Five Stocks Posing in Front of Bears Today

Courtesy of The PPT algorithm, here are the most current top five readings from my “12631 RELATIVE STRENGTH” custom-made screen, identifying which stocks are exuding some of the best performances to the market at-large at any given moment.

I look for stocks whose Daily PPT Hybrid Score surges, while the Weekly Hybrid has been negative over the past week. This can often yield stocks which are emerging from consolidations.

Members can click here to view and save the screen.

Sorted for at least 500,000 shares of daily average volume to ensure liquidity.

Please click on image to enlarge.

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While equities careen lower, the coffee ETN is following-through higher. We observed the falling wedge consolidation a few weeks back, as the commodity was ripe for an upside breakout as a sequel to its first quarter rally this year.

Also note that Starbucks is weak today and ripe to break lower, a play on the idea of a sympathy sell-off there with coffee rallying.

A weekly close over $36, which looks very likely, is a huge win for coffee bulls into late-summer.

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As evidence to support what I said in my last post, note the weak charts for the micro-caps, small caps, high yield corporate paper, and junk bonds, respectively below.

These are charts suffering technical damage by any standard, while we know the Nasdaq and S&P are basically hovering at their 20-day moving averages, seemingly unscathed at all.

In particular, the sell-offs in high yield paper and junk today is most concerning, given how disorderly it appears without gaining much attention.

The micro-cap chart, IWC, is another overlooked one with a potential major head and shoulders top very much in play.

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I have been largely sidelined from this market in recent weeks due to the glaring divergences which have increasingly seemed to matter more and more. For a long time during this multi-year bull run, negative divergences were better seen as Christmas tree ornaments, to be briefly admired rather than taken too seriously.

However, the deteriorating action in the small and micro-cap stocks, as well as high yield corporate paper and junk bonds of late has reached a point where stocks are having trouble sustaining moves to the upside, even with logical catalysts such as a leader like Facebook smashing earnings a while back.

To be sure, this is not a broad-based market and has not been for a while. Despite TWTR gapping up hard yesterday after earnings, other growth names like DDD GLUU YELP are plunging this morning.

The main chart that seems to be overlooked here is the micro-cap index, which I will present to you again later this morning.

For now, I am focused on looking for quick, actionable ideas inside our 12631 Trading Service. Just this week, our members successfully trades the likes of GPRO LOCO on the long side.

Earnings plays aside, it is still fairly slim pickens out there in terms of attractive technical setups for swings.

I would argue that the heavily-shorted SHLD, though, may be ripe to squeeze higher the rest of this week for a quick long trade.

I am looking for the stock to make a move which holds over $40, at least. On the daily chart, below you can see a beaten-down stock which has been quiet in recent weeks, grinding sideways as volume has tapered off. This is not an ideal long setup for me, insofar as the chart still being mired in a correction. However, the potential for a move up and out of the highlighted triangle is certainly there.

Earnings for Sears are nearly a month away.

Drop me your top tickers overnight.

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Enjoy tonight’s video, and enjoy your evening. 

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