The market never makes entries easy. We finally hit the 61.8% retracement level on the SPDR S&P 500 ETF (SPY) weekly chart I've been discussing for the last few week. We could bounce as high as $191.75 from here without too much resistance. The current channel being formed is very wide, running from $187 to $197.50 with sub-channels outlined in there as well, but if you are looking for wide ranges to trade around, that is what I'm using until we see a closing break on a weekly basis.
I'm looking at two Dow names today in 3M Co. (MMM), an Action Alerts PLUS holding, and Intel (INTC). The technical picture for these two has been stronger than similar large-cap names, even in the wake of the recent selloff. 3M isn't quite as strong, but if we do hold this rally, there could be an upside buy trigger in place.
For 3M, resistance sits at $142 and then just below $146, which gives us two possible trades. A close over $142 could set us up for just a quick scalp attempt into the $145-$146 area. The only concern here is the 50-day simple moving average (SMA) at $144.50. The best trade here may be to wait for a close over $145 and look for a run back up to $153.
The moving average convergence divergence (MACD) indicator is looking at a bullish cross along with the force index and relative strength index (RSI). These appear to be coordinated bullish divergences. My preferred play on 3M would be selling a bullish put spread to buy a bullish call spread. I would likely be out-of-the-money on both, but certainly on the put spread.
Intel has a bit of a stronger setup. Over $30 and the stock looks like it could offer a pop towards $32. We don't have to contend with any SMAs here, while we are seeing a much stronger MACD. The same bullish crosses can be seen on the RSI and force index.
Once over $30, Intel will have everything technically working for it: price, volume, trend and momentum. I expect this one to actually draw in some momentum players possibly pushing us as high as $34. The stock eas recently around $28.50, so the risk doesn't appear to be great vs. the reward. Intel has a liquid options market, so by using in-the-money calls around the $28 or $28.50 level, one can simulate stock exposure while defining risk. Intel is one of my favorite large-cap names on a close over $30.