The markets should be relatively calm today, with the “Easter Monday” holiday break in Europe and surrounding countries. Anticipate less volatility as a result, as families are on Easter break this side of the Atlantic as well. Countries observing the holiday.
Earnings This Week – More Banks
The watch list is much smaller this week, as many stocks on the IBD50 List fail to impress. Compound this with the spike in volatility, changes in breadth and sentiment and you have all the reasoning you need to practice patience. Do not force trades when the markets fail to give a decisive direction.
Bioverative (BIVV) is a recent spinoff from parent Biogen. The trend is strong, so any break below the 9ema would be a warning sign for short term traders. Bollinger bands are starting to change direction, as they did in early March. We would like to see one more test of the upper bands to keep us interested.
Meanwhile, SOTEMA is bullish as traders continue to push price to higher lows and higher highs. Multiple tests of the 9ema last week show buyers continue to support the trend, so we are looking for a repeat of this pattern for a quick move above 57.00 this week.
Any change of this pattern, will be readily apparent, therefore stop 56.00 (+/-) initially and trail thereafter.
BIVV 5 minute illustrates the levels that will trigger a trade. A push above the 57.00 level (third to last candle) will take out bag holders that held over the weekend. A follow through that removes swing traders at 57.15 should find new “breakout” buyers, then quickly take out 57.55 and 58.00 (daily pivot high). If we see any signs of rejection at these levels (wicks at highs), we’ll consider taking profits.
Telecom stocks were pretty strong last week, so we will consider DY as a potential trade. The company has pretty impressive earnings, as their numbers continue to grow. The latest quarter produced quarter to quarter increases of 52% and three year growth of 83%. The company reports again on 5/22/17.
Technically speaking, volume increased on Friday, as Bollinger bands begin to expand. We’ll be looking for a bullish continuation day to confirm a trade. Use the 5min (TD) setup as an initial entry. While we are content with day trades (in and out same day), you might consider a swing if we close near the high of the day. We want to see continuous buying, especially considering the current market environment. A quick move lower in NDX and/or SPY would likely shake new bulls, therefore follow through is important.
MOMO continues to build higher lows and higher highs. A retest of the 9ema would be an excellent entry, if we see buyers show up and the trend reverses intraday. You’ll need to watch the 5min (TD) setup, as this stock continues to attract momentum traders. Volume suggest institutions are also accumulating shares. Earnings grew at a staggering 633% last quarter, producing a profit margin of 32.3%. The company is scheduled to report again on 5/15/17.
Considering the state of the markets and the heightened volatility, timid traders should wait for confirmation. The markets continue to trade in a consolidation pattern that will likely break higher at some point. In the interim, you’re just asking to sustain more losses. Wait and be patient if you are more into swing trading and trend following. For more, please read the weekend BLOG POST. We covered thoughts on what will signal and confirm the next direction the markets take.
Two Methods for Determining the Next Market Direction.
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