Good evening StockBandits!
Today we saw a little of everything take place with a small gap down open, a turn higher into positive territory, some mid-day indecision, and then some afternoon weakness. Ultimately, the selling pressure was too much to overcome and as a result we saw a fair amount of Tuesday’s rally erased.
That’s been par for the course of late, as day-to-day indecision has painted a different color bar for each of the past 6 sessions (green, red, green, red, green, red). That lack of follow through is keeping things choppy at the moment, and it may not smooth out much between now and the weekend. We have options expiration on Friday, and then the Greek elections over the weekend. Almost everything of late has been Europe-related it seems, so with uncertainty running high we could see more of the same knee-jerk types of responses once next week arrives.
For now, we’re caught in trading ranges without any momentum. Until the indexes are able to clear their respective key levels, lasting upside simply will not happen. We’re holding above the recent lows, but without any follow through strength that may not be the case for long.
I’m staying selective at this point and have no problem being naturally hedged with plays on both the long and short sides of the market. Eventually, we’ll see better follow through come along and that may offer the opportunity to become more directionally positioned, but for now it’s still wise to maintain high levels of cash while we wait for clearer technical conditions (an exit from the range). As a result, there are some candidates for quick trades but nothing new in terms of swing setups, so the charts need more time.
I’ll run through a few of the indexes here and then share some new plays I’m eyeing.
NAZ – The NAZ won’t get anywhere meaningful until it leaves this range between 2887 and 2753. We’re also seeing day-to-day indecision here, keeping momentum muted.
SP500 – The S&P remains beneath 1335, and until that changes it’s just an uphill battle to embrace the long side while caught in this range. 1294 is next if this index weakens further, followed by 1266 at the June low.
RUT – The RUT has failed at 772 a few times lately and that leaves it looking weak here. Next support is from early June at 729.
DJIA – The DJIA has failed at the 12600 area a few times, including again today. Next support is 12300, followed by the June low at 12035.
Charts of Interest:
Below are some charts of interest, from market leaders to example charts:
SBUX is breaking down from a $5 range here and has plenty of room to tumble further.
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.
SIX remains on watch here as it rests near highs. A breakout would put it back on the move, but some additional time in this area would be positive to see.
SWKS broke a descending trend line last week and has held above it nicely. It’s now sitting just beneath the highs and may attempt a breakout soon. I’d like to see it spend a bit more time in this area.
IAG is resting beneath major resistance (former support) at the $13 area. A little more lateral price action here may set up an attack on that level, so I’m keeping it on watch.
BMC is pressuring the downtrend line off the recent high and may see a quick pop if it can get through it.
CP is beneath former support from a multi-month channel, and this one may be in the process of breaking down further.
UPL is sitting just above multi-week support and could break down further any day now.
CLF is resting on rising support here and may see another quick round of selling if it breaks the trend line. I’d like to see this pattern tighten a bit but it may not wait that long.
BTU is facing a potential break of support here after failing to hold recent bounce attempts. A move below $22.70 may prompt a burst of selling, so this is one to keep on watch for a quick short. I don’t see a swing exit with this pattern though, so it’s only a play for the nimble trader.
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.
No new swing trades tonight.
[table “294” not found /]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.
NEM triggered, GRA Target 2 hit (position closed)
Open Position Notes:
HOT turned nicely lower today, erasing yesterday’s bounce and putting the stock at a new pullback low since my entry. We also saw volume uptick a bit today, which was a small bonus. This stock is still in a position of weakness, so I’m comfortable with this short sale and am waiting on some follow through at this point.
NEM triggered a buy this morning on the open as it gapped 1c beyond my intended entry. That was enough to prompt a purchase for me as the stock started to move higher within its channel. Although the overall market suffered today, this one held up rather well, so I’m going to stick with my existing trade parameters for now and see how it acts in the coming days.
Closed Positions:
GRA has been weak since the day after my entry, and had already given me an opportunity to book partial profits at Target 1. The stock bounced back up, filled most of the gap, then turned nicely lower. I had also been able to tighten my stop on remaining shares, setting up a “free trade” scenario for this one while waiting for follow through. Today I got it, as this one sold off hard to reach Target 2 where I closed out a 9% gain on the second half of this trade. On a net basis, this one gave me a $3.55 profit, which equated to a 6.7% gain on the position. I’m now out and will wait for a new setup before considering another entry.
See you back here on Sunday.
