It was certainly an ugly day on Wall Street on Thursday. The McClellan Oscillator is down another 79 points, minus 310, which is extremely oversold. In fact, it’s the second most oversold reading since last November, and the third most oversold reading in the last year and a half.
We’re at a point where, if it gets any lower Friday morning, it could be a buying point for a snapback. I’m pretty sure we should see it happen somewhere between Friday and Monday. Friday is Option’s Expiration Day, and it may still be an ugly day, but in the next 24 – 48 hours of trading, we’re going to start to see the market do some kind of snapback. It wouldn’t hurt to get some good news out of Europe for a change.
For now, however, we’re going to take a look at some of the longs, and many of those are ultra-shorts, but, of course, we’re buying the ultra-shorts long.
The Direxion Daily Large Cap Bear 3X Shares (BGZ) broke out in April after the big falling wedge, backed and filled, retested, ran up to the declining topsline, and popped out about a week ago. It pulled back and held for a couple days, and then rocketed. Just in the last five sessions, it’s gone from 21 1/2 all the way up to 24.77. Most importantly is that it broke through two layers of resistance. The next target is up near 26, and the secondary target is at 28 3/4.
The Direxion Daily Financial Bear 3X Shares (FAZ) was also in a big declining channel. It ran up to the 50-day moving average and the gap at price resistance, pulled back and retested, and also failed at 50, and then pulled all the way back and tested the triple bottom around 20.00. That was successful, and since then, it moved up to nearly 28. In the last two days, it’s gone from 24 to 27.74, up 1.61, or 6%, on 26 million shares.
One of the important things to remember is when there’s a down-move like this, and the declining moving average continues to drop, and suddenly they change, flatten out, and turn around and cross over, it’s extremely bullish. One of the reasons this stock had this move up is because of the moving average crossover. That goes for most of the ultra-shorts on today’s Charts for the Day.
Stocks on the Short Side…
Chipotle Mexican Grill, Inc. (CMG) dropped 10.03 to 394.50, or 2 1/2%, on Thursday. This is the worst close we’ve seen on this stock since back in March. With the falling channel that it’s in, and the market the way it is, if it gets a further downside move, it may get down into the 382-3 range short-term.
Life Time Fitness Inc. (LTM) was put out on the short side, it spiked down 1.23 to 42.69, or 2.8%, and now the target on this one is down around 40, and you may want to take this 7 points short.
Other stocks in our Charts for the Day are the Direxion Daily Emrg Mkts Bear 3X Shares (EDZ), VelocityShares Daily 2x VIX ST ETN (TVIX), ProShares Ultra VIX Short-Term Futures ETF (UVXY), Citi Trends (CTRN), FriendFinder Networks Inc. (FFN), Kongzhong Corp. (KONG), the Direxion Daily Small Cap Bear 3X Shares (TZA), Gardner Denver Inc. (GDI), A. Schulman, Inc. (SHLM), American Public Education, Inc. (APEI), Stocks on the short side include Constellation Brands Inc. (STZ), Joy Global, Inc. (JOY).