Don’t Ignore This Pivotal Price Action!

We’re experiencing some choppy action this week as stocks hit the brakes Thursday.

Let’s take a closer look at the S&P 500…

The broad market barometer is looking subdued following last week’s breakout. On Wednesday, I reviewed last week’s key rally above 3,100 — and how the S&P confirmed the breakout with a strong showing to kick off the trading week.

Just look at the beautiful wedge pattern, complete with the 3,100 break to kick off July trading:

S&P chart

Next stop: 3,250 (yellow line)

As I said earlier this week: Do not ignore this pivotal price action! Now we just need to see some follow-through to regain some momentum and move toward our short-term 3,250 target.

Just because the market’s churning sideways right now does not mean there aren’t any bullish momentum plays out there…

Just look at the Nasdaq Composite. While the averages stumbled Thursday morning, the Nasdaq was able to quickly claw back into positive territory by early afternoon. Many folks continue to worry about elevated tech valuations. But remember — it’s all relative. Stocks can become even more overvalued and markets can always go higher than you think.

Right now, it’s a matter of money flow. Dollars are continuing to gravitate toward the technical stocks. Investors know they are pricey, so we could see some opportunity come into play when it comes to some non-technology stocks that are lagging behind the market’s momentum leaders.

While the Nasdaq continues to search out new all-time highs, the S&P and Dow remain red on the year. I think these indexes will snap back into place as you see some value come into play this summer.

Keep it In the Money,

Alan Knuckman

Alan Knuckman
Editor, In-The-Money

Chart of the Day: Walmart’s picture-perfect bounce

Greg GuenthnerSometimes a little positive news is all a stock needs to ignite the perfect technical rally…

Walmart Inc. (NYSE:WMT) is a great example. The stock was slowly fading from its April highs into the summer, finally finding support at its 200-day moving average — a pivotal price point for this stock going back to pre-covid times earlier this year.

But earlier this week, a news story broke detailing Walmart’s plans to implement a service to compete with Amazon Prime. The stock skyrocketed on the news, sending shares higher by more than 7% on the day…

wmt chart

The positive news helped ignite a new momentum move in this sluggish stock right at a make-or-break moment, setting up shares for an extended rally to new highs. A measured move to $140 or higher wouldn’t surprise me at all…

Trading Tip of the Day

The best way to book consistent gains in the market is to keep it simple. That’s how I approach the search for all my longer-term trades.

The very first thing you want in a long-term trade is performance. We want to capture the meat of a big move higher. That means we want stability and a solid uptrend.

Let’s say you’ve read about a stock on a financial news site and you’re bullish on its prospects. Take 30 seconds and pull up a simple long-term chart going back at least two years. If the stock is moving “bottom left to top right,” you’re on the right track. No fancy technical analysis required.

Once you’ve found a play you like that’s locked in a strong uptrend, you’re ready to put it on watch. Step two in our trading process is learning when to pull the trigger. After all, buying is the most important part of this whole process.

Don’t blindly throw money at a play just because it’s trending higher. Instead, you should wait for the for a bounce near a key support level (along a trendline or moving average) before pulling the trigger.

— Greg Guenthner

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Alan Knuckman

Alan hails from the home of options trading in Chicago, where he began working as a clerk on the floor of the Chicago Board of Trade (CBOT). Beginning with his days on the floor, Alan’s worked with all aspects of the options markets for the past 25+ years.

Transitioning from a clerk to a floor...

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