Markets are higher today, and this week’s action has been extremely choppy and trendless. Seemingly every day a new headline, stance, or opinion comes out, and the market moves off of that information. However, neither bulls nor bears have yet to establish control of the market in the near term. Markets are being led higher today by small caps, as the Russell 2000 is higher by about 0.9%. All other major indexes are higher, up by between 0.4% and 0.8%. Bonds are slightly weaker on the day, lower by about 0.3%, while gold and silver a trading back and forth near breakeven.
CHART OF THE DAY
Cirrus Logic (CRUS) – The integrated circuit company has been weak this year, but there are signs that the stock is forming a nice bottom. Since June, CRUS has made a series of higher lows and highs, and the equity is currently setting up in a nice triangle pattern, indicating that there could be more upside in the near future. CRUS recently retook its 200-day moving average, which capped rallies going back to late 2012. This trendline could now act as support. Additionally, CRUS is very highly-shorted, as 18% of its outstanding float resides with the bears. This creates the potential for future short-covering rallies.
I like a long entry here with a stop on a close below 23. I would initially target a move to 25, with 30 as a stretch target.
WHAT I’M EXPECTING
I would consider the current volatile environment to persist next week, as there is a good chance we’ll get some sort of news regarding the debt ceiling to surface this weekend. Additionally, the September Fed minutes will be released next Wednesday, so any surprises on that front could also spark a big move in stocks.