tight and choppy into memorial day

SPY$SPY we kicked things off Monday following through to the upside and adding to gains from last week’s breakout to new all time highs. But after Monday’s progress higher, the market essentially stalled out and chopped around within a 1 point range for the remainder of the week. Looking ahead to the holiday shortened week ahead of us we have this tight range we closed dead in the middle of on Friday which has me on breakout alert. 212.50 to 213.60 are the levels of interest I’ll have on my radar to see which way short term directional momentum builds.

On an intermediate term basis, the uptrend and breakout above 212 is still firmly in tact. And this makes holding above recent lows even more important for the bulls because they risk this past week’s action becoming a false (failed) breakout to the upside. I continue to be allocated anywhere from 50% – 80% of my portfolio on the long side but I’ll be quick to reduce that if I’m given a reason to. Summertime trading is effectively upon us as we enter into the last week of May. The breakout of this near term range will be a good gauge of the tone of the market heading into the traditionally lighter volume season.

IWM$IWM the action in the small caps over the past few weeks is much sloppier than that of the S&P500. Despite the $IWM outperforming YTD, the action here is suggestive of further sideways and choppy action for weeks to come. 120 – 126 are the bigger levels to keep an eye on; meanwhile 123.50 is a good midpoint reference point as to who’s winning the battle between the bulls and bears. Not too much else to add here, middle of a trading range that likely just needs more time to develop.
TLT$TLT the breakdown throughout the month of April is finally showing signs of slowing down as price is respecting a prior area of significance between 118 and 120. The fast moving averages are still racing lower which means for my style I would like to see more sideways action build before getting involved one way or the other. But if you’re nimble, there could be some more some more gas in the tank to stage an oversold reactionary bounce heading into next week. Let’s see if this can cool down a bit and move sideways for a higher probability setup.
AAPL$AAPL this sleepy name is showing more signs of awakening as it broke above important levels around 130 that had been acting as resistance over the past couple months. The heavy lifting looks like it was taken care of this past week but still on deck we have the previous all time highs to deal with around 134. I like the chart and multi-week base that it carved out and I’ll be eyeing long entries going forward.
FEYE$FEYE is a name I haven’t written about about in a while but the 9% move to the upside this week demands some attention. The base over the past several months has been a little sloppy but ultimately very healthy action after the breakout run higher in February. Members and I got long some FEYE this week, but it’s for a longer term hold than our usual day to day momentum swings. While it couldn’t quite close at new recent highs (> 46) I think the 44 area was a big hurdle that it conquered. I like this name going forward.
BABA$BABA here is another name that members and I got involved in after it broke above the minor level of resistance at 88 earlier this week. Alibaba held pent up basing above a longer-term important level of 87 and that high level basing was key that there was built up energy in this name following the earnings gap higher. It rocketed into the open gap from January of this year and filled about 50% of it before stalling out. We’ve taken about half off into this strength but we’re looking to see if this can continue to perform next week. Extended a bit, but looks good.

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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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