May 8 Breakout Trading Update and Breadth Surprise

May 8, 2014: 12:40 PM CST

Today’s session already has given us two big surprises from what we’re accustomed to seeing each day.

First, today started as a “breakout of resistance” event that resulted in a quick short-squeeze impulse near 1,890 (today’s high so far).

Second, we had a big surprise in our Breadth Chart, which we’ll see shortly.

Without further delay, let’s update today’s mid-day market and key levels (and trending stocks):

We have an initial breakout that fell just shy of the 1,890 target and price traded down against this level.

An immediate breakdown here – under the 50 EMA at 1,833.50 – strongly suggests that price will continue a downward arc first to the 38.2% Fibonacci Level (1,881) then perhaps to the midpoint at 1,878.75 and lower as highlighted.

Focus on these levels both as intraday downside targets (on a breakdown/reversal) or as potential spots to trade long off support for a bounce-play.

See if you can spot our “Big Surprise” on our Sector Breadth Table:

I’ll give you a clue – the worst performing sectors today – Energy and Utilities – have been the best performing sectors many days before today.

As of this screencap, zero Utilities Sector Stocks were positive and 14% of Energy stocks were positive.

Our strongest sectors are Technology and Industrials (90% of S&P 500 Sector Stocks Up) followed by Consumer Discretionary, Financials, and Materials.

This strange shift represents a strong reversal in short-term money flow.

Finally, we turn our attention to potential trend day continuation stock candidates, start with rising trends:

Keurig Green Mountain (GMCR), Expeditors Int’l (EXPD), Scripps Networks (SNI), and CenturyLink (CTL).

Our sell candidates include Southwestern Energy (SWN), Merck (MRK), EQT Corp (EQT), and Teradata (TDC).

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Corey Rosenbloom, CMT
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