May 8 Breakout Trading Update and Breadth Surprise

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).

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).