Good evening StockBandits!
Stocks gapped higher this morning to reach new multi-week highs and continue the lift of late. The senior indexes led the way with the DJIA and S&P 500 each reaching new recovery highs, while the NAZ and RUT edged closer to their October resistance zones.
Today’s gap wasn’t necessarily an exhaustion gap (although that remains to be seen), but the market did show some signs of fatigue with some intraday selling from open to close. Given that we’ve seen the market tack on roughly 7% since the close from Dec. 19th, a rest at this point would certainly be a healthy development.
What’s perhaps most interesting about today’s price action was where the S&P 500 found resistance. I’ve been beating the drum about 1294 for quite a while now, and today we saw that level get tested and held as resistance. A brief push through that zone ultimately resulted in a quick retreat back beneath it, and the S&P finished below it as well. It’s a major level and a logical spot to put in some rest, so it could be we see a pause in the short term after failing to eclipse that critical level from last year.
The market is so far up on the year, but the majority of those gains have come by way of these two Tuesday gaps. For example, SPY has gained $3.63 since its close of 2011, but buying the open and selling the close each day this year would have resulted in only a gain of $0.53. That’s not to say there hasn’t been opportunity, because there has been in individual names, but it does highlight the lack of intraday follow through for these first 6 sessions of the year. That places a premium on stock selection, as it’s been tougher to participate in the overall strength based purely on sympathy given that lack of follow through from open to close.
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!
Video Stocks Discussed: ACI, MBI, SODA, RCL, MCP, WLT
Swing Trading Candidates:
NONE TONIGHT
[table “199” 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.
