The morning sell-off was short-lived this time, as buyers arrived to defend the 50-day moving average on the S&P 500 Index.
On the ETF for the S&P, observing the 30-minute chart below, I am keying off $185.10 to see if the move sticks.
Note how that level also coincides with the 20-period moving average on the 30-minute chart.
If the bounce does have legs, a few names which have held up well are: BAS FANG Z
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Bounces are still being sold quite aggressively, as the RSI and NYMO readings have yet to point to a deeply oversold market where buying into this mess is likely justified for more than a very quick, intraday flip.
Banks like Goldman Sachs and Morgan Stanley are not doing themselves, or bulls, any favors with their weak price action. And biotechs and small caps continue to slide.
In these situations, even though 2013 conditioned many market players to buy each slight dip, it is worth stepping back and considering which scenario may very well cause the most pain to the most traders at this point. Perhaps a straight-line down move to the 200-day moving average on some of the major indices would do the trick.
However, the 1840 line in the sand on the S&P 500 Index appears to be the battle du jour for bulls to win. I am watching this level throughout the session, as well as strong holdouts like Intel which have traded remarkably well of late.
What are you trading this morning?
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The following is just a small excerpt from my latest Weekly Strategy Session (please click on that hyperlink for details about trying it out). which I published for members and 12631 subscribers this past Sunday.
The Goldman Sachs weekly chart bearish rising wedge was a thesis I advanced in these Strategy Sessions fating back to last year. Despite all of the whipsaws and proclamations by bulls for a sustained rotation into the big banks and financials, the weekly rising wedge, since 2011, on Goldman is still very much in play. As you can see, price breached the extended support trendline (lower light blue line), and recently retraced back up to it only to struggle.
Also note that Goldman is a Dow Component and is ripe for a short trade under $160, especially if the Dow finally succumbs to the selling in the Nasdaq and Russell. A close over $180 on a weekly basis likely renders this bearish rising wedge theory null and void.
For reference, the bearish rising wedge is a chart pattern that starts out with price in a wide range which soon contracts in terms of the swings as prices move higher. You are looking for at least two “reactions” or touches of the resistance trendline above, and usually three reactions of the support trendline below to help give the pattern the look of a wedge.
This theory behind the pattern is often difficult to grasp, in the sense that it is tough to call a pattern of higher highs and higher lows bearish. Moreover, the bearish rising wedge pattern is often a trap that eager bears fall into, as their yearning to call a major top sees them aggressively shorting an assumed breakdown (which often does not come to fruition) while price still works through an overall uptrend.
To defend against those kinds of blunders, consider that, as with all potential reversal patterns and candlesticks, overall chart context and maintaing trading discipline are key. The bearish rising wedge is most valid after a prior, established uptrend. The psychology of the pattern denotes that buyers are slowly losing their grip on the market as the price range narrows.
Of course, confirmation to the pattern in the form of a powerful breach and hold below the support trendline gives bears the best shot at actually capitalizing on the reversal, since otherwise the pattern can certainly either morph into another chart formation or prove to be a trap that eventually sees prices going much higher.
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Comments »If you are looking for some (quick) support buys here, a good algorithm screen to have, courtesy of The PPT, is one I made called “12631 Quick Bounce Plays.”
In the screen, I am looking to isolate stocks with positive daily Hybrid PPT scores, but negative weekly ones.
Thus, they are ripe for a quick bounce as the momentum seems to be turning, if only for a bit. I also screen for PPT Relative Strength scores, as well as volume and % from 50 day moving average.
Members please click here to view and save the screen
Here are the readings as of Monday’s close. Remember, we are talking about short-term flips here, not high quality, multi-week swings. Keep those stop-losses in place.
(Click on image to enlarge)
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If we finally get that broad market bounce, then Italian energy giant E is a long idea over $50.40. On the first daily chart below, note the resilience of the stock on a relative and standalone basis of late.
And on the short side, I still view many transports as begin ripe to roll over. UPS makes sense in this regard, as I am looking for a move under $97.
Drop me your top tickers overnight.
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If you enjoy my blog posts and videos, then I would encourage you to please click on this 12631 hyperlink for more details about joining our great team of traders at a very reasonable price. 12631 is a trading service which @RaginCajun and I direct here at iBankCoin.
Enjoy tonight’s video, and enjoy your evening.
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