It is easy to point the finger at Greece as the culprit behind Monday’s mega sell-off, but it is impossible to deny that there has been an ongoing distribution among select US stock sectors for several months.
Viewed from this perspective, yesterday’s price action among the major indices could simply mean the underlying weakness finally made it to the market’s surface.
Regardless of what happens with Greece, the US market is now in a corrective phase. It is impossible to predict how it will unfold and too soon to talk about some kind of a bottom. With this in mind, trading ideas and select setupss will require patience and a high level of discipline.
With the Volatility Index (VIX) around 20 we should expect more big market moves (up and down) in the coming days/weeks. These conditions clearly favor intraday and tactical traders. The best strategy for longer-term investors may be to do less or nothing until the correction is behind us.
The following are five trading ideas that are on my radar heading into tomorrow.
Facebook (FB) – The stock remains in a clear uptrend and recent price action in FB looks like a controlled pullback to support in the 85-86 area. The key now will be to see if a bullish reversal occurs with a move back up through 87.
Google (GOOG) – Google is a potential short setup. It is barely holding on to 519-520 support. Should this level fail, GOOG is likely to headed lower toward the 500 level.
MiMedx (MDXG) – I covered MDXG as a trading idea two weeks ago. MiMedx has shown impressive relative strength, barely budging during Monday’s sell-off. The stock price seems to be flagging for a breakout through 12 and a possible move toward 13.50-14.00.
Twitter (TWTR) – Even if continued acquisition rumors turn out to be unfounded, TWTR is a setup with good risk/reward. With an entry in Twitter around 36, a trader would be risking roughly 2 points for the possibility of capturing 4 to 6 points of upside.
ZIOPHARM Oncology (ZIOP) – Another stock with impressive relative strength, ZIOP seems to be flagging for a breakout toward 14-15 and possibly beyond.
Thanks for reading.
No position in any of the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.