conflicting signals keep market at ease

$SPY in last weeks recap we pointed out the markets bearish change in character after a breakdown from a 2-month long rising channel. Despite the bearish behavior we also made note of the extreme oversold conditions and suggested the best course of action was to stay nimble. After the close this Friday we can see the market behaved in that very conflicted manner, that is by probing the downside beyond last weeks lows but ultimately closing within 30 cents of where it opened Monday. In the near term we have carved out this falling wedge that the bulls made a run against on Friday. They are in the process of trying to breakout of it and Monday could offer some additional momentum to the upside if we can follow through above Friday’s highs. While the buyers definitely stepped up on Friday and closed the week on the highs, we still aren’t out of the woods yet.

We’re still in the process of making lower highs and lower lows on an intermediate term basis and until we can reclaim the breakdown level and fill the open gap at 197 we need to continue to remain cautious. Individual stocks is where I want to pay attention for relative strength (and weakness) amid this chop.  SPY15

$AAPL continues to slide lower in this well defined descending channel making lower highs and lower lows in very similar fashion to the broad market.  Friday was a good showing for the bulls in this name and it will be worth watching coming into next week if they can continue their buying and break up and out of this channel. 95.50 is the level I would need to see taken out by the bulls to become an interested long in the name again. As long as this continues to trade below 95 it seems more likely to drip lower and/or chop around. On watch.AAPL15

$NFLX this weeks out performer in large cap high beta tech was Netflix. Most of these other names are still carving out a trading range or wedge of sorts and Netflix already broke up and out of it’s range and is on route back towards the highs. This 450ish level is some pretty larger resistance in the name going all the way back to the beginning of June, so it’s not to surprising to see it stall out around here after a 20 point run. I’ll be looking for a range to develop here next week and I would be very interested in getting long Netflix again above 455. NFLX15

$FB i like tight patterns and Facebook is shaping up to be one of my favorite longs on my watchlist next week if it can show some commitment above $74. It’s had now 2 weeks to digest the gains from its earnings report and it appears to be finishing up it’s coiling pattern any time now.  Keep this on your radar, below $74 is all noise right now, remember, no trigger, no trade.FB15

$TWTR speaking of digestion we still have Twitter casually dripping lower after its massive earnings pop about 2 weeks ago. This pattern isn’t quite as tight and clean as Facebook but I still want to be involved in the name on any potential upside breakout. $44 is essentially the level I want to see Twitter take out and close above for a trade to the upside. Another name on my watchlist if the bulls can pony up some further strength.  TWTR15

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Evan Medeiros

Evan is the founder of the Trade Risk. With 20+ years of coding experience and a B.S. in computer science, Evan brings a systematic discipline to investing in the stock market.

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