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

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.

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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).

Let’s see what our Breadth Chart reveals about current market strength (or weakness):

We actually have a BEARISH picture in current money flow or sector strength.

The three Defensive Sector Groups (Staples, Health Care, and Utilities) are strongest today along with Energy.

The weakest sectors are the Offensive/Bullish names with Financials the weakest performer today.

Unless something surprising happens – and it can – the market appears more likely to fall down again from resistance as opposed to breaking above it (yet we would make a mistake in assuming the bulls absolutely cannot break this market out into a “surprise” short-squeeze rally).

You’d want to trade stocks showing relative strength, like our top stocks today:

Avis Budget (CAR), Brookdale Senior Living (BKD), Netflix (NFLX), and 21st Century Fox (FOXA).

Bearish downtrending candidates include the following stocks from our “weakness” scan:

El Pollo Holdings (LOCO), Keurig Green Mountain (GMCR), Eagle Mat (EXP), and Neustar (NSR).

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).