Good evening StockBandits!
Stocks struggled to gather momentum in either direction today, starting off the new week with some sluggish price action. Early weakness set the tone, and although the indexes failed to really break down, they nonetheless remained in the red. Buyers were once again present, however, preventing a deeper decline and containing the day’s weakness to insignificant declines.
It all added up to a day of rest, which at this point is actually a good thing. It’s healthy to see a 5-session 180-point climb in the NAZ met with some minor, low-volume selling. Profit-taking is part of the game, and without it, trends are not allowed to persist for very long. The give-and-take moves let those with weak hands or shorter timeframes lighten up, while those with cash on hand and an interest in continuation are able to reload on dips. It could be that the latter is exactly what we saw today with the pullback stabilizing and a small lift into the closing bell.
Of greatest importance for the indexes are the prior pullback lows, each of which are still a considerable distance away. That allows the current dip to go deeper, if needed, before the current series of higher lows would be threatened. For individual stocks, the important element here is simply some rest. Many names had become short-term extended and needed to digest the recent run by creating some new bases and pivots before possibly heading higher. We’re a couple of bars into that scenario, although more time is needed. At the very least, the extended conditions we saw last week have been alleviated, which certainly helps the cause of the bulls.
Heading into tomorrow’s session, I am again sticking with my existing swing positions rather than adding new candidates. The setups which look ready for moves here either do not have well-defined exits for swings, or do not appear to have adequate potential to offset the risk associated with their patterns. Charts are always building, so rather than force the issue, I’ll simply stick with what I have and wait for the charts to build swing-worthy bases before adding to my existing exposure.
I’ll run through a few of the indexes here and then share some new plays I’m eyeing.
NAZ – The NAZ posted its 2nd straight decline today, but again on below-average volume. This index sits beneath 2946, but with ample room to create another higher low here it is still in good shape for the bulls. Some continued rest before an attack on last week’s high (2987) would be healthy but not required.
SP500 – The S&P is sitting shy of 1370, but it’s close enough it could reclaim it within a day if it catches a bid. This index also has potential to create another higher low on this dip.
RUT – The RUT is back below 815, but even on the past 3 sessions with declines it finished off its lows each day. That points to the presence of buyers, particularly on the heels of the big run we just saw.
DJIA – The DJIA is still finding support around 12700 on this pullback. It’s also positive that it has dipped with light volume, which shows no negative change of character so far.
Charts of Interest:
Below are some charts of interest, from market leaders to example charts:
LXK is a stock which recently broke out from a low-level base, and now is testing the breakout area on this pullback. This is not my type of play, but it’s a fair setup for those who prefer this kind of price action. It’s all a matter of preference, but at the very least it’s a notable chart worth pointing out.
SBUX is trying to turn higher within its channel here after finding support again above the $51 area. This one has room to lift further in the days ahead, so it’s worth keeping on the radar.
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.
UPL has rested for more than a week and now has a similar pattern to what it had a few weeks ago. A turn higher could offer a quick lift, particularly with $23 being an important short-term and intermediate-term level.
MDVN is at short-term resistance here and may be ready to pop again. This is a small base but in a stock which has momentum, it may not wait much longer. This is not an ideal swing setup for me, but I like it for a quick momentum play if it makes new highs.
MMM is resting just beneath a major level at $90, and a breakout in this Dow component stock could produce a quick pop. That’s all I’m interested in playing it for though, as this stock tends to move somewhat slowly.
TSLA is facing a descending trend line here, which if crossed, could produce a quick return to the June highs as a momentum play.
LULU is struggling to find its footing here and looks ripe for a deeper decline if it breaks rising support here, offering a quick momentum short for the nimble trader. This stock has been making lower highs and lower lows since early May, and as of yet hasn’t shown a change of character.
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:
CINF held steady today with a $0.10 loss on light volume. This stock continues to act well by rising and resting, which is encouraging. It has now spent a few days beneath the recent high, and could turn higher at any time here. The minor pullback has prevented it from becoming extended, and I’m interested in seeing how it acts if it’s able to nudge past the high.
JBHT rebounded nicely today from Friday’s decline, recovering almost all that was given back and on a pick up in volume. This stock has been range-bound for the past several sessions, but continues to hold above the recent gap, which is positive. It’s not far from Target 1, so I’d like to see an attempt toward that level this week sometime.
DNKN tried to lift today but couldn’t get it done, instead finishing slightly lower. This stock is still holding above recent support (former resistance), so I’m trying to stay patient with it. My stop is in place, so if it happens to weaken from here, my risk is defined. However, the setup is still favorable for a bullish move, so let’s see if the buyers can emerge sooner than later.
Closed Positions:
No closed positions.
