Good evening StockBandits!
Stocks made a quick retreat on Thursday and Friday ahead of the long weekend, reversing lower after clearing the mid-August high on Monday. The rally which started 2 weeks ago covered considerable ground, and on Wednesday night last week here I noted that there was a hint of fatigue setting in. That came to be the case as stocks turned quickly lower to give back roughly half the prior move.
In recent weeks, we’ve seen the major averages carve out both a higher low and a higher high, offering the bulls something to hang their hats on for the first time since early-July. However, the bears are viewing this as a low-level digestion phase after the late-July to early-August selloff, and as I noted on the blog Friday, both sides have valid points.
The main objective we must continue to focus on here is that nothing is out of the question. We might have seen the worst of it, or the correction might have only begun. Either way, our job as traders is the same: find quality risk/reward trades and avoid all else.
The difficulty right now is simply that this market refuses to sit still for more than a day or two right now. That’s preventing the charts of individual stocks from being able to construct meaningful bases, so the charts remain very sloppy and about the only trades available right now tend to be descending or ascending trend line breaks.
Such is the case during a volatile phase of the market, and at some point that will change. For the time being, it’s imperative to take trades with a short-term timeframe (due to the frequent reversals we’re seeing and the overnight gaps), while patiently waiting for more swing candidates to emerge. Forcing trades in a sloppy environment can prove costly in terms of both capital & clarity, so be willing to protect both when you’re not seeing what you like in the charts.
I’ll cover my game plan for Tuesday 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!
Video Stocks Discussed: JVA, DLTR, PANL, KGC, CTSH
Swing Trading Candidates:
NONE TONIGHT – 100% cash.
[table “116” not found /]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.
Jeff: Great video series (#4 especially good); very helpful.
Mike Morrison
Hey Mike!
Thanks and I’m glad you’re enjoying them…more to come. Hope your Labor Day was relaxing and you’re ready to get after it this week. Have a great Tuesday!