Good evening StockBandits!
Friday’s weak finish suggested the buyers had become exhausted, and why wouldn’t they be after such a quick ramp off Tuesday’s lows? However, they returned today to produce a huge opening gap to the upside which was followed by additional strength. The rally pushed into mid-morning before a few hours of choppy digestion arrived. We then saw a minor dip lower before another ramp to new highs into the closing bell.
Today’s gains were quite impressive on their own, let alone after the run-up we saw last week. Needless to say, this isn’t a sustainable pace of upside, but at the same time trying to fade this move could prove immediately painful should it happen to continue. Aggressive shorts who timed entries late last week have clearly been caught off guard once again, and they’re scrambling alongside underinvested bulls to make buys in case this rally continues.
Chasing moves is never easy, and particularly right now that’s the case. We’ve seen the indexes do anything but rest for the past couple of months, forcing us to either stay sidelined on an overnight basis or to get out in front of exhaustion-types of moves in hopes of yet another reversal. That’s a dangerous game for limited gains, but apparently few can handle laying low with cash on hand. I’ve received a few emails of late from traders who just couldn’t resist the action, and as a result have done serious damage to their accounts (despite repeated warnings here).
The bottom line is that there are no rules for what the market can do. It can scream higher or lower in a straight line if it wants, or it can sit idle indefinitely and make no progress whatsoever. We’re seeing illogical moves take place one right after another, and it may not be done yet. That’s why it’s so important right now to keep an open mind about what may come next. We literally could see this strength built upon with some lasting upside, or we could see a move back down to new lows, or anything in between. Stated otherwise, be careful with your convictions here, because they just might warrant some adjustments before all is said and done.
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: DG, ATHN, GS, OPEN, NFLX
Swing Trading Candidates:
NONE TONIGHT – 100% cash.
[table “142” 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.
