Good evening StockBandits!
With the previous week producing a dramatic turn lower from the recent highs, the market had an opportunity last week to put together a bounce attempt. But it didn’t. The buyers were nowhere in sight. And rather than rebounding, stocks instead slid further, undercutting key short-term support levels in the process. That constitutes follow through on the downside, which is something we’ve not seen in quite some time.
To see a change of character take place in this market comes as no surprise, given the fact that it trended higher for some 10 months. What is surprising is the way in which this turn has unfolded, with the bulls not even putting up a fight. Usually, the longer the trend, the more common it is to see a battle take place before a meaningful turn can occur.
My personal expectation for anything more than a modest pullback after such a lengthy uptrend would have been a failed bounce or two after some initial selling pressure. However, that never happened in this case, and it’s essentially been a down elevator with only a brief pause early this past week. The distribution that’s taking place is noteworthy, and it suggests this market might have a hard time building on the uptrend for at least a little while.
Whether that marks the top of the rally is not yet known, but one thing is for sure – the depth of this selloff certainly has opened the door for a lower high to get painted once the next bounce does play out. For now, the sellers are dominating as the bulls raise cash, and despite the need for a market bounce, we must respect the short-term trend until signs emerge that it has exhausted itself. It’s too early to get long, as the downdraft is still in motion, and yet initiating new short sales after a move of this magnitude entails much higher risk for any timeframe shorter than a few hours. The bounce might be playable for quick flips, but the best bet for initiating new shorts is to wait for a bounce and then hit the stocks which have struggled to participate.
Needless to say, it should be yet another interesting week ahead of us!
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!
–
Video Stocks Discussed: PVX, AVB, PCP, COH, CYH, NYX
Swing Trading Candidates:
NONE TONIGHT
Bullish Watch:
PVX, GCI, DPZ, MAPP, TRGL
Bearish Watch:
CRM, DSW, GFA, NTES, JLL, AVB, YGE, CSIQ, TSL, SLG, CYH, STP, PCP, COH, PWRD, GES, NYX
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.
