Good evening StockBandits!
It was a reversal-prone session today as stocks opened higher, quickly filled the gap to move well into negative territory, lifted slightly from mid-day into mid-afternoon, then spent the final 2 hours chopping around aimlessly into the closing bell. Ultimately, the S&P 500 finished back below the pre-FOMC levels from last Wednesday to completely undo the ‘no taper’ rally.
Days like today can be hard to get a handle on because the moves are so short-lived. That makes them easy to overtrade as each new bar looks like the one that’ll begin a meaningful move, but when it’s all said and done we really didn’t do much of great consequence.
To see a 3rd day of weakness obviously puts to rest the 1-month streak for the S&P 500, but more importantly it gives the market a little bit of rest. Psychologically, it removes a small amount of the edge the bulls are currently enjoying, although coming right off all-time highs it’s hard to give much credit to the bears. This may simply be nothing more than some mild profit-taking before more new highs are made. What’s important here is keeping an open mind, because none of us know what’s going to happen.
My aim is to continue to focus on the technical levels and the price action as we move toward the end of the quarter. I’m still working the charts in search of quality setups, but given the lack of basing action there are still very few worth noting. What I’m finding tonight only look trustworthy for intraday plays, but sometimes that’s all the market has to offer.
Let’s get to the charts.
NAZ – The NAZ was down 30 points at its low today but bounced back enough to reduce the decline to less than 10 points. The lighter downside volume and finish off the low leave this index looking like this pullback is nothing to be concerned about. The high is less than 1% away and the bulls have kept dips shallow in recent weeks, and now it’s their turn to show whether or not that has changed.
SP500 – The S&P fell back below 1709 today to complete the breakout failure, and for good measure finished fractionally below 1702 to erase all the post-FOMC gains. This index still has room down to 1671 as next support. Prices had become extended and a pullback was in order, which we’ve now gotten. Can the bulls turn it into a higher low?
RUT – The RUT sits just 8 points from its all-time high after a very mild 3-day decline. Each of the down days have been incremental, with today’s damage being less than 1 point. Of note today was the successful test of 1063, the prior high from August, which produced a 9-point lift into the closing bell.
DJIA – The DJIA painted its third straight decline today but the pace slowed from Friday with a 49-point drop. This index is barely clinging to the 15400 low end of the range from July and August, so we’ll see if that prompts any upside tomorrow. There’s still ample room to create a higher low compared to the August low of 14760.
Notable Names:
AAPL is gapping almost daily of late and in both directions, making this tech leader’s chart a real mess. Today it gapped higher on news of strong iPhone 5S sales over the weekend, filling a gap from two weeks ago but creating another new one along the way. There is no play here as it’s so highly news-sensitive and gap-prone.
NFLX hit a new high today but reversed hard to paint an outside reversal bar or a bearish engulfing bar (same thing). That puts it back in its short-term base and indicates perhaps price isn’t ready to keep climbing just yet.
LNG is pulling back but I’m watching the descending trend line by the day for a possible turn higher. I’d want to see price approach that trend line first and on some expanding volume before considering a play, so this is simply on my radar right now.
PBR is attempting to build a small triangle here but needs more time. The finishes of the last two sessions were weak, but if price can perk up a bit more and volume can start to expand, this one could produce a long setup as the trend is still up.
CGNX is trying to turn back up here but I’d prefer to see stronger volume along with the advance in price. This ascending triangle could stand to tighten as well, which I’d want to see for a swing candidate. However, this one does look capable of producing a single-day pop if it can make a new high at $32.70, so I’ll take it for an intraday play on Tuesday if it can cross that level.
VALE is still trending higher but in recent days has put in a little rest. I’m now watching the small trend line just overhead as it develops. A break above it on Tuesday at $16.65 looks good for a single-day play on the long side, but I’d want to see a larger base before considering it for a multi-day swing.
BIDU is facing highs here and a breakout to $150.10 could produce a pop. The last time it cleared resistance it moved higher for just a single day, so that’s all I’m looking for here as well. If it prints $150.10 on Tuesday, I’ll take it for a momentum play on the long side but will not hold overnight.
TNGO may need a bit more time but it’s not far from new high territory here. A turn up through $24 on Tuesday looks good for a momentum play on the long side, but I don’t like this setup enough to take it for a multi-day swing. The finishes of the last couple days have been a little weak, downside volume hasn’t quite contracted like I’d prefer to see, and the indexes are sending mixed messages.
New Swing Trade Candidates:
No new swing candidates tonight, staying light and selective before adding more exposure. Current positions are working and not much else looks compelling just yet.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
