Good evening StockBandits!
Stocks followed through on the heels of Tuesday’s strength, helping the indexes recover further from their recent retreat. The 2-day advance has helped to erase most of the losses from Monday (the RUT recovered completely), and helps the short-term higher-low scenario.
Volume was quiet, as expected, most likely due to the approaching July 4th holiday. That’s typically the lightest-volume trading week of the year (rivaling only Thanksgiving week) as traders step away to enjoy fun in the sun or spend time with family. Therefore, it’s no surprise we’re already seeing quiet volume and it’s likely to dissipate further these next couple of sessions. I expect that, barring a major news event which prompts some emotion (and participation), we’ll see reduced volume at least until the second week of July, and possibly beyond that. The best way to combat it is to remain selective and trade smaller.
We are still beneath some important levels in the averages here, with the S&P beneath 1335 and the NAZ beneath 2887. Those levels were briefly cleared two weeks ago, but have since been given up. A push back above them would be technically positive and potentially allow them to start serving as support, so I’m watching for that possibility in the coming days.
Heading into the remainder of the week, there are a few stocks on my radar but I’m rather content with my current level of exposure when it comes to swing trades. I am reluctant to chase this nice 2-day move into what I’m expecting to be a light-volume couple of sessions ahead of the weekend, so my experience tells me it’s best at this point to let some of these setups mature a bit further and exercise some patience.
By the way, here’s a video interview I gave recently I think you’ll like: Trade With the Numbers in Your Favor.
I’ll run through a few of the indexes here and then share some setups I’m eyeing.
NAZ – The NAZ again tagged 2882 today, stopping just shy of 2887. Bears consider this light-volume bounce to be a selling opportunity, while bulls are looking at the higher low created this week vs. June 12th vs. June 4th. Time will tell, but for now the buyers have yet to walk away.
SP500 – The S&P got to within 1 point of 1335 today and then backed off a few more. It’s got a great shot at reclaiming that level here, but the bulls may prefer to pause first.
RUT – The RUT got back above 772 today and now has its sights set on 784 as the next important technical hurdle. This index was only able to close above that level once since surrendering it on May 14th.
DJIA – The DJIA showed some follow through today despite weak volume. This index has a pair of important levels overhead it will need to clear at 12700 and 12876, respectively.
Charts of Interest:
Below are some charts of interest, from market leaders to example charts:
AAPL is caught in a range here with some potential to help the NAZ if it happens to lift from short-term support.
FB is putting in some much-needed rest here after a nice rally. Today’s weakness suggests it’s not quite ready to head higher again yet, so it’s one to keep on watch.
SLV is getting dominated by a multi-month downtrend line and now is facing a test of key support. Unless we see a change of character quickly, this could continue the decline.
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.
LXK has a shot at a trend change here but needs to clear resistance and see better upside volume. Should this happen to go before the end of the week, I like it for a quick play but not yet as a swing (based on the quiet volume here).
MLNX is stabilizing after a pullback from its highs and may turn back up here to offer momentum players an opportunity for a quick pop.
MDVN is rallying up to resistance here but volume isn’t indicating anything of great importance just yet. If it clears $89.50, I’d expect only to see a quick pop, so this is not one I’m looking to swing trade just yet.
EW is in a narrowing range here after a big rally, creating a well-defined bull pennant pattern. A turn higher could bring short-term momentum back into the picture, but I like it for a quick trade rather than a swing with a major holiday approaching.
CRUS has a series of higher lows on pullbacks recently and has a shot at a turn higher here. This one could produce a quick pop if it is able to clear $29.10.
SLW is resting after a big technical break last week and may still have room to tumble. The failure to attempt a bounce suggests the sellers still have ample supply, so I’ll be watching $25.50 for a quick short sale rather than for a swing.
REGN is a momentum stock and therefore rather volatile. Here it’s acting weak and resting just above rising support. If we see a break, it could trigger another wave of selling for the stock which nimble traders could participate in. I am not interested in swing trading this stock as it’s been rather volatile and biotech stocks are so news-prone.
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 (as per my notes above).
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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.
LNKD removed (pattern negated without triggering)
Open Position Notes:
CINF hovered around the flatline today, finishing lower by just a few cents. This is slightly disappointing to see a lack of follow through to yesterday’s lift, particularly on a day in which the broad market showed strength. Overall, the stock is still holding up pretty well so I’m going to stay with it and be patient while waiting for the trend to continue.
NFLX finished slightly lower today once again in the face of an advancing market. This is not bullish action, but the stock did hold short-term support after testing it, and it held just a dime above my stop loss before lifting slightly in the afternoon. I’m very curious to see how this one behaves the next time it advances, and I expect it will clarify the most after this short-term indecision and downside testing.
UPL gapped up this morning and shot higher, hitting Target 1 where I was able to book a 6% gain on a portion of my position. That level represented former support from February and March, and it posed as resistance today. Nonetheless, today’s surge in price was very positive and it came on excellent volume, so there was widespread participation. Although the stock finished slightly off its highs of the day, it was a great session for the stock and I expect to see follow through. I’ve tightened my stop for remaining shares to breakeven for now and will continue to adjust as needed in the days ahead.
JBHT bounced today, which was encouraging to see. I particularly liked that it was able to (at least barely) finish above my entry price, not so that I can see a gain in the trade but simply as confirmation that the stock is attempting to turn higher after the multi-day pullback from its recent highs. The issue here is that upside volume is rather anemic. Technically, that’s not what I want to see, but seasonally that is at least partly attributed to the July 4th week we’re about to enter when traders simply tend to disappear. I’m going to stay with it for now without any adjustments, but may alter my outlook on it after evaluating a bit more price action.
Closed Positions:
No closed positions.
See you back here Sunday.
