Good evening and Happy Fathers Day. Below, are some of the most requested charts over the past week with some general market analysis to digest. Despite the alarmingly low volume in the markets, which is not giving confidence to many, the market has created some very nice chart setups and has a slightly bullish sentiment. After we moved above 1108 in the S&P 500, we have seen consolidation, which has been the reason for such attractive chart setups. My favorite stocks to watch this week are the ones with bullish Russell rebalancing news coming out. Due to the very low volume in the market, the best breakouts are happening in the sectors that find themselves in the headlines often. This includes Energy and Gold/Silver. This has made the combination of strong chart setups and anticipated bullish news to be much more pertinent to finding high volume breakouts. The Russell rebalancing news should be very helpful in finding the short-term volume strength that we need to profit from. Keep your eyes on the S&P 500, 1108 level. If we break support there, we could see weakness develop in the charts.
Jamba Juice (JMBA)
A/D line: Positive, slight uptrend
ADX line: Signaled buy last week but trend is weak meaning it could signal sell anytime soon
MACD: Signaled buy last week which was confirmed by the ADX buy, watch closely to see if it bounces from here or starts downtrend due to weak volume
CMF (21): slightly positive
OBV: Confirmed all moves in the PPS, normal
RSI: Neutral territory closer to oversold territory. This means lots of room to run on a breakout north.
200-day MA is likely good support as it was never truly tested.
100-day MA resistance broken last week, now is support level
Resistance: $2.80
Analysis: I’m still holding a trade in JMBA as the indicators are neutral to bullish and the market itself is currently in a mini-bull rally (very light volume though). If we were to break support in the S&P 500 at 1108, I’d be quick to exit my long trades. If JMBA can continue to test $2.80, it is much likelier to break it. If it does, we should be a nice lift to sell into. I took some off the table the last time we went towards $2.80 and if it looks to be another failed attempt, I may do so as well as I am looking at stocks related to the Russell rebalancing this week. The biggest problem I am seeing in this market is the light volume and JMBA is becoming a victim to it. Light volume is very disruptive to even the most bullish of indicators. This leads me to want to stick with more popular sectors which are likelier to draw volume. Energy, gold, silver, and other commodities are finding the most attention at the moment, as they are in the headlines often. However, as stated above, the Russell rebalancing news is what I am more likely to focus on. If we can break resistance at $2.80, this should force shorts to start covering and we should see enough volume to take us much higher. Don’t be greedy in this market though and be sure to sell some shares in increments to lock in profits on any run-up.
Marathon Oil (MRO)
A/D Line: Strong uptrend which is only growing stronger
ADX: Signaled a buy last week and the PPS moved up nicely the entire time
CMF (21): Almost all positive over the past 3 months. .5 or higher is very bullish
MACD: Confirmed the ADX buy signal last week and the stock has been bullish since
OBV: Confirmed all PPS moves, normal
RSI: Neutral territory closer to overbought territory, a slight pullback would be healthy for the chart though
Support: (straight red line on chart) about $32.90
Analysis: The chart found enough volume to help it breakout from its recent trading range, with the support of the bullish indicators, which we pointed to the other week. Some consolidation would be healthy, for the chart, by resetting the RSI before it reaches overbought territory. This is not the say the RSI cannot continue to wiggle higher with the PPS, but we are likelier to encounter more resistance with a higher RSI. The key to consolidation is staying above recent support at $32.90. Anything below that could blur the bullish indicators in the chart and put the chart in a short-term sell. A few days of sideways action around $33.50 would be very bullish and create another support level for the bulls.
Altria (MO)
A/D Line: Positive with a slight uptrend, bullish but not strong right now
ADX: In a VERY strong bearish trend but showing signs of a potential reversal in the new future due to last weeks action. This indicator is still very bearish for now
CMF (21): Almost all positive over the past 3 months. .5 or higher is very bullish
MACD: Just signaled buy but has no confirmation in other indicators so this is considered a fake signal until the ADX can confirm it.
OBV: Confirmed all PPS moves, normal
RSI: Neutral territory closer to oversold territory
Support: 200-day MA
Analysis: Last week was very helpful in fixing this broken chart. However, the strong bearish ADX indicator is stating this action is very weak. The chart could be just bouncing off the 200-day MA with little upside movement until the trend in the ADX has enough time to reverse. The MACD signaled buy but without the ADX confirming it, it is likely to be a fake signal which will create a new wave of sellers when the action fades. Be wary you do not get caught in this action as it would only hurt the chart further to have a strong wave of sellers creating downside pressure. If the MACD buy signal does prove to be fake, but the PPS stays above the 200-day MA support level, look for another buy signal from the MACD which could finally be confirmed by the ADX. At that point in time, I’d look to start a position as we would have more reason to believe it should last with stronger support this time. If the 200-day MA support is broken, be careful. I’d stay patient for now and watch for a stronger setup in the chart.
Sirius XM (SIRI)
A/D Line: Uptrend resumed last week, bullish
ADX: Bearish trend but current path puts it on a reversal this week. Watch closely
CMF (21): Slightly positive but positive nonetheless
MACD: Signaled buy last week but without the ADX confirming it, the PPS has not gained much ground
OBV: Confirmed all PPS moves, normal
RSI: Neutral territory closer to oversold territory meaning we have a lot of room for an upside run
Support: 100-day MA
Resistance: 50-day MA
Resistance 2 (green line): $1.15
Analysis: The chart has created a very nice setup for this week. I will be looking to start a position again if the general market consensus doesn’t turn bearish and weaken these nice chart setups. With the bullish Russell news being anticipated, this should create enough volume to push us past short-term resistance levels. The only indicator really holding us back at the moment is the ADX. If the MACD can stay bullish long enough for the ADX to confirm a buy signal, we could see a nice breakout. The Russell news should help ensure this breakout has enough volume to support it. Unless the general market breaks down this week, this is one of my favorite stocks in the short-term, if not my favorite.
As always, do your own homework to see if you agree and join our live stock market chat-room, if you have questions. Request chart analysis here. See you in the morning. Good luck out there.
Mike
At the time of publication, Kudrna was Long JMBA but positions may change at any time.
