Good evening StockBandits!
With the market lifting so rapidly to finish out last week, a day of rest and digestion was not at all out of the question (as noted here last night). Today we got that as the indexes finished mixed with the bulls taking a bit of a deserved breather. The RUT led the way, while the NAZ cleared 2946 on a closing basis, a level it last finished above in early May. Meanwhile, the S&P added a few points with the DJIA nearly flat as it posted an 8-pt decline.
This week’s volume is likely to be the lightest or second-lightest volume of the year (with Thanksgiving being the other week), and today’s action was a good reminder of that. We saw the market act sluggish and lethargic, and of course the volume which accompanied the minor changes in price today diminished and was below average for the S&P and DJIA. That serves as a reminder that while it’s not wrong to do some trading this week, it is best to reduce position sizes when liquidity is absent.
My take here is that the market could stand to rest a bit, and so with that in mind and the light volume I’m expecting for the remainder of the week I’m going to be selective with new swings. I have a new candidate tonight which I’ll outline below, but generally this is a week to let the charts base out further and to do some intraday trading if you’re inclined to be active.
I want to point you to one last video interview from the recent Traders Expo I did called Perfect a Strategy But Don’t Stop There.
I’ll run through a few of the indexes here and then share some new plays I’m eyeing.
NAZ – The NAZ cleared an important level today at 2946, thus confirming the higher low from last week. This is very positive to see, although this index is a bit short-term stretched here and may need a rest soon. With it being a holiday week, this would be the ideal time.
SP500 – The S&P edged higher today to mark a higher high and put this index within a few points of the 1370 key level. Volume sagged today, as I’m expecting to see for the remainder of the week.
RUT – The RUT has momentum here with 4 consecutive closes at the top of the bars. Today’s lift led the way for the other indexes, and gave this index some breathing room back down to 784 in the event of some profit-taking. Overall, the higher lows we’ve seen in recent weeks and this surge of strength bodes very well for the bulls.
DJIA – The DJIA crossed back under 12876 today but not by much, as it only gave up a few points on the day. This index is resting at an important level, and that’s fine for the bulls. Resistance from the spring is at 13300, so there’s room to rally if and when the buyers get back in gear.
Charts of Interest:
Below are some charts of interest, from market leaders to example charts:
AGU is an example of a stock which has shown excellent strength but which makes for a very tough buy here as it reaches multi-month resistance. This would be a logical spot for this one to rest, so it’s the kind of setup I am content to wait on rather than take my chances with making a buy late in a run like this.
M broke support and has since been unable to reclaim it, which offers a good example of how easy this is to see when a trend is present. This is good technical action and this stock could continue lower in the weeks ahead.
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.
LGF created a higher low a few weeks back and then rallied sharply. Since then, it has put in some rest and now faces short-term resistance. A push through $15.10 offers the nimble trader a shot at a quick pop, although spring resistance isn’t far overhead. For that reason, I’m not interested in a swing.
AFFY is at the upper end of this wedge after holding support and may see a quick lift if it can clear $13.40. With resistance from a few weeks ago not far overhead, this is the kind of setup for a quick play rather than a swing for me.
SINA is breaking support here after basing for several weeks and it appears this stock has further to correct. A break of $49.30 could offer a quick shorting opportunity as more traders stop out and see a new correction low established.
ALV is channeling lower and looks to have some short-term potential here as a short after reaching the upper trend line and failing to clear it. A break of $54 would suggest it’s ready to move lower within the channel again, but this one is a bit more prone to gaps so I won’t be taking it for an overnight.
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.
HAL is in a well-defined channel here and has bounced on weak volume to reach the upper trend line. I like this setup for a short sale with a tight stop just beyond the upper trend line and a potential move back down toward the recent low. Earnings are due out 7/23, so it has some time to work. Details on stop and target levels are on the Trades Overview grid below.
[table “303” 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.
UPL closed, HAL added
Open Position Notes:
CINF was able to build on Friday’s strength despite a quiet market day and some reduced volume to reach a new high today. I’m very encouraged by how this stock is acting and I’m staying with it as it heads toward my Target.
NFLX floundered a bit today to finish slightly lower. The stock is caught in a short-term range here, but still looks like it could really rip if it could simply catch a bid. I’ve been patient with this one, but if it’s unable to get going I may look to adjust my plan.
JBHT pulled back today but held above Friday’s gap and was able to lift from the low of the session by the end of the day. This one still looks poised for strength, and so the presence of some buyers on weakness today and the light volume were both encouraging signs.
Closed Positions:
UPL reached Target 1 last week for a quick 6% profit target, and I had tightened my stop. Today the stock saw early weakness which prompted the stock to hit my stop, taking me out of remaining shares for a 2.8% gain. On a net basis with an average of these two exits, it gave me a 4.9% gain on the trade, which was nice. If it sets up again, I may consider another entry, but it has just seen a big move in the past few weeks and may be due for some rest.
