Good evening StockBandits!
This morning we saw yet another sizeable gap, this time to the upside, as stocks jumped higher right out of the gate and never looked back. The lows of the session were set at the open, and after some initial consolidation the buyers continued to put cash to work. That gives the indexes some breathing room above short-term support levels, while opening the door to an upside resolution to this indecision phase known as a trading range.
It’s extremely difficult to capture a move like we saw today, as so much of the advance came via the gap. Toss into the mix the fact that we saw a weak finish last night just above key short-term support, and it would have been downright risky or even foolish to load the boat on the long side in anticipation of a giant spike higher. So, when others wonder if you had a huge day today based upon the market rally alone, be patient and don’t conclude that there was a ton to do. On days like this, the buy-and-hold crowd are the ones who are thrilled with it, and you and I as traders tend to find more opportunities when these big gaps aren’t present. Stated otherwise, it was a good day but better days will undoubtedly follow.
The temptation many traders face after a day like this is to get overly aggressive tomorrow in hopes of making up for perceived lost opportunity. Don’t make that mistake tomorrow. My plan is to focus on stocks which participated some today, but which still have room to play catch-up tomorrow as money flows into them to produce secondary moves. There will be opportunity there, even if the indexes happen to put in some well-deserved rest.
It will be those catch-up stocks that I’ll be focused on tomorrow, and I’ll outline them in tonight’s video momentarily. Put the momentum names on your watch list, but don’t chase extended stocks tomorrow and remember they’ll likely need to rest and base before they’re really worth trading again.
**As a reminder, my wife & I are expecting a baby in the next 3 1/2 weeks and our first arrived 4 weeks early. So, I may drop off the radar suddenly whenever this baby decides to arrive. If I do, fear not – I will resurface with an update shortly after!
I’ll cover my game plan for tomorrow in the video, and as always, feel free to share your own thoughts, trade ideas, and questions down below in the comments section.
Here is tonight’s video:
The Bandit Broadcast Video – Click to Watch!
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Video Stocks Discussed: DRIV, KMX, RVBD, TSL, NG
Swing Trading Candidates:
NG has spent the past few weeks basing in a narrowing consolidation after a big run from late-October into early-November. This has created a large bull pennant pattern, and now the stock is challenging the upper trend line to suggest a breakout may be near. I’m watching for a push through $14.85 to trigger a buy and signal that another leg higher is starting. As with all swing trades, my stop and target levels are on the Hit List here inside the Hideout.
Bullish Watch:
DRIV, NTGR, KMX, CODE, BEXP, CTXS, F, GGAL, TGA, JAZZ, SM, DAR, NG, WLT, RIG, RVBD, PUDA, BEN, MSCC, ATML
Bearish Watch:
MOS, TSL, JKS, ESI, NHP
The Hit List is a separate post which contains discussion on open positions and swing trade stops and targets, so be sure to check it for further details on swing trades.
