Good evening StockBandits!
The market put together a bounce today, and there wasn’t a lot to complain about when it came to how it unfolded. Stocks were strong right out of the gate, we saw a steady intraday uptrend for the morning, followed by a few hours of rest. That means that short-term support levels are holding for now, and we should gain a better understanding of the strength of this rebound once some selling returns. That’s when the big test will arrive as to whether or not the correction has run its course. Tonight, it’s premature to decide either way.
The superficial numbers were solid today, but the most important element of the day was not what you might think. Sure, the advance was a pretty nice showing by the bulls, but it was the final 4 hours of the session which I found most interesting. Prices simply moved laterally during that time, so there was no excitement, but it was a change from the recent norm of strength getting immediately sold. Time will tell whether this market is turning over a new leaf (more technical evidence will be needed), but in a one-day-at-a-time market, this one made things just a bit more interesting.
We still have a few levels to watch on the upside that may be in play tomorrow, most notably the completion of gap fills for the NAZ and S&P. Beyond that, we’ve got some broken support zones and prior bounce highs which could prevent a runaway rally, although anything is possible as the end of the quarter draws closer.
By the way, if there are a couple of names you’d like me to review in tomorrow’s charts video, be sure to send them in. You can simply reply to this email for convenience and I’ll add them to the list.
Let’s get to the charts.
NAZ – The NAZ closed strong on heavy volume today and is nearing a gap fill to 3657. It still has the prior bounce high at 3684 and the August high of 3694 to contend with, so there’s ample resistance overhead.
SP500 – The S&P got less than 1 point from a gap fill to 1656 today, but didn’t back off much after that was done. That gives it some room down to 1627 support, but it’s still some 18 points beneath 1671 former support.
RUT – The RUT continued its bounce from support today, and although it’s still in a multi-day choppy range, it does now have a bit more breathing room on the downside. The short-term trend remains down, so this isn’t yet grounds for embracing the next great bull run. It’s simply some letup in the selling for now. The next pullback should tell us a lot.
DJIA – The DJIA reclaimed 14887 today but still sits more than 100 points shy of the prior bounce high. This index remains vulnerable to lower prices and the current bounce appears for now to simply be a relief rally. More technical proof could negate that, but given the general weakness of late and lack of upside volume, that’s the look it has.
Notable Names:
VHC is an example I wanted to point out tonight of the type of setup I like to look for when considering longer-term plays. I like to see a big decline, and then several months of rallying and testing which holds above the low. This fits that description and now has some near-term higher lows which could benefit the recovery effort. No position here.
SINA is at the upper trend line and I’m relisting it tonight for a play in case it goes. The initial pop could be a good one, so I’m watching for a push through $79.90 for a momentum play.
PCYC is at resistance tonight and doesn’t act like it wants to continue basing. If it can make a new high at $120, I’ll grab it for a momentum play to participate in the initial breakout move.
CLF is holding support here and a turn up through the descending trend line could generate some interest. A swing stop at this point would be rather wide, so I’ll grab it on Thursday for a momentum play if it can clear $22.
IOC is struggling to maintain a bid in recent days and could easily roll over. A break of rising support at $69.10 would pave the way for another retreat to begin in this stock. I’ll take it for a momentum play on the short side if that level gets broken.
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.
WLT is setting up here for a possible breakout with rising support showing some accumulation in the last couple of weeks. A break above $13.80 and I’ll be a buyer looking for a move toward a couple of prior levels. My stop will be just beneath the base.
Bullish Watch (click for charts)
Bearish Watch (click for charts)
Trade Like A Bandit!
Jeff
