Walking the Narrow Line

Here is an intraday look at the small cap ETF, which is instructive given the wild price swings we have seen since the pre-market futures session.

On the 10-minute chart, below, note the narrow price range since roughly noontime on the east coast.

I am looking at a $110.50-$110.75 range.

Elsewhere, some nice moves in commodity-land have my eye. I am already long natural gas, but am sweating wheat, sugar, coffee, corn, and perhaps crude and the metals.

Drop me your top afternoon ideas.

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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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For the old school types who believe that the credit market guys are more rigorous and know better than their younger, dumber cousins in equities, again consider the weakness in high yield corporate paper and junk.

We have been thwacking their derivative ETF’s for a while now, and the persistent weakness.

On the updated daily charts, below, note the mini-crashes of late, with nary a day in the green for weeks on end.

Even this morning, with a gap lower in equities being dipped, and GPRO trading in its own planet squeezing shorts into another galaxy, they remain red.

I am flat equities here, focused on a natural gas long.

But if we see stocks roll back over this afternoon I will have more conviction shorting again given the real weakness in high yield corporates and junk.

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One of the M&A deals this morning centered around the causal dining space, specifically BAGL.

Einstein Noah Restaurant Group, Inc. (NASDAQ:BAGL), a leader in the fast-casual segment of the restaurant industry operating under the Einstein Bros.® Bagels, Noah’s New York Bagels®, and Manhattan Bagel® brands and JAB Holding Company (“JAB”) today announced a definitive agreement under which an affiliate of JAB will acquire Einstein Noah Restaurant Group for $20.25 per share in cash, or a total diluted equity value of approximately $374 million. The agreement, which has been unanimously approved by Einstein Noah Restaurant Group’s directors, represents a premium of approximately 47 percent over Einstein Noah Restaurant Group’s 30-day average trading price. (SOURCE)

This type of deal-making has been returning to the thesis we have looked at many times, of viable causal dining and food-related plays as takeover targets, be it by Private Equity or otherwise.

Here are some at the top of my list. The ones in boldface have the better technical setups, if the broad market cooperates this week.

1. BDBD
2. DAVE
3. FRGI
4. HAIN 
5. IRG
6. KONA
7. JMBA
8. WWAV

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.

For perspective, consider the S&P 500 weekly chart.

You can see a fierce, if not remarkably benign and complacent, uptrend since late-2012, with last week’s selling bringing out calls from market players and observers for a “bottom,” which of course is barely seen as a blip on this weekly chart.

We can see just how truly warped this market has become, where any bout of selling off of all-time highs is seen as some type of true plunge; In reality, the S&P market has not seen a true plunge in roughly two years.

Regarding our market tells, the small market capitalization issues housed in the Russell 2000 Index remain under pressure and are leading to the downside. A close below 1,082 on the Russell almost assuredly presages a bear market for the small caps, while a close over 1,213 negates the bear thesis.

In addition, the German DAX bourse found stiff resistance at its prior support weekly chart trendline last week, which we had previously observed.

Our third tell was the liquid, marquee momentum darling Tesla Motors. We observed the weekly chart bearish “shooting star” reversal candlestick several weekends ago, which has since confirmed lower.

While Tesla is still clearly in an overall uptrend since last year, the stock is also in pullback mode, which should be respected until we see signs of strong buyers emerging–Momentum tends to cut both ways.

While not clear evidence of a new bear market, these above tells point towards a correction in equities well underway. Until further notice, bounces are to be sold.

So what new information did we glean from the market last week beyond our tells?

Observing the…

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For you night owls out there, feel free to drop me any market/trading-related topics you would like me to cover in a weekend video.

In addition, anything else about the current market, feel free to drop below.

Also, in case you missed it, below is my weekend video analysis.

Speak your mind, night owls.

Direct Vimeo Link Click Here