While the big picture for the major indices still appears healthy, the markets feel slightly heavy at these levels with many individual names experiencing selling yesterday.
A minor and healthy pull back in the overall markets may provide a buying opportunity at support in names that have recently broken out. Below is a chart of the SPDR S&P 500 Trust (SPY) highlighting key areas that should provide support in the event of a pull back. Additionally, below is a trade idea in Huntsman Corporation (HUN), which broke out yesterday on heavy volume and was relatively strong versus the S&P 500.
Chart 1: The daily chart of SPY below outlines bearish candlestick patterns that recently formed at resistance, warning of a short term pull back, only if confirmed by today’s action. In addition, a few short term support levels are illustrated that all cluster between $130.70 to $132.36.
Chart 2: The intermediate uptrend in HUN was broken in March when the bulls lost control of the 50-day simple moving average (sma). On March 25th, the bulls regained control by closing above the 50-day sma on heavy volume. Yesterday there was a breakout and close above the neckline of a bullish inverse head and shoulders pattern accompanied by heavy volume. Target: minimum expected price objective is $20, obtained by measuring the height of the pattern. Protective Stops: conservative: activate on a close below the 50-day sma, currently $17.37, aggressive: confirmed move below the neckline, which is around $17.75-$18.
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Disclaimer: The information contained herein is not guaranteed. This is not a solicitation of any order to buy or sell. This material is based upon information that I consider to be reliable, but I do not guarantee its completeness or accuracy. Assumptions, opinions and recommendations contained herein are subject to change without notice, and I am not obligated to update the information contained herein. I may have a position/s in the security or securities mentioned. This communication, including any attachments, is for the exclusive use of the intended recipient(s) and/or the intended recipient’s designees. Any use, retention or dissemination by a person other than the intended recipient is strictly prohibited. If you are not the intended recipient or designee, please notify the sender immediately by return e-mail and delete/destroy all copies of this communication.