Good Morning, Traders. Slight show of strength on a wild Wednesday, which included the release of the minutes of the May 10 FOMC meeting. Apparently the Fed doesn't really know what it wants to do going forward and said so in their usually ambiguous terms, which either leaves the door open for more tightening or not. Typical, we would expect nothing more. The markets responded with a knee jerk selling reaction upon the news at 2 p.m. ET and then recovered a bit into the close, causing the Dow to gain 74, the S&P 10, and the Nasdaq 14. Although those figures may seem impressive on the outside, keep in mind that this action was all happening inside the range of Tuesday. All of it, to be exact. About 97% of Wednesday's action occurred inside the confines of Tuesday's bearish trade. An "inside day" as it is known in technical analysis parlance often indicates a mere pause before a continuation of trend. For now, no change to the technical outlook. The S&P daily as shown below continues to vascillate near the 200ma daily (blue) and does not seem to be making any headway in terms of a meaningful bounce as of yet. Near-term bias remains sideways to down for all markets.

Focus List



PMTR - Pemstar, Inc.
Industry - Electronics
Side - Long
Trigger - 3.05
Stop - 2.60 or low of weekly breakout candle
Target - 4.00
Timeframe - multiweek

Notes

• Showing good relative strength as broad market stays weak.
• Cheap stocks can often act independently of broad market.
• Not totally thin, but does not trade heavy volume. Use caution and limit orders.

PSYS - Psychiatric Solutions, Inc.
Industry - Health
Side - Short
Trigger - 29.19
Stop - 30.05
Target - 27.50
Timeframe - 2 days to one week

Notes

• Relatively short-term play off of reversal pattern.
• Two consecutive topping tails (inverted hammers) at 200ma (blue) resistance indicate supply in this area.
• Target listed is to retest swing lows from last week, however, can be played for quicker, shorter move.

Peter Reznicek is the Chief Equity Strategist and a principal of the Prana Fund, a domestic hedge fund, and ShadowTrader, a subsidiary of thinkorswim which provides coaching and education to its clients on both intraday and swing trading of equities. For a free trial to the full version of The Big Picture or to learn about ShadowTrader's other services, visit shadowtrader.net or send an email to preznicek@shadowtrader.net.