Good evening StockBandits!
Stocks lifted further today ahead of tomorrow’s FOMC with the DJIA nearly posting a triple-digit gain while the other indexes tacked on 1-2% each. Key levels were once again in play as the RUT was able to clear another and the S&P, DJIA and NAZ all approached their respective resistance zones before backing off slightly late in the day.
All eyes now turn to the FOMC as expectations are running high for some kind of announcement on further quantitative easing. The first two rounds propelled stocks higher, and now we’ve rallied into Fed day in hopes of another with concerns tied to Europe and softer domestic economic data. Whether or not we get it, I do not know (or care). What I do know is that the market seems to be pricing it in, so we could see some added volatility tomorrow once the news hits. It’s definitely a day to stay on your toes with that in mind.
I am doing a webinar on Wednesday at 12pm ET in conjunction with the Market Technicians Association, and I’d love for you to join us! It’s free of charge and I’ll be covering Formulating Your Trading Plan – hope you can join us! Here is the link, but it will not work until the time of the webinar. Hit the link a few minutes before 12pm ET and I think it will ask for your name and email but then should let you right through – no pre-registration required.
I’ll run through a few of the indexes here and then share some new plays I’m eyeing.
NAZ – The NAZ continued higher today on the heels of yesterday’s break of 2887, which was very positive. Volume was also strong, but this index is approaching the next resistance zone at 2946. Some rest after this 4-day run would be healthy, but bulls should want to see 2887 held on the next dip.
SP500 – The S&P continued higher today but approached the next big level at 1370. Here again, some rest would be healthy.
RUT – The RUT has cleared 2 big levels in 2 days at 772 and 784, respectively. This has been a nice multi-day run for small caps, so if we see some rest at this point it wouldn’t be a bad thing. Bulls would ideally see 772 held on the next dip though.
DJIA – The DJIA flirted with the May 2011 high today of 12876 before backing off a bit. This senior index looks due for some rest, but overall it’s acting much better with this follow through move to the upside.
Charts of Interest:
Below are some charts of interest, from market leaders to example charts:
COST neared the upper end of the channel today and then backed off. It’s important to keep longer-term patterns like this in mind as cues to lighten up even if your timeframe for a trade is shorter-term.
NKE is struggling of late since failing its breakout attempt in May. Lower highs are in place and this feeble bounce looks like another lower high in the making.
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.
HAIN is nearing a breakout and may see a quick pop if it can clear the upper trend line.
ALL is at upper resistance and may leave this large wedge soon. This is not a momentum stock, but it may offer a quick play for nimble traders if it clears the upper trend line.
CDE is challenging a trend line here and could get through it as soon as tomorrow. This one could see a nice lift if it gets through $19.25, but this stock hasn’t proven its change of direction yet so I’m reluctant to take it for a swing.
IAG is facing key resistance at $13, which if cleared, could produce a quick pop for nimble traders.
DECK is still struggling to find its footing and now looks ripe for another wave of selling. Today the stock underperformed and if it makes a new low we could see further weakness.
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.
COO is in a downtrend with several lower highs in place over the past few weeks. Currently, the stock is struggling to continue its bounce attempt and is sitting in a bearish pattern with this rising wedge. A break of the lower trend line at $78.50 could set off the next leg lower, so I’ll get short for a swing trade if that level gets broken. 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.
HOT stopped, CHD & CINF triggered, COO added
Open Position Notes:
NEM struggled to hold up today as cash moved out of the gold sector and into other groups. It didn’t lose much ground, however, which is somewhat encouraging, as was the light volume which came with the minor pullback. I’m sticking with this trade for now while waiting to see how it acts on the next lift.
CHD triggered a buy today as it cleared the upper end of its symmetrical triangle pattern. The stock wasn’t able to move much higher after topping out late morning, and subsequently slid off its best levels into the afternoon. In the end, it finished back inside the base. Volume was above average, so this is not the kind of breakout attempt I would prefer to see. I’m going to stay with my existing trade parameters and see if the stock makes another attempt to move higher. If it shows a lack of conviction again like it did today, I may look to make an adjustment.
CINF triggered a buy today as it left its short-term channel and exited the larger ascending triangle pattern. Price move decisively through resistance and finished the day strong, just a short distance from highs. Volume, however, was light so we’ll have to see if that can improve in the coming days. It could be that this stock has just posted 4 consecutive advances, but I’d like to see volume confirm this move soon.
Closed Positions:
HOT bounced big today to clear the previous bounce high, taking me out of my short position for a 4.2% loss. The stock was acting well and struggling to lift in spite of recent broad strength, but the prolonged market rally was simply too much for this one to ignore and it subsequently followed suit. Given the same setup again, I wouldn’t hesitate to take the trade, so I believe it was a play worth making. I’m out now and have no interest in another entry unless and until the stock sets up again.
Hi Jeff,
Great setup on the COO. I appreciate when you find setups that have natural stops that are close in like this one.
The first target is also sitting perfectly a few cents above the 200 day where it found support before. Very pretty setup.
John
Thanks John, maybe it will work as cleanly as it is set up. You know me, playing the numbers game with the best setups I can find…some will work, some will fail, but if I manage them well it should work out on a net basis.
Go get ’em tomorrow!