For the second day in a row we have a huge gap up on our hands. Today’s is backed by the tame PPI data which was released at 8:30. The obvious levels to watch are yesterdays highs. As I type this SPY and QQQQ are hovering just a hair above Monday’s highs. The billion dollar question is will sellers squash the rally again? They say that the more times a support or resistance level is tested the weaker it gets. Based on that, S&P 1280 should be real weak by now.
Also keep in mind that this is expiration week — stay on your toes.
Potential swing trades:
See one of the recent ‘Chart Reading‘ posts for some potential swing candidates.
Potential day trades:
(From Briefing.com)
Gapping Down
Gapping down on disappointing earnings/guidance: MED -24%, IPII -16%, NTES -10.4% (also Citigroup downgrades to Sell), CNCT -5.8%, DE -1.8%… Other News: SIMC -30% (to delay 10-Q), AMKR -3.7% (receives Nasdaq delisting notice), BMHC -3.4% (in sympathy with IPII).
Gapping Up
Gapping up on strong earnings/guidance: HSOA +19%, KONG +20% (also Brean Murray upgrade), VRGY +9%, A +8.9%, XNL +8.3%, STP +6.2%, BRL +5.1% (also settles litigation with SHPGY), UBS +2.8%, SPLS +2.4%, HD +2.2%, FOSL +2.1%… Other News: TPTH +77% (receives bid from BDX), DLP +13% (to be acquired by MON), RBAK +4.5% (RBC upgrade), SHPGY +4.6% (settles litigation with BRL), CCBI +6.2%, AMR +4.1% (Citigroup upgrade), ORCT +4%, SNY +3.4% (Berkshire buys stake in SNY), USEY +3.3%, ALA +3.3%, SAP +2.9%, WFMI +2.8% (extends yesterday’s 7.5% move), SYT +2.7%, AKAM +2.7% (positive broker comments), HANS +2.5%, SI +2.5%, QCOM +2.4% (positive comments from OpCo), NOK +2.4%, ASML +2.3%, PHG +2.3%, AMD +1.7% (product announcements)… Under $3: ISON +6%, NVAX +3.5% (RBC upgrade), LU +2.9%.
Disclaimer & How I use this list
I say the more often a resistance level is tested and holds, the stronger it is.
I guess it depends on what you think cause the resistance and support.
In the case of resistance, it’s caused by people who have shares to sell, and who sell on rallies. Do you think that eventually they’ll run out of overhead supply?
Hmmmm…well, I think the real “tale of the tape” will be if the Bulls can hold onto any rally in the afternoon. If the Bulls can’t substain a decent rally today, then I think it’s time to sell the Pinto.
~o)
The original sellers may well “run out” of shares, eventually (unless they are short term traders buying back on the next dip). But the total number of shares is not going down (modulo buybacks). Next time around, the new holders may well decide to get out at even, seeing how their recently acquired shares are failing to break above resistance.
Net, you have a transfer of shares from those who rode them up (the “Smart Money”) to Johnny Come Latelies (the “Dumb Money”), a.k.a. distribution. Eventually you run out of JCLs dumb enough to buy at the well established resistance level, and prices must move lower in order to entice them back in.
Hey Mike,
Speaking of resistances, now that S&P broke out past 1280 (and RSI breaking through 60) where do you think the market will go? Is the coast clear to go long?