Good evening StockBandits!
The week’s main event took place today with the FOMC announcement, and in the end it was a non-event. The afternoon was characterized by sharp moves which didn’t last long, which was reminiscent of the Fed days of old. None of the spikes in price were able to stick and each simply resulted in a reversal. It was somewhat funny but accurate to see the NAZ up less than 1 point on the session.
Apparently, traders want to digest this news a bit further before committing to a direction. We’ve rallied right into the news so a pullback from here still isn’t out of the question, but as of yet we’ve not seen any conviction on the part of sellers. Technically, today goes down as a day of rest – which is healthy, but not something we can really derive any useful info from.
Rather than predict what the market will do from here (as that isn’t my job as a trader), I’ll simply point out that the S&P rally we’ve seen over the past couple of weeks has left the market in a pretty good spot to potentially create a higher low on the next pullback. Currently, the S&P has about 90 points to the downside before the low would be threatened, which is a positive for the bulls. Given the upside follow through we’ve had in the past few days, the buyers seem to be active again and therefore we could see them step in again to provide support on weakness.
I suspect the next pullback will give us the most clarity in terms of the resolve of the bulls. Much has been made of the inverted head and shoulders pattern which was confirmed with a push back above 1335 (S&P), but that’s not the big thing to focus on in my opinion. I think we need to evaluate the next dip and see if it comes on heavy volume and just how steep of a move we get. If it’s somewhat orderly and getting met with bids, then the odds increase considerably that we’ve marked a low which could stick for a while.
My watch lists have been reduced tonight but are relatively even between bullish and bearish setups. I’ve got a few swings on right now and will be selective for now when it comes to new additions to the list. A little market rest at this point without giving up much ground would go a long way toward building many more bullish setups on individual charts.
I’ll run through a few of the indexes here and then share some new plays I’m eyeing.
NAZ – The NAZ rested today and could stand to base here a bit more. That would help digest the multi-day lift, and I would expect to see bulls defend 2887 if it’s tested on a pullback.
SP500 – The S&P also rested today with an inside day on below-average volume. This index is pausing beneath 1370, a major level which was the May 2011 ‘Bin Laden’ high. If bulls can hold 1335 on a pullback, it would bode well for some upside continuation.
DJIA – The DJIA has challenged 12876 each of the past 2 days but hasn’t finished above it. That’s the May 2011 high for this index and was resistance earlier this year, so it’s not surprising to see it respected here. Bulls will want to hold 12611 if we see a pullback but for the moment we’re just resting beneath an important level.
Charts of Interest:
Below are some charts of interest, from market leaders to example charts:
FB is pausing here beneath short-term resistance after catching a bid in recent days. Time will tell if the low has been put in, but this is the level to watch in the days ahead if this one is to continue higher.
RS is like quite a few other charts at the moment which have found resistance and after repeated tests the level has held. Aggressive shorts can play against levels like this, although there isn’t a lot of apparent room to correct.
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.
LF is back at the upper end of this triangle pattern and may attempt a breakout soon. The last couple of moves have only lasted 1-2 days each, so this isn’t a swing candidate for me.
IAG is still resting beneath $13, a key level for the past couple of months. A push through it could set this one free for a quick lift, but it must clear that level before I’d be interested in a play.
SNI has pulled back off the high from earlier this month. A move up through the trend line at $57.50 could invite buyers into the picture, but I’d only consider this for a momentum play and not a swing at this point.
DECK briefly broke support today but it happened late and was able to hold above it by the closing bell. This one is still worth watching as it’s been weak and a move to new lows could spark a quick selloff.
NKE looks to be building another lower high on this daily chart and I’m watching rising support for a possible break. The previous two support breaks only produced 2-day moves, so this is more of a momentum play than a swing if it goes.
HAR failed to reclaim broken support from a couple of weeks ago on this bounce and now looks vulnerable to another decline for a test of longer-term support.
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 candidates tonight.
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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:
NEM was weak all morning today with a gap down and some follow through selling. However, it spiked higher at mid-day in conjunction with the FOMC news, and although it faded a bit in the afternoon it did not threaten the morning low. This one has no doubt shown hesitation to continue higher within its uptrend channel, but it’s seeing short-term support hold and therefore I continue to give it a chance to make a move.
CHD pulled back this morning and then stabilized for the remainder of the day. It never was able to fill the morning gap, but it marked its low for the session early in the day and then created an intraday higher low this afternoon. For now, this one remains caught in the base after Tuesday’s breakout failure, but I’m going to wait and see how it acts on the next bounce to see if an adjustment is warranted. If it bounces in a weak fashion, I’ll look to tighten my stop.
CINF finished the day down just fractionally and I’m viewing today’s action as a rest after a 4-day lift. Today’s volume helps confirm that with very light activity on this minor dip in price, so I’m staying with it. I liked how despite a small pullback today the stock was able to hold above the breakout zone, so now let’s see if it can produce some upside follow through.
Closed Positions:
No closed positions.
