Good evening StockBandits!
The indexes were able to put together nice bounces last week, highlighted by a big lift on Wednesday in particular. However, it hasn’t been a very compelling rally given that it has taken place on weak volume. That is of course a measure of participation, so when we see heavy selling volume followed by a light-volume rally, it taints the picture and reminds us that the sellers may still be in charge.
We also see right now that the indexes are beneath their prior bounce highs. That means lower highs are still intact, so as long as the indexes are below key levels, it keeps the overall mood somewhat sour and therefore warrants caution until that changes. That is subject to a shift, so we need to keep an open mind, but at the moment with the technical evidence we have to go on this is a bounce which still cannot be trusted.
One thing to consider is that if this V-shaped bounce continues, the farther it carries the more room the averages will have to pull back to possibly create a higher low. We don’t yet know if we’ve seen a low created, and it’s entirely possible that even if we have that bottoming will be a process. That of course would indicate that some tests may be in store, so we’ll monitor the action carefully on the next pullback. It’s my sense that we’ll gather some very useful information on the next dip as we see whether the selling intensifies again or if the market is able to find a bid and therefore stabilize further.
I’ll run through a few of the indexes here and then share some new plays I’m eyeing.
NAZ – The NAZ lifted last week but volume has thus far failed to confirm the current bounce. Additionally, price is still beneath 2887, keeping the burden of proof here on the bulls.
SP500 – The S&P reclaimed 1294 last week but this index also saw light upside volume. It is also sitting beneath 1335, which was recent resistance and support back in February and March.
RUT – The RUT has bounced sharply here but has yet to get back above 772, a highly important level on several occasions last year. This index still has lower highs in place.
DJIA – The DJIA just saw a huge rebound but upside volume was relatively tame and this senior index is for the time being still beneath the previous bounce high at 12611.
Watch List & Short-term Setups:
Below are stocks which are starting to set up but which are not quite ready for multi-day plays. These may provide short-term moves if the levels highlighted below are crossed, but should remain on watch a bit longer for those with multi-day to multi-week timeframes.
ROST has held up extremely well in recent weeks despite market weakness. This one is ripe for a breakout if it can push through $65, but volume isn’t confirming this lift in recent days so I’m reluctant to take this for a swing just yet.
CERN has pulled back quietly in recent weeks and now has a shot at leaving this channel to the upside if it can clear $80 for a quick pop toward the recent highs.
SCHN is caught in a downtrend and has rested in recent days. Next breakdown at $24.10 could bring about more selling, but I’d prefer to see it rest here a bit longer before considering it for a swing.
CELG is resting just above short-term support, and a break of $64 could spark more selling.
New Swing Trades:
These are the stocks I’m setting up for new plays. I will wait for my trigger price before entering, and all stop and target levels are provided below. For those of you who are new here, please see the Swing Trading Strategy for more details on how I manage these trades.
CHD is in a longer-term uptrend but has spent the past few weeks resting in this narrowing consolidation. A move up through the trend line at $54.30 starts the next leg higher, so I’ll be a buyer there for a swing. Details on stop and target levels are on the Trades Overview grid below.
HOT has a series of lower highs in place and the heaviest volume of late has been on the downside. Here the stock has seen a V-shaped bounce on diminishing volume, which could result in a lower high. I’ll get short for a swing if this one breaks $50.70. Details on stop and target levels are on the Trades Overview grid below.
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Trades Overview:
This list is a look at our current & potential swing trading positions. Stocks we are already in have “triggered”, while those we are considering for plays have not triggered. Click post title to view print-friendly link.
No changes
Open Position Notes:
GRA got close to my adjusted stop on Thursday but failed to lift further, turning lower and staying weak. I am still pleased with how this one is acting and would like to see a test of last week’s low to see if it can get broken. I’m sitting tight for now and allowing this one to rest while waiting for some follow through.
Closed Positions:
No closed positions.
