So far this week, the overall market price action has not been kind to my weekend bullish hypothesis. The usual “risk-on” suspects (e.g. small caps, biotechs, etc.) have been unable to put in any continuation to the strength we saw at the end of last week.
The S&P 500 remains the laggard and also the most oversold major index. Today it tested the 2070-2075 support area leading to a somewhat predictable but also weak oversold bounce that did not inspire much bullish confidence.
The odds are we are nearing a more substantive bounce but given Tuesday’s malaise we can’t be surprised to see more short-term weakness either. This type of trading action requires active investors to be disciplined and patient when sifting through stocks.
The following are five stocks with solid trading setups that I will be watching tomorrow:
Domino’s Pizza Inc. (DPZ) – The stock has shown great relative strength and continued narrow consolidation around the 20 day moving average and $110 level. I will continue to watch for a range expansion move through 111.00 to 111.50 resistance.
International Business Machines Corporation (IBM) – In April, IBM broke out from a long base and this lead to the current pullback to retest major support in the 163-165 area. As well, we have an attempted bullish reversal on Tuesday. I am expecting continuation toward 168 to 170 tomorrow.
Mellanox Technologies, Ltd. (MLNX) – The stock is showing good relative strength and trading sideways in a consolidation flag near the highs. It needs to push through 51.00-51.50 soon or this flag will become more likely to fail.
Sonic Corp. (SONC) – The stock chart is showing a constructive two-month pullback and consolidation pattern into the 28-30 support area. SONC now needs to get through 31.00 to 31.50 resistance.
Visa (V) – A somewhat sloppy Cup and Handle pattern has formed on daily with a controlled pullback to the 50 day moving average and 68. Visa (V) now needs to get through the 20 day moving average and move toward 70.
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.