Feb 4 Trending Stock Scan and Market Update

Feb 4, 2015: 2:11 PM CST

Buyers extended their dominance today, though they’re meeting resistance with divergences, suggesting their bullish swing may be ending.

Let’s update our key levels, highlight the divergence, and of course note trending stocks today:

For a broader discussion on this ongoing and important pattern, see my update post “Plotting the Current Range and Future Breakout for the S&P 500.”

Buyers held the market up at the 1,990 reversal, triggering the current bullish rally and short-squeeze.

While TICK (and momentum) Divergences forecast a likely reversal at the lows, we’re seeing these same indicators flash Negative Divergences into the 2,050 level.

This is a caution signal and puts us on guard for yet another bearish play down away from 2,050.

Otherwise, a breakout to new swing highs beyond today’s high suggests 2,060 would quickly be in play.

Let’s see what our Breadth Chart reveals about current market strength (or weakness):

We noted the TICK Divergences and we’re seeing Sector Rotation Divergences, or at least a bearish signal.

Only ONE sector trades above the 50% positive line and that’s the defensive Consumer Staples.

Our weakest sectors are Energy and Utilities which are showing almost zero stocks positive right now.

We have potential bullish trend continuation plays in the following stocks from our scan:

Sony (SNE), Disney (DIS), General Motors (GM), and Cognizant (CTSH).

Potential downtrending candidates exist in stocks showing relative weakness today:

Ralph Lauren (RL), Fastenal (FAST), Gilead (GILD), and AbbVie (ABBV).

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Corey Rosenbloom, CMT
Afraid to Trade.com

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