Today was another day where the indices didn't really do a whole heck of a lot. We saw a lot of strength in retail, homebuilders, and financials, which strikes me as a classic early cycle move. On the other hand, we're starting to see pullbacks in tech and the small caps that were the real winners last year and early this year. Maybe today was a one-day mini-rotation. Tomorrow we have the jobs report, which will shake up the action. The market today was probably just waiting around for this.
Once again, I made no trades today. RGR, FUQI, and UTA appear to be experiencing trouble with resistance. I'd like to see these three pull back further so I can get a starter on in each of them or break out above resistance so I can get a starter on in each of them. Either way.
CRE is still holding above that 50-day EMA, and I'm wondering whether I'll get that pullback towards the 200-day EMA I've been expecting. Most likely, I'll take a starter around present levels tomorrow after the jobs report. Just a starter because I want to leave room to add if it does indeed pullback like I think it will.
ARO gapped up above resistance at the 50/200-day EMAs, but it fell right back towards them, having fully closed the newly created gap in the first 30 minutes of trading. Such action is not typically bullish. Combine that with the fact that ARO's volume was pretty heavy today and it makes me think ARO has further downside. Today's action in it felt like a short-term buying climax. If you're long ARO, don't give it much room below the 50/200-day EMAs because if it fails to hold, it's a long way down and you don't want to ride through that pain.
ROST, like ARO, had a powerful gap-up to start the day. However, unlike ARO, ROST was able to sustain the gap, which is bullish. The gap-up was also on heavy volume and broke ROST decisively above its downtrend and the 50-day EMA, which is also bullish. What was not bullish, however was neutral, is the fact that ROST was unable to continue moving higher as the day progressed. It reached its highs for the day early in the morning and proceeded to drift for the rest of the day. When we see gap-ups like this, the ideal scenario is a stock that pops early in the morning, pulls back to test the early low, rallies back towards the early high, and breaks right through that high decisively. We did not see that in ROST today, which should give you pause. I'll watch this one closely over the next couple days. If it manages to hold that gap, I'll take a starter long. However, if it starts to fade, I'll let that gap get filled before taking my starter long.
I've provided intraday charts of ROST and ARO below so you can see what I'm talking about.
Position: none
Disclaimer: This is not a recommendation and is presented for informational purposes only.
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