Fed-Day Buying Spree. Now What?

Technical Edge — 

• NYSE Breadth: 85% Upside Volume (!)

• NASDAQ Breadth: 81% Upside Volume (!)

• VIX: ~$23

Game Plan: S&P 500, SPY

Readers: I’m terribly sorry for today’s short piece. I feel awful right now physically, but I did take a look at the S&P. 

S&P 500 — ES 

I would love to see the ES stay above last week’s high of 4016.25. However, if it can just stay above 4000, that’s constructive for the bulls. 

On the upside, yesterday’s 4042.75 high is a level to watch. A move above it this week could put ~4100 in play. 

S&P 500 — SPY 

We got our gap-fill on the SPY, but the close leaves some questions as to “where to from here?”

Above Wednesday’s high could put $407 in play. On the downside, I’d like to see $397.50 to $398.50 hold as support. That’s the 50% to 61.8% retrace of yesterday’s range. Bulls don’t want to give up too much of yesterday’s gains. 

Go-To Watchlist — Individual Stocks

*Feel free to build your own trades off these relative strength leaders*

• Numbered are the ones I’m watching most closely. 

• Bold are the trades with recent updates. 

• Italics show means the trade is closed.

Trade Sheets: Down to 1 individual holdings against a profitable stop-loss.

1. MCK — We have hit two trim zones so far on MCK. Feel free to cash the last ⅓ of the position as you see fit. $335 to $340 is a potential upside target (and has since been hit). 

   1. Moving stop-loss up to $315 and given the consolidation, I am thinking of holding my last ⅓ for a push to $348 to $350. 

2. PEP —  I want to trim a little at $173 to $173.50, just to put some money in my pocket. From there, I’m really looking for $176 to $177. On the downside, I’m using $168 as my initial stop-loss. 

3. COST — I ended up taking a ½ size position at the gap-fill ($513.25). I am going to use a stop-loss of $505. I may consider making it a full-sized position if we go daily-up over $519.68. 

   1. I did add a little at $519, but then once we hit the $525 to $526 upside target, I trimmed a bunch and ultimately moved back down to a ½ position. Stop-losses to B/E at this point. Will probably trim move near $530. 

Relative strength leaders (List is cleaned up and shorter!) → 

• O

• CNC

• HRB

• CHNG

• COST 

• PEP — 2x daily up now sitting at $172

• BA — beauty 

• ABBV

• UNH

• XLE

• VRTX — really nice action lately.

• MCK — trying to break out. 

Economic Calendar

Disclaimer: Charts and analysis are for discussion and education purposes only. I am not a financial advisor, do not give financial advice and am not recommending the buying or selling of any security.

Remember: Not all setups will trigger. Not all setups will be profitable. Not all setups should be taken. These are simply the setups that I have put together for years on my own and what I watch as part of my own “game plan” coming into each day. Good luck!