Today’s Strongest and Weakest Dow Stocks Right Now May 18

May 18, 2015: 11:24 AM CST

With the market tilting toward the “Breakout” or “Melt-Up” outcome I highlighted in this morning’s post, let’s dig a little deeper to find which stocks are participating with the bullish money flow (or short-squeeze bearish stop-losses) and focus on the leading stocks (and avoid the laggards).

Let’s view the chart below and take it step-by-step (and pinpoint today’s Dow Jones leadership):

The scan above is created with Trade-Ideas, a service I highly, highly recommend for active intraday traders.

I’ll be posting more scans and ideas from them as I’m thrilled by the capabilities of the software and the myriad of options you can scan – all customized to your personal trading style and aggression level.

With all the numbers and colors above, let’s focus all of our attention on the Green and Red bars in the middle.

This is a formula in Trade-Ideas which shows the position in a stock’s daily range – that’s often a better visual marker than simple ranking by percentage up or down on the session.

Plus, we can sort all 30 Dow stocks by the percentage within their intraday range.

We’re most interested at stocks at the top of their range (and the bottom for relative weakness) which would mean Cisco (CSCO) and Travelers (TRV) along with Intel (INTC), and JP Morgan Chase (JPM) are showing strength today.

They’re currently trading at the highs of the day as indicated by being near the 100% level of their intraday range. Continue Reading…

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Breakout or Bull Trap? A Quick Plan for the SP500 and Dow Now

May 18, 2015: 10:12 AM CST

Right now we’re playing the “Will it really break out or is this just another Bull Trap?” game with our trades and analysis.

Let’s step inside the market quickly to view what’s going on underneath the new price highs.

Here’s this morning’s S&P 500 futures (@ES) intraday chart at the highs:

We’re seeing the @ES Futures (e-mini S&P 500) trade above the 2,115 breakout resistance high.

However, Momentum and Internals – shown with Breadth – are making lower highs (a divergence) while NYSE Breadth is actually negative 745 (745 more stocks are negative right now than are positive on the day).

This non-confirmation suggests another Bull Trap and failure outcome as more likely than the alternate thesis which would be a short-squeeze breakout and possible “melt-up” rally in the stock market (similar to February 2015). Continue Reading…

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What We Thought was a Sideways Range was NOT What We Assumed

May 15, 2015: 4:58 PM CST

Quite simply, what we THOUGHT was a Sideways Range was NOT actually a Sideways Trading Range.

What’s changed our thinking and what does it mean about the current state of the coiled stock market?

Let’s take a look:

First, let’s build off an assumption that we’re challenging.

I’d multiple times recently assumed that the S&P 500 was “coiling” or trading within a well-defined sideways rectangle (horizontal trading range) which was similar to that of January (ahead of February’s breakout).

See the recent posts:¬† “Still on Breakout Watch for the S&P 500” and “Triple US Stock Market Index Update.”

The quick expectation from those posts was that price would continue bouncing sideways in a sideways trading range.

In reality, what we’re seeing is NOT a Sideways Rectangle Range but instead a RISING, compressing trendline pattern similar to a Rising Wedge.

It makes a big difference, given that a simple breakout beyond a sideways resistance high “should” lead to an impulsive bullish breakout¬† like that of February. Continue Reading…

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What is Moving in the Market Today Update and Stock Scan May 15

May 15, 2015: 12:31 PM CST

What’s going on behind the scenes of the stock market today as a possible Bull Trap stuns (or perhaps doesn’t surprise) some traders with a failed breakout and range day?

After yesterday’s big trend day session, price couldn’t continue the momentum today and a clear range evolved.

Let’s take a look at the current picture plan what to do next:

Here’s a snippet from Thursday evening’s Member Strategy Report that forecast today’s rally:

Here we are right back at the range resistance high – with another small divergence – and our planning and expectations will be identical to the two prior events (earlier in May).

First, we’ll officially label our “Dominant Thesis” as the range continuity thesis which makes us bearish into resistance with divergences and ready to play short/bearishly intraday (or swing trading) down against 2,120

By definition our Alternate Thesis and thus LARGER move in the opposite direction expectation is the bullish, short-squeezed breakout thesis wherein we will ONLY trade the market from the long/bullish side while it is firmly (not divergent) above 2,120.

Don’t miss out on unbiased, actionable analysis (and stock scans!) like this each evening – join the Membership today.

Price held at the highs, creating a narrow range day (so far) between the key pivot point slightly above 2,120 and the lower support near 2,118.

Think of these as tiny zones as opposed to hard walls targeted to the penny.

There’s a lot of emotion – hope, fear, and greed – swirling around at the highs and one side will one as one side loses.

Until then, be patient and trade in the direction of the winning side (bearish under 2,117 and bullish for a short-squeeze beyond 2,122).

Continue Reading…

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A Quick Way to Chart the Cycles in Volatility

May 14, 2015: 1:59 PM CST

There’s a quick and easy way to chart Volatility and assess whether we’re in a low or high volatility period and what’s likely to happen next in the cycle.

Price alternates between periods of High Volatility to Low Volatility and it’s important to adjust your expectations and trading strategies as necessary.

Let’s see one of the easiest tools to chart the Volatility Cycles (highs and lows):

I’m showing the indicator “Bollinger Band Width” which simply subtracts the value of the Lower Bollinger Band from the Upper Bollinger Band.

Bollinger Bands measure two Standard Deviations from the mean or 20 period moving average (default).

High volatility periods in price will increase the standard deviation – and thus the distance of the upper and lower bands – and low volatility periods will decrease the standard deviation and distance.

We can simply chart the width of the Bollinger Bands as an easy measure of Volatility.

You get what you see in the chart above of the S&P 500 (daily) from the 2009 low to present.

Note the “waves” or periods of high and low indicator values that almost look like a steady wave. Continue Reading…

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