Good evening StockBandits!
Overnight weakness paved the way for a downside gap this morning, from which stocks never did recover. Indecision was the initial response to it, but more waves of selling hit the tape into the early afternoon. From there, the market staged a modest comeback by challenging the morning highs, but when the strength failed to persist through those levels, another harsh decline set in, bringing red right up to the closing bell. The indexes finished right at their lows for the session with losses of more than 3% across the board. Needless to say, it was a painful day for the bulls.
What’s so interesting here is that although the market is getting very short-term oversold and in need of a bounce, it could still continue lower with all the persistent weakness that’s present. The buyers seem to have no interest in stocks yet, and the bears have a growing confidence. A shift of the tide could quickly bring the bulls out to defend the May lows, and the bears could move to cover shorts, so it’s important at this juncture to stay on guard for anything. There’s grounds for caution here on both sides of the tape.
Heading into options-expiration Friday, my game plan is pretty clear. There are a few potential shorts which I’m considering for day trades if they trigger, but otherwise I’ll be looking to see if a market rebound kicks in. If it does, I’ll be focused on ETF’s, as pretty much all individual stocks have been badly damaged over the past few days. Anytime the indexes tumble more than 8% in 6 days, that’s usually going to be the case.
For those who aren’t day traders, this is a great market to remain in cash until things settle down. Hopefully if you haven’t been short with me in recent weeks, you’ve been sitting in cash for the month of May and you’ve avoided the pain which so many are feeling in this correction. It won’t last forever, but at the moment, there are no technical reasons to conclude it’s done.
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: CSTR, UHS, GMCR, MON, PNRA, SPY, DIA
Swing Trading Candidates:
NONE TONIGHT
Bullish Watch:
CSTR, UHS
Bearish Watch:
RDN, GMCR, CF, MON, MCO, BIIB, PNRA, WLP
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.
