print of the policy statement will be highly scrutinized.
I’m expecting to see a fast tape after the news hits with the usual reversals we typically see, but perhaps once the dust settles we will finally see this market take a breather. It definitely deserves one after the move it has just made. The pace of this lift has been unsustainable, but we’ve yet to see even some healthy profit-taking that lasts more than a few hours. With the DJIA and S&P 500 having each reached the upper ends of their respective trading ranges, this is certainly a spot where some selling is to be expected. What happens, we’ll just have to wait to find out.
Tonight, the charts are lopsidedly bullish with so many stocks still trending higher, but high-quality setups for new entries are few and far between. Such is the case in an extended market environment, so rather than force new trades, I’m reminding myself to stay patient here. Good opportunities will surface, I just need to be sure I’m not spinning my wheels or overtrading in the meantime while waiting. The only setups I’m considering for tomorrow’s session are for single-day plays.
Let’s get to the charts.
NAZ – The NAZ couldn’t exceed Monday’s intraday high but it retraced much of what was given back from the peak and now is trying to move up and out of the 1-week congestion pattern. Volume isn’t yet picking up, but that could easily change tomorrow as the FOMC news comes to pass.
SP500 – The S&P is set for a showdown at the highs here as 1709 is only a short distance away but price just rallied in 12 of the last 14 sessions. That’s potentially a better setup for the bears to have an extended market approaching highs, although with so much recent success the bulls won’t likely back down easily. A breakout will need to hold and not quickly fail if it is to be valid, so the close will be of great importance even if 1709 is cleared intraday.
RUT – The RUT broke out today with an incremental new high of 1 point beyond Monday’s peak. This small-cap index did put in a few days of rest but it’s still up 5.6% in just 2 weeks, which isn’t a sustainable pace. New longs at this stage are higher risk and therefore shortened timeframes should be considered until we see if this minor breakout will actually stick.
DJIA – The DJIA spent another day between 15400 and 15600, two levels which have been sort of a security blanket for this index going back into July. This index has seen a huge rally the last couple of weeks and here again any breakout will need to hold or it will instead look like an exhaustion move on the heels of this big lift.
Notable Names:
F is basing here beneath resistance and could break out very soon. Price isn’t yet pressuring lateral resistance, but I’m setting up a single-day play here just in case it catches a bid. I like it through $17.75 for a quick rally, but as a swing I’d want to see price closer to resistance and volume picking up alongside price (which it isn’t doing yet).
GMCR is at the apex of this wedge and given the preceding uptrend, I’m watching for an upside resolution. A turn up through the trend line at $86.50 looks good for a single-day play on the long side with room to go back and test the high.
NUS has a recent history of lateral levels being cleared for 1-day moves, and tonight it looks set for another. I’ll grab this one for a single-day play on the long side if it can clear $95.50 on Wednesday.
DLR is stalling here mid-range and hugging rising support which has formed on the current bounce. I’d much prefer to see it lift back toward resistance to put on a swing short within the range, but if it breaks rising support at $54.40 on Wednesday it could still produce a nice single-day play.
IOC was listed here last night but did not trigger today. The same setup is valid which is a potential turn lower if rising support gets broken. I’ll grab it for a single-day short on Wednesday if price breaks $72.40, and this one can be a quick mover as seen on the chart below.
New Swing Trade Candidates:
No new swing candidates tonight, sticking with existing positions while waiting on new setups.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
