You Can’t Overtrade It…IT’S ELECTRIC!

[youtube:http://www.youtube.com/watch?v=mDENY9A-N1A&feature=related 550 412] ______________

We are still peeling back the layers of the onion of overhead resistance in the broad 1300-1330 range. As you can see on a 30 minute chart of the S&P 500 dating back to last Friday, with the exception of this morning’s quick dip we are essentially dead money here and doing the “electric slide” dance up, then back, then sideways.

While overtrading this range may be a mistake, there are still some enticing setups out there. One name that I have been long since late last week is NETL, which has excellent short squeeze potential. As you can see on the chart below, if the resistance level just above is pierced, we could see some fireworks.

______________

______________

___________

The bulls passed the test of the 50 day moving average on the S&P 500 during this morning’s brief dip. In essence, the price action has quieted down significantly compared to what we saw over the past several weeks. After a sharp 7% correction earlier this month, followed by a stunning upside reversal, a more subdued market is naturally next in the line of progression.

My thinking remains that we have some clear parameters for a trading range, with 1300 representing the lower boundaries, while 1330 should act as resistance. We also seem to have to have the type of underlying price action that one would associate with a trading range, seeing as some areas of the market are notably weak, while others are impressive in strength. Either way, we know where our lines in the sand are.

___________

What if I told you that, within a matter of seconds, I found a stock that has been up 100% of the time in the month of April, with 13 data points to boot? Beyond that, the average return for this stock in the month of April is 17%. Would that command your attention? Well, even if you abhor seasonality analysis, take a gander at the chart of MDVN below, and consider the bullish consequences that would stem from a breach of $18.

For you reference, here is The PPT readout on seasonality for MDVN, which you can find for virtually every other issue in the market as well.

Seasonality

Month Avg % Return Total # Months # Months UP # Months DOWN January -1.726 11 5 (45.45%) 6 (54.55%) February 11.484 14 8 (57.14%) 6 (42.86%) March -4.779 15 8 (53.33%) 7 (46.67%) April 16.995 13 13 (100%) 0 (0%) May 2.411 11 6 (54.55%) 5 (45.45%) June -1.958 11 5 (45.45%) 6 (54.55%) July 2.07 12 8 (66.67%) 4 (33.33%) August -2.328 11 7 (63.64%) 4 (36.36%) September 4.4 12 7 (58.33%) 5 (41.67%) October -2.074 13 5 (38.46%) 8 (61.54%) November 2.355 14 7 (50%) 7 (50%) December 16.992 14 11 (78.57%) 3 (21.43%)

Click here for more information about The PPT.

___________

Direct Link Click Here

____________

Despite the weakness in crude oil today, many equities in the energy sector are performing well. For starters, the OIH is acting very well after initially negotiating multi-year overhead supply during the past few weeks. Clearly, though, the solars are acting incredibly well even on a day with crude weakness. TAN, the ETF for solars, is “doing everything right” from a technical perspective off of the confirmed bullish abandoned baby pattern a few weeks ago, followed by a period of consolidation and subsequent gap higher today.

From a sentiment perspective, plenty of traders despise dabbling in solars, and the sector has essentially been a dead-money laggard since the 2008 crash. Hence, it will be interesting to see if the strength is sustainable. Regardless of bearish views on solar, it is pretty tough to argue against their outperformance today, relative to both the energy commodities as well as other equities in the complex. I am currently long YGE and TSL.

_____________

[youtube:http://www.youtube.com/watch?v=SutWuza9aDM 550 412] ______________

The Stocktwits stream is all over the the major short squeezes going on in names like LULU NFLX OPEN TZOO. Despite a rather slow day in the broad market, there is little doubt in my mind that we are still seeing the consequences of too many aggressive bears piling into heavily shorted names earlier this month with the market in the midst of a correction. In other words, the shorts are being forced to go “deep cover” (underrated 1992 movie starring Laurence Fishburne, back when he was known as Larry).

Accordingly, you might find it value-added to see the intraday results of a custom screen I made in The PPT designed for isolating short squeezes. I showed you another screen last week. This one is slightly different but in the same spirit.

Double-click on picture to see full results.