The market ended the month of August on a whimper. The Russell 2000 (RUT) basically had a sideways day and pulled back some -0.3%, while the S&P 500 (SPX) gave back -0.8%.
Yesterday’s price action has no significance on the overall technical picture. The indices remain squarely in a correction, while a lot of individual stock charts look downright smashed and will need time before new patterns and support/resistance areas can emerge. This skews most trading ideas and setups for stocks to the short side.
Despite the overall sideways action in the markets Monday, there was very little strength under the surface and the overall theme seems to be a rotation from the momentum/growth leaders (tech and biotech) and into beaten down sectors like energy and materials. This may be great news for the lagging sectors but it is hard to interpret as bullish overall for the stock market.
The following are five trading ideas and setups that I am watching.
Delta Airlines (DAL) SHORT – Delta Airlines (DAL) has been having a hard time making any progress even before oil started rocketing higher late last week. Bearish consolidation under the 200 day moving average and today’s bearish reversal indicate likely downside ahead toward 38 for DAL.
EDAP TMS SA (EDAP) – The stock has seen a strong recovery following last Monday’s crash. EDAP remains in a constructive six-month consolidation base and could be getting ready for a breakout through 3.80-3.90.
Paycom Software (PAYC) – Paycom Software is showing great relative strength and constructive consolidation within a four-month base. PAYC now needs a strong move through 40.
United Therapeutics Corporation (UTHR) SHORT – UTHR was rejected with conviction off the resistance level around 160 and the 200 day moving average and it closed near the lows of the day on higher volume. There is likely more downside continuation toward 138-140 area for United Therapeutics stock.
Valient Pharmaceuticals International (VRX) SHORT – There has bee bearish consolidation under 240 for VRX. As well, the stock is trading under the 50 day moving average and a small bearish reversal/engulfing bar occurred in Monday’s session. Should support at 220 fail, Valient Pharmaceuticals stock is likely headed for a test of the rising 200 day moving average.
Thanks for reading and have a great rest of your week.
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.