Given the broad oversold conditions, today’s bounce should not have been a surprise to anyone. As a result, several short-term trading setups emerged this morning.
The S&P 500 bounced right off its 200 day moving average (dma) and ended the day in the 2090-2100 resistance area. The Russell 2000 had a textbook opening flush under the 200dma, followed by a potent bullish reversal.
The question now, of course, is where will the market go from here. Given the oversold conditions we should not be surprised to see it continue a little longer, especially on more oversold indices like the Russell 2000. But we should also be prepared in case it fails.
The following are the five potential long trading setups I will be watching tomorrow:
ABIOMED, Inc. (ABMD) – The stock is showing impressive relative strength and a lovely flag at the right side of a four-month base. ABMD seems like it is getting ready for a push through 75 and breakout to new highs
MiMedx Group (MDXG) – Another impressive flag within a well defined consolidation base. If MDXG can push through 13 it would put it on a path to reach the measured move target of 14.50-15.00. I highlighted the trading setup on MDXG a few weeks back.
Northrop Grumman (NOC) – Mid-July breakout attempt led to a controlled pullback to support at the 50dma. Now the question is whether it can bounce back over 165.
iShares Silver ETF (SLV) –  The Silver ETF has very oversold conditions. Combined with recent narrow price action, SLV could be ready to embark upon a more substantive oversold bounce. The next day or two will be key.
ZIOPHARM Oncology, Inc. (ZIOP) – ZIOP is another stock with a well defined base and a consolidation flag. I’m expecting continuation through 13 and breakout to new highs. I cover ZIOP in early July.
Thanks for reading and have a great week.
Twitter: Â @NoanetTrader
No position in any of the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
