Good evening StockBandits!
After seeing new highs in each of the indexes last week, Friday’s downside ultimately made the difference as minor losses were posted on the week. And although Friday’s action wasn’t pretty, the market was able to recover from its worst levels of the session to cut some of the day’s losses. We have yet to see any technical damage be done yet, which keeps us in short-term trading ranges and intermediate-term uptrends while we watch for some range expansion to arrive. Volatility has steadily contracted, but at some point we’ll see emotions play a greater role in the day to day action, so we need to stay on our toes.
The NAZ remains in a well-defined trading range, while a similar but tighter range is starting to emerge in the S&P 500. It tested a pair of short-term levels last week with 1150 twice serving as resistance and 1131 twice serving as support. The 1131 area corresponds with the December highs, so to see former resistance now acting as support is one way to further validate that level. If we do see a close beneath that level, it would suggest further profit-taking, and therefore would offer grounds for added caution on the long side in the near term. That same level also corresponds with the rising trend line which began in early November and has been offering support during the past couple of months. A break of that trend line would be another technical development worth noting, as the downside may accelerate if that occurs.
We have a holiday-shortened week this week, so let’s see what happens. Friday’s dip helped to shake up some of the charts, and I would expect to see more trade candidates this week if some consolidation follows. The bulls are still in the driver’s seat, and all eyes will be on them to see if they’re going to keep driving the action in the short term. The creation of lower highs and lower lows before the health of the longer-term trends would be threatened.
Please leave your comments and/or questions below if you have any, I always enjoy the interaction.
Here is tonight’s video:
The Bandit Broadcast Video – Click to Watch!
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Video Stocks Discussed: SYK, AGCO, SLG, SYNA, JAH, IOC
Swing Trading Candidates:
JAH has pulled back in recent days, but the stock has closed at nearly the same level for the past 3 sessions. Price is also finding support at a prior key level, and a turn higher through the descending trend line at $32 could put this one back on the move to the upside. I’ll be a buyer if that occurs, and will keep a tight stop just below.
IOC made a monster move in recent months with a relentless uptrend, but suddenly this stock seems to have changed character with a big move lower on heavy volume. It’s really struggling to bounce here, and a move down through the rising trend line at $74.35 could bring sellers back into the picture. I’ll be going short this stock if that occurs.
Bullish Watch:
SYK, H, SWC, APL, JAH, BCRX, FRT, AGCO, PENN, GNW, PDC, BA, PXP, PNC
Bearish Watch:
XCO, CRM, SNDK, CSKI, EBIX, ARE, SYNA, FCN, UPL, ANF, AET, FMX, TUP, GPN, MELI, EQIX, TECD, IOC, SLG, INFA
The Hit List will be coming out soon with discussion on open positions and swing trade stops and targets, so be sure to watch for it.
Jeff, IOC looks like it’s off to a good start. I was unable to enter this trade. Trade through schwab and unable to short. This happens about 30% of the time. Good luck
David
Hey David,
Hope your trading day was a good one despite not catching IOC. That’s the thing about trading the short side, it just sometimes happens that we can’t participate when shares aren’t available to short. The availability of short inventory does vary from broker to broker, and really I’ve only found 2 ways around it. One is to have accounts with a couple of brokers so that if one doesn’t have shares, hopefully the other one will. The other way is to call the broker for a locate, whereby they will contact the clearing firm to see if some shares can be borrowed for shorting. Often times that does the trick for me (if the stock is not readily available), so I’d suggest giving them a call next time you run across one that’s unavailable.
That is definitely one annoyance that comes along with trading the short side at times. At any rate, I hope you were able to grab some of the other trades and put your week off to a nice start.
Great to see you commenting here and talk to you soon!