Good evening StockBandits!
Last week, we saw the NAZ and S&P 500 each testing short-term support on Wednesday, and despite brief penetrations of those levels, the market was able to rally back enough to end the day still in the trading ranges which began one month ago. However, Thursday’s arrival brought with it swift and decisive downside price action, easily undercutting those support levels on expanding volume. The DJIA also broke its 10-month uptrend line, slicing through it without hesitation after several recent tests. And finally, rather than producing even a modest relief bounce on Friday, the selloff continued, matching Thursday’s losses as traders fled from stocks ahead of the weekend.
Some feel that the bank reform proposals put forth by Obama on Thursday set this all in motion when financial stocks took such a big hit, while others have sensed it was inevitable that a correction would at some point kick in after such a tremendous market run for the better part of a year. Regardless of the cause, it does appear the market is undergoing a change of character here, based not only on the steep declines, but also the lack of effort on the part of dip buyers. That has been the crowd which has prevented selloffs from lasting or being severe, but they were nowhere to be found for the past couple of sessions. If they’re losing their resolve, then we can expect some different price action going forward.
One thing is for certain, which is that many individual charts now look very different than they did just a few days ago. Most are shattered, in fact. While that might mean limited setups for a few days, eventually it’s going to mean a whole different batch of names to focus on. We’re either going to need to see some consolidation set in, a relief bounce which struggles to hold, or a combination of the two, but pretty soon there should be many more setups even if it’s slim pickin’s tonight.
Volatility has spiked, which is a good thing, and the market now remembers that it’s able to move in both directions, which should keep things quite interesting in the days and weeks to come.
Please leave your comments and/or questions below if you have any, I always enjoy the interaction.
Here is tonight’s video:
The Bandit Broadcast Video – Click to Watch!
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Video Stocks Discussed: SSO, CHKP, MTL, FAS, QLD, DDM
Swing Trading Candidates:
NONE TONIGHT
Bullish Watch:
DPZ, CFN, MAPP
Bearish Watch:
JLL, MGA, NFLX, XCO, AMZN, EDU, CP, LIFE
The Hit List will be coming out soon with discussion on open positions and swing trade stops and targets, so be sure to watch for it.
