Stalking This Prey Running Away

I missed the General Motors gap down this morning, and the stock has more or less failed to hold even a minor bounce since.

However, the weekly chart shows that this action may very well be just the beginning of a major breakdown fro the stock, with plenty of room before the lower weekly Bollinger Band is hit.

I am debating putting on a small short anyway, and building it as long as the $34-$34.70 above acts as resistance.

Other notable weak issues today which are short candidates: AXP MA.

Drop me your top afternoon trades.

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The small caps in the Russell are still an issue for the market, returning to our zoomed-out look of the ETF, below.

Note the rising channel since early-August is still busted, as price threatens to flip back over this afternoon.

The broad market is under some pressure here, as well, though nothing too bloody yet. Overall, it is more of a sloppy tape than anything else.

Still, I have the small caps on watch for potential shorts if the selling builds, based on this recurring analysis we have done on the Russell for a while now.

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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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Momentum names such as GPRO LOCO MBLY, among others, are seeing some nice action this morning.

General Motors, however, is breaking down below $34 from the consolidation we have been stalking for a while. I still believe the chart is on the cusp of a major breakdown. In addition, also note the weakness in Ford this morning.

On the subject of motorboats, though, Norwegian is looking the strongest of the cruse lines. On the second chart, note the high and tight bull flag after the recent gap higher.

What are you trading this morning?

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Crude oil and energy stocks are the clear laggards this morning. But natural gas, using the ETF on the first chart, shows potential support holding.

We may very well see a rotation within the energy complex, namely from the energy stocks into natty.

I have UGAZ back on watch as a long this morning if the UNG ETF clear $21.15.

ERY is the triple-bearish ETF for energy stocks.

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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.

 Without question, there remain plenty of divergences pointing towards a mature bull market running on borrowed time. Divergences, by nature, do not seem to matter much until they do, and then they seem to matter in such a way where market players who ignored them wonder why they never took them seriously. At the same time, bull markets have a knack for rendering bearish divergences to be pure folly for extended periods of time until, again, they do not–And then those negative divergences and other warning signs abruptly and unforgivingly come home to roost.

For those reasons, in this weekend’s Strategy Session I am going to present three tangible keys to the week ahead.

Before I do that, though, I still think it is instructive to briefly run through just some of the current warning signs which, once more, should be taken with a grain of salt until we see some actual price deterioration on the major averages.

First, for context, consider just how long this bull market has been grinding higher. The S&P 500 Index has not experienced even a mild 10% correction off the highs, nor a trip down to its 200-day simple moving average since 2012, both historically rare circumstances, indeed. 

In addition. as the following chart illustrates, the S&P…

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