I’ve been keeping an eye on the market and it seems as though we are at or very close to a breaking point on a descending triangle. This is true both of the DOW and the S&P. Will we bounce or will we push lower? There’s no answer to that until it actually happens. Once it does happen, the direction of the market will become more clear and trades with low risk and high reward can be taken.
On a side note, with the addition of $AAPL to the DOW, I believe the S&P is a better indicator of overall market health. So any time I reference “the market”, I am talking about the S&P unless otherwise specified.
A number of stocks are at key support levels, some are in bollinger band squeezes, and others are in existing down-trends. Let’s take a look at a couple of stocks exhibiting this behavior:
As can be seen, $JNJ has been in a down trend in recent months. It appeared to have formed a double bottom, but it is about to retest that bottom. $JNJ was in a downward channel, but made a higher high and slightly broke out of the channel which is slightly concerning. However, if it breaks and closes below $98, I’m looking for a swing trade over the course of a week or two down to $95. MACD is already looking slightly bearish and a close below $98 should support a short trade. The other way to play this stock is to go long if it bounces off $98, but that would be a counter trend trade and would require a tight stop. $LVS is another stock in a downward trend worth looking at.
This stock does not necessarily follow the trend of the overall market. As a matter of fact, it has been in a side-ways pattern for around a month or so and is now in a bollinger-band squeeze. Whichever way it breaks out of the band is the direction I would take the trade. However, I would start with a small position due to the possibility of a “head fake”.$HES is a stock just about to enter into a bollinger band squeeze.
$EXPE is a great example of a stock breaking out. The only thing I am concerned with is if the market pushes lower, the breakout could fizzle. A low risk trade would be watching for $EXPE to come back to $96.74 before getting in and keeping a tight stop. You may miss the move with this approach, so the alternative is to get in at market open understanding that you’ll want a wide stop.
$EBAY is and has been in a nice uptrend. It sits on the ascending trend line and is a good low risk/reward play. However, this one may also depend on the direction of the market. MACD is looking bearish so the stock may roll over. If it does $55.50 is the first target. $54.00 is the second. If we get a bounce, $59.70 looks likely as a first target.$BBY is another stock in a similar up-trend.
That wraps up this update. Have a great night, hope you had a happy Easter. Good night and happy trading!