May 13 Breakout Intraday Update and Stock Scan

May 13, 2014: 1:09 PM CST

The S&P 500 fully achieved the expected 1,900 target, and now we monitor the rest of today’s session for any sort of Bull Trap or else continuation of the bullish surge – and short-squeeze – already in motion.

We’ll start our update as usual with the S&P 500 chart and key levels:

With yesterday’s bullish breakthrough above 1,889, we saw logical upside continuation (short-squeeze) as mentioned in yesterday’s update.

Now that the S&P 500 has fully scraped against – and slightly returned under – the key 1,900 index target, we’ll focus our attention at the Bull/Bear Interplay here.

A downward break under the current 1,895 low may open a quick sell-pathway (bearish bias) toward the 1,890 confluence.

Otherwise, it’s bull, bull, bull (including short-squeeze from the bears) on another breakout above 1,900 no matter how illogical an upside breakthrough may be (again, short-sellers would help propel price higher with their tight stops clustered near 1,900 should a continuation breakout occur).

Sector Breadth – along with the momentum and volume divergence – argues for caution here:

I wish I could say “all is clear for a powerful upside bullish breakout” but that’s not true.

Sector Breadth reveals a bearish or cautious picture with strength (money flow) into the Defensive or Risk-Off sectors such as Staples, Health Care and Utilities (catching a bid again) along with Energy.

Weakness has developed in Financials, Discretionary, Tech, and Materials.

Let’s turn our attention now to potential uptrending stock candidates for the day:

We have a big breakout in Keurig Green Mountain (GMCR)- a continuation of the Bull Flag pattern I highlighted in the recent “GMCR Triggers Bull Flag Breakout” post.  Price already achieved its initial target with today’s gap and impulsive rally.

Other potential trend day candidates include L3 Communications (LLL), Mosaic Co (MOS) and Devon Energy (DVN).

Finally, our potential downtrending stock candidates on a potential reversal day include Plum Creek Timber (PCL), Time Warner Cable (TWC), Dollar General (DG), and Verizon Communications (VZ).

Afraid to Trade Premium Content and Membership

Follow along with members of the Daily Commentary and Idealized Trades summaries for real-time updates and additional trade planning.

Corey Rosenbloom, CMT

Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).

2 Comments

2 Responses to “May 13 Breakout Intraday Update and Stock Scan”

  1. wayne Says:

    Hi corey, I like your sector breadth chart…would u mind telling me what symbols you use to track each of the various sectors?

  2. Naeem Says:

    I have regularly witness these kinds of break outs, it is very normal and honestly I don’t find any proper way to avoid it. Therefore, I only suggest to use a safety plan like cash back offers. I trade with OctaFX, it is a fantastic broker that also have rebate service (cash back) so I am able to earn 15 USD per lot size trading, it is about 50-60% of the spread that is charged from which is just 0.2 pips.