The market tried to break out yesterday and opened strong but failed to hold up and came right back in to bounce back up again during the last two hours of the day simply stated, this market is choppy and rangebound. The levels of the range are 118.70- 116.70 then 116.00. A break in either direction could pave the way for momentum to kick in. XLK again tested resistance yesterday and failed, the more it tests the more likely it will go through so Ill keep an eye on it. XLF in no mans land, too choppy given all the news surrounding the financial sector at the moment regarding the foreclosures and the Bank of America (BAC). If we gap down today Ill watch how the market reacts at the levels mentioned above, if we hold Ill be looking to go long by trading the strongest stocks in my list and if we fail and go through it, I will cautiously trade the short side. If we gap above the previous resistance which is unlikely then I will look for the market to hold above 118.70 and if we fail to hold then Ill probably do nothing and just watch from the sidelines as the market will be re-entering no mans land again. Finaly if we open in the middle of no mans land then Ill do nothing till the picture clears up, or Ill trade a stock that is strong in a stock specific environment. Today is Friday and there aren't any major news reports coming so we might not have a catalyst to break the market out of its range .
Longs:
DAL: A long with room to go. IPT at 14.00
DOW: A long with room to go. IPT at 31.60
DD: A long that formed a bullish flag on the daily.
Breakouts:
HD> 42.15
COST> 64.00
MRK> 37.50
ADM> 33.60
AMGN>58.50
TJX>45.40
BBY> 42.70
Shorts:
NEM: Weak stock with room to go. IPT at 58.45 then at 57.00
SNDK: A sell short that clost below all its major moving averages. The volume on the down day was also above average signaling the weakness in SNDK
Breakdown:
CHK < 21.67
ABX < 44.80. IPT at 44.10 then at 43.85
AU< 45
KGC< 17.40
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