Good evening StockBandits!
A weak start this morning sparked some additional selling pressure, but it lasted less than 30 minutes. By 10am ET, the market had established the low for the day and reversed higher, never to look back. By the end of the session, the indexes had closed at new recovery highs, although the net gains weren’t very spectacular.
We’re in a mode right now where the market continues to edge higher, and that’s keeping things pretty tricky. Rather than pull back with any lasting profit-taking, it’s just holding steady and adding incremental gains on a regular basis. That’s creating a bit of a short-term rising channel, which of course follows the sharp ascent from September. Stated otherwise, the uptrend is still intact but the pace has certainly slowed.
That alone isn’t cause for concern, as it simply prevents many stocks from being able to build new bases. The cleanest bases I’m finding at this point are largely breakout candidates, which haven’t performed very well for swing trades recently. The way I’m combating that is to take the trades anyway, but simply with a shortened timeframe (day trading). In time we’ll see more setups come around, but at the moment the best thing to do is exercise some patience while waiting for more quality setups to arrive.
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: IVN, IMAX, ALGN, ZION
Swing Trading Candidates:
NONE TONIGHT
Bullish Watch:
DV, IVN, IMAX, TRW, ALGN, JBL, MCP, ROVI, LUK, DRIV, CHKP, SCCO, BPO, WIT, IDCC, REG, AMP, RIG, JCP, THQI, ZION
Bearish Watch:
EDU, VMC, LLL
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.
My eyeballs, imagine that for the $COMPX and $SPX as we are in this slower up channel it looks like the average daily range is greater than when we were in the stronger uptrend. But it might be my imagination. If this were true (increased daily range) and if we were moving more horizontal, some would say that it suggests distribution. So, perhaps that is happening here too. Noting that the RUT-X does not show this. I also comment that for the last couple of weeks I have faded the opening move of SPY, IWM and QQQQ several times successfully by waiting for the initial move to bottom or top at/near a pivot level. While I don’t have much experience with these types of fade moves, they seem to work better (for me) when we have large daily ranges bounded by pivots (R1, R2, S1, S2). Other eyeballs and comments would be appreciated.
Hey Jon!
Caught the late show for Wall Street 2…not a bad movie, although the soundtrack was solely Talking Heads (with no Burning Down the House). So, I’d have changed that but otherwise liked it. Lightspeed was the trading platform on every PC in the movie, I wonder what they had to pay for that.
Anyway, interesting observation here Jon with the avg daily range expansion in the NAZ and S&P. I’d agree that there’s some distribution taking place into recent strength given the reduced pace of the advance, but we are still moving higher. As long as that’s the case, my stance is to favor the long side while keeping one eye on the door at all times in case the music stops.
Go get ’em Wednesday!