Downward sloping 200 day moving averages? Bearish consolidation patterns? More overnight weakness in Crude Oil? Even more bad news out of China?!
The market laughed at all these silly bearish worries, mine included, and exploded higher right out of the gate today.
It was a big day for stocks. The S&P 500 Index rocketed higher by nearly 50 points (+2.5% for the day), in a show of price and volume fireworks that can only be seen in corrections, and closed near the 1970 level.
Today was a clear victory for long-suffering bulls, but let’s keep the champagne on ice a bit longer.
Technically, the S&P 500 remains in a symmetrical triangle consolidation, which implies a state of indecision. Should the S&P 500 muster enough strength to move through 1975 and close over this level, the bears will have to revisit their hypotheses and stop loss levels.
Having said that, proactive bears would be remiss to ignore today’s potential “risk on” signs in the stock market, most notably the broad rally in the Healthcare (XLV) and Biotech (XBI) sectors, as well as more bottoming signs in the beaten down Energy Sector (XLE).
The following 6 trading ideas and setups that I will be watching tomorrow.
1. Â Celgene Corporation (CELG) – It’s been a somewhat sloppy two-month pullback to support but the overall price structure for Celgene (CELG) is intact. Today’s bounce off the 120 level and 200 day moving average (coupled with broad sector strength) could indicate CELG is likely to continue higher toward 130-135.
2. Â Casella Waste Systems (CWST) – I profiled this stock in my weekend post noting its relative strength during the current correction. Sure enough, CWST wasted no time in breaking out of a five-month base today. I am expecting continuation toward 7.50-8.00.
3. Â Cyberonics, Inc. (CYBX) – This is another stock that showed great relative strength and continued consolidating above the key moving averages throughout the recent panic and sell offs. Stocks like these are typically among the first to push higher when market conditions change: So today’s +5% rally in Cyberonics (CYBX) should therefore not be a surprise. I’m expecting continuation toward 70 and beyond.
