There's nothing better to ferret out the resolve for the bulls and frustrate the bears than a divergent gap down in the major indexes. The divergence was the fact that the QQQ and IWM gapped below their prior day low while the SPY and DIA did not. The result of such a condition is often that the bigger trend (the phase) wins. On Wednesday, that meant a choppy upward bias after a weak gap lower open.
Sure there were good reasons to gap lower, ADP Payroll numbers were disappointing, Spain's markets were sinking, and the U-turn pattern from Tuesday needed one last push lower. But the Dow and SPY refused to breakdown, and Opening Range reversal patterns gave us a clear indication that it the gap had flushed the bearish sentiment for the day.
The bigger picture, however, is that the market is waiting for Friday's employment numbers. Three of the last four day's have been more consolidation than trend and even the trend day (Tuesday) reversed. So I expect more of the same for Thursday - the 5 day range will likely define Thursday's price boundaries.
All four market watch have their own version of the same pattern that has been building for the last 5 days - a new bullish phase breaking out over a prior swing high and consolidating in a new range.
Longs:
I have a big list of long candidates today because the last 5 days has been building the breakout, then consolidate pattern mentioned above. Today could very easily be a holding pattern for tomorrow's jobs report, but many of the patterns are very capable of moving on their own. Plus there is the possibility that the market will move before the report.
In generally my preference for breakouts would be those that have spent several days under the FTP which include:
AAPL
LMT
LNKD
EQIX
MAKO
or those that would be breaking a daily inflection point that includes multiple days. These include (all have positive pivots and closed above them):
AAP
CRM
OC
TIBX
ESRX
BBBY
FFIV
CREE
BRCM
Since I expect a good chance of a range bound day, I'll look for reversals as well. The stocks that have positive pivots from the list above are good candidates plus stocks that have been strong but may not offer the multi-day inflection point that the list above does. These include:
CP
UNP
JWN
MJN
CF - has earnings after the close
UA
Finally...
AAPL has a bullish slingshot pattern so I'll look at it as a potential long if over the pivot, but also a potential short below the FTP.
Shorts:
All of the shorts have negative pivots and most have rallied for several days prior to yesterday. So breakdowns or reversals are going to be a consideration.
APA
GS
UHS
BG
WLL
SWN
MPC
GDI - Prefer a reversal, must be below PDH,64.33
I'm also watching BIDU which is very compressed and under the 200 DMA.
