May 7 Midday Stock Scan and Trading Update

May 7, 2014: 12:56 PM CST

Can anyone explain today’s volatile “down-up-down” market reversal that seemingly trapped both sides of the market?

Let’s do our best to continue focusing on updated key index levels and study the message of current “Sector Breadth.”  We’ll also see trending stocks and note some major gap-downs this morning.

I expanded the perspective to the 3-min intraday chart to highlight the short-term Fibonacci Retracement Grid.

At the moment, price is pivoting between the 38.2% (1,870) and 61.8% (1,876) levels which are our current focus.

Beyond that, we saw a continuation of the down-swing toward the 1,862 level ahead of a Stick-Save buy event thrust price back inside the falling trend (all the way to peak at the 61.8% level as described).

For now, a continued break under 1,870 puts us back in intraday bearish territory while we remain neutral between 1,870 and 1,876 (bullish for a short-squeeze breakout above 1,876).

Sector Breadth paints a bearish picture at the moment with respect to 100% of S&P 500 Utilities Sector Stocks being positive on the session … but we balance this bearish evidence with the bullish evidence that 90% of Financial Stocks are up on the session.

Otherwise, strength is concentrated in “bearish” Consumer Staples and late-cycle leaders like Energy, Industrials, and Materials.

Like yesterday, it’s a mixed picture, but one that appears to tilt more to the bearish side.

Our potential uptrending continuation candidates include Pioneer Natural Resources (PXD), Verizon (VZ), Humana Inc (HUM) and Deere & Co (DE).

We note that Whole Foods Market (WFM) gapped down strongly this morning yet has traded up off the $38.00 level.  WFM joins Perrigo (PRGO), Yahoo (YHOO) and Under Armour (UA) as today’s weakest and potential bearish trend day candidate stocks.

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Corey Rosenbloom, CMT
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