June 24 Rounded Reversal Intraday Trading Update

Jun 24, 2014: 12:41 PM CST

Well that was exciting!

The S&P 500 initially triggered the alternate breakout (above 1,964) thesis to continue a surprise short-squeeze toward 1,968.

Divergences undercut the high and price began a logical retracement lower that morphed into a market collapse and reversal of the bullish price action.

Let’s highlight the new structure and pay close attention to the key levels as price races lower:

I highlighted the 1,960 to 1,964 level in yesterday’s report as being the key “Range Reference” boundaries.

Price traded up off 1,960 to break above 1,964 and trigger the breakout buy (short-squeeze) play.

While it was successful for a period of time, price stalled then reversed into the 1,968 level.

We saw a retracement develop into a collapse straight back through “Open Air” (a great educational example) toward the 1,960 support low.

For now, we’ll focus our attention on 1,960 and the potential for a support-bounce (range) or else a continued breakdown (collapse) lower.

Our Sector Breadth Grid took a clear bearish turn on the reversal:

Our Defensive Sectors – namely Health Care and Utilities – are today’s strongest sectors (and this is a bearish signal).

Consumer Discretionary follows third while all other sectors under-perform the session today.

Despite the reversal, there are always bullish candidates to trade from our scans:

Vertex Pharma (VRTX), Weyerhaeuser Co (WY), Harman Int (HAR), and Ralph Lauren (RL).

Bearish candidates include the following:

Halliburton (HAL), Pioneer Natural Resources (PXD), Diamond Offshore Drilling (DO), and Anadarko (APC).

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Corey Rosenbloom, CMT
Afraid to Trade.com

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