Good evening StockBandits!
Stocks were soft for the opening hour today as each of the main indexes dipped into the red again, but a mid-morning reversal reminded us all that the bulls haven’t gone home yet. The rally erased the losses and put the blue chips mildly positive while small-caps reached new all-time highs by early afternoon. In keeping with the reversal-prone price action from earlier in the session though, a late-day stumble into the bell ultimately left the RUT and NAZ only positive by a couple points while the DJIA and S&P each painted their fourth consecutive decline.
Today’s strength getting sold leaves the market in short-term pullback/rest mode (large caps / small caps), which isn’t such a bad thing. Recall just a week ago, when the indexes had run too far too fast and left many stocks overbought in their wake. We’ve now gotten a little bit of digestion and some profit-taking, which should help to produce more plays very soon.
Technically, it’s a mixed market right now. On the one hand, we have the blue-chip DJIA and S&P 500 each having failed their breakouts, which isn’t pretty. On the other hand, however, we have the NAZ and RUT each holding up quite well and sitting nicely above their breakout levels. It’s likely we’ll see things move in better unison sooner than later, the only question is which side is giving the best clues right now?
I’ll spare you any nonsense predictions here because those don’t matter anyway. Instead, I’m going to focus on the price action and let the setups guide my actions. More are building after another day of non-upside, so hopefully several will be surfacing shortly. Tonight I’m again sticking with single-day plays as that’s just all I’m seeing worth taking at the moment with the lack of basing and the mixed market averages.
Let’s get to the charts.
NAZ – The NAZ cleared Monday’s high today but couldn’t hold it and ultimately finished higher by only a couple of points. The finishes off the session lows of the last two days indicates the buyers are doing their best to prevent a deeper pullback, which raises a bit of confusion with the weak close today. Nonetheless, this index is holding the 3694 breakout zone for now and sitting just 30 points from its high of last week.
SP500 – The S&P closed weak today to finish 10 points off the session high and paint its 4th straight red bar on the daily chart. The breakout through 1709 failed and we’ve now seen some downside follow through, although that key level is still not far away. The next rally should tell us a lot as to whether or not we’ll revisit 1729 or not in the days to come.
RUT – The RUT tested 1063 on Monday and lifted into the close, then finished higher by a modest amount today. It did make a new intraday high at 1081.91, which gives us a pair of levels to utilize for the very short-term here while this basing action continues. Overall, this still looks bullish with this high-level base.
DJIA – The DJIA gave up 15400 today to continue the pullback from last week’s post-FOMC spike to new all-time highs. This quick correction stands in stark contrast to the small-caps which have held up so well, but over the coming few days we could easily see them come a bit more in line with each other and move a bit more in unison.
Notable Names:
TMUS tested the high today, getting within just a few pennies of resistance before backing off a bit. This chart is taking on a bit of a cup & handle look to it, but may need more time to base after today’s failure to break out. I’m going to leave this on watch for now but it has my attention.
GOGO is not far from its high here after a very small pullback. This stock just doubled and now needs some rest, but given all the momentum it has, there’s just no telling whether it will pause here long enough to establish a base. I’m keeping it on the radar in case it does, as this could end up being a powerful pennant if it can tighten another day or two.
WDAY is trying to complete a modest pullback and a turn up through the trend line at $81.25 could invite strength to return. I like it for a single-day play above that level for Wednesday but just don’t trust this small of a setup enough to keep it for a swing given the mixed market signals tonight.
CBD is turning back up after a small dip and could push through short-term resistance any day. I like it for a single-day play on the long side if it can clear $48.40, but it’s a big gap-prone and therefore not a swing candidate for me.
MPEL is sitting in a tight wedge here and an upside resolution could produce a quick spike higher. I’ll take it for a single-day play on the long side Wednesday if it can clear $31.25.
XONE has been extremely weak lately and the small bounce from last week was quickly erased. A swing stop would be far too wide, but this looks good for a momentum play on the short side if it gives up $48.15 on Wednesday. Holders clearly want out of this name and there’s no nearby support to lean on.
New Swing Trade Candidates:
No new swing candidates tonight, charts need more basing action to tighten and better-define entry/stop levels. Sticking with existing plays with adjusted stops heading into Wednesday.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
