ominous start for stocks in 2014

$SPY after two trading days in the new year we can see theres been a slight change of character in the short term behavior of the markets. Two days of wider range bars and a pick up in sell side volume is a change of pace from what we have seen in the last two weeks of December. Something to be concerned about intermediate term? Not necessarily, 182.50 could hold as support and this mini 2 day shake could be over with, OR we could see further correction down to 180 support or beyond. I think the more interesting thing to note is the number of charts that are currently sitting on support and threatening breakdowns. If we do fail to hold near term support in a number of these prior leaders I would get more cautious on the markets in the short  to medium term. I had been flat in my swing account for a couple weeks now and I did do some buying with half sized positions at the close yesterday in a few names as the market dumped lower during the final 30 minutes of the day. They’re not my A+ setups but I do feel there’s value in establishing feeler positions in some names. spy30

$AAPL one of the leaders on the way down this week especially Friday when price accelerated lower after breaking 552 support. I expanded the chart out this week to show the bigger picture range Apple has traded in ever since that late November breakout move higher that stretched from 513 to 575. I have fibs drawn on the chart from that impulse leg and you can see price is still holding the 61.8 retracement which comes in right around 537 coinciding with the December 17 pivot low at 538. 537-540 is a likely spot to see buyers show up and shorts look to take some off going into next week but with the pickup of volume on Fridays sell off there certainly is a good case to be made that we may flush through that level before any reversal attempt. With that said, I did aggressively step up and buy half my “standard” Apple size right at the close on Friday in my swing account at 540.88. Gap lower on Monday and I may look to put on the rest of the position but ultimately as a stop I really wouldn’t want to see a close below 535.aapl60

$GOOG here is a name that is still holding up well at all time highs in this sideways range from 1105 to 1120. Theres an open gap waiting to be filled below recent support and we have to wonder if this is just another chart ready to breakdown on further weakness. Its rangebound until its not. Will it crack lower like $AAPL and $NFLX or will it hang in there and emerge as a leader of the new year again?  goog15

$NFLX last week I noted this breakdown from the rising channel Netflix had traded in for several months and we can see that this week it really just coiled up in a tight range with somewhat of a guilty look of a bear flag. This was a leader in 2013 and I think it will be important to watch the resolve of this chart for more clues about the early stages of 2014.  nflx15

$FB another name sitting on support and this pattern looks very dangerous. A very clear head and shoulders with a neckline at $54 and a measured move of about $4 if price breaks down from the neckline. You don’t want to get caught on the wrong side of this one, I’ll be watching it closely for day trades on Monday whichever way it decides to break.fb60

$AMZN similiar to Google, Amazon remains at all time highs in a holding pattern consolidating for the next leg higher or lower. Tough to be too bearish on this name, I like the relative strength overall and like many of the other names I believe the next directional move will be dictated by the path of the $SPY. Probably my favorite swing long setup if the market can firm up next week.amzn15

$TSLA tightening up significantly here and I would suspect a move to get set in motion early next week. Holding above an open gap the bulls were quick to snap up shares sub 149 on Thursdays attempted breakdown. Again, I think alot of these charts depends on which way the market leans going into next week, so for me, with no real conviction either way I will sit on my hands and wait for the market to tip its hand. tsla15

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Evan Medeiros

Evan is the founder of the Trade Risk. With 25 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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