Today we feature two longs and two shorts to watch in this turbulent market.
On the long side, Mercury Systems, Inc. (MRCY) is one of our Top 25 stocks, and you can see why. It has a beautiful, 2 1/2-year rising channel. More importantly, the key to this stock is that the 2011 high was taken out. The all-time high goes all the way back eleven years. It says 32 is the next target.
Today's upmove in the ProShares Ultra VIX Short-Term Futures (UVXY) inflicted some damage to the dominant downtrend. Let's notice that the price structure climbed above its nearest-term resistance line at 15.10 and followed through to close near its high of the day.
That said, the first real litmus test for this powerful upmove off of the 9.40 all-time low is at the prior rally high print of 16.00.
Futures are trading modestly higher this morning, which bodes well for the red count on our S&P 500 chart as wave (v) of v in progress off Friday's low.
As long as price is above that low, there is a very reasonable setup to take us higher near-term, with 2118 - 2151 SPX as the potential target region above before red wave v completes.
Here are four momentum stocks to watch in technology, energy, pharma and biotech.
Universal Display Corp. (OLED), in an up-channel off its February low, recently traversed from the top of the channel to the bottom. But the lower trendline held, as the stock popped the last two sessions, closing Monday at 61.29, up 4.88, or 8.6%.
All of the action in the Emini S&P 500 (ES) since the end of April has carved out a 30-35 point range that has traversed the range 6 times in a 12-session period (see red-shaded area), the recent of which occurred Monday.
Another blown opportunity for the bears this morning. After closing the S&P 500 at 2046, or a point below the 50 day exponential moving average, the bears had the bulls where they wanted them.
A gap down this morning would have the index trading further below those key 50's and testing the 200 DMA at 2023. The futures started down nicely last night but the usual save as the evening went on.
With the dollar continuing its rally this past week, it will not have to make a decision as to the nature of the rally. As you can see, the DXY is now approaching the 1.618 extension off the lows, which is ordinarily the target for a wave iii.
The question will then become if the market can pullback and hold the 1.00 extension at 94.20, and then head up to the 95.
The Emini S&P 500 (ES) is under pressure this morning, perhaps in reaction to the surprise rate cut by the Australian Central Bank.