Good evening StockBandits!
While the world celebrated the rescue of trapped miners in Chile, the market celebrated the hope of further intervention from the Fed via QE2. It seems the minutes from the most recent meeting, which were released yesterday afternoon, were digested overnight and the buyers found more reasons to put cash to work in hopes of a continued positive response from the market.
The indexes have now reached key levels from the spring, as the NAZ cleared 2450 intraday today and the S&P crossed 1180. We did see both of those levels given back by the close, which shows a little respect to them, but today’s move was more of a statement than anything. The relative ease with which these levels have been reached suggests that we may go on to exceed the April highs before a well-deserved, healthy, and needed correction sets in. After all, what’s better than a breakout to pull in the final holdouts on this rally, before some real profit-taking arrives?
And speaking of selling the news, I’ve wondered today if the market simply rallies up until the point at which QE2 is finally introduced by the Fed – and then reverses. We’ve seen plenty of expectation rallies like that (ie: Saddam statue in 2003), so it’s not too far-fetched for that kind of scenario to play out again. Nonetheless, it isn’t our job to predict what or how things will play out, but rather to define how we’ll navigate the moves – whatever they may be.
At this point, the trend is still up. And while we’ve now hit the aforementioned resistance levels, we still have no technical proof that the rally has ended. New highs are being made almost daily. That certainly makes for a frothy environment – and a difficult one for initiating new buys for anything but the shortest of timeframes – but that’s what we’re looking at right now.
The bottom line is that I’m looking to favor the long side via shortened holding times, but I’m in no hurry to try to call a peak and short this market. Once some cracks in the armor begin to emerge, we’ll see them and have opportunities to participate. Until then, the walk of the tightrope continues despite the distance between current levels and August support.
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, ALGN, MTL, BYI, MCP, MTB
Swing Trading Candidates:
NONE TONIGHT
Bullish Watch:
BORN, IVN, IMAX, CSIQ, ALGN, JBL, PPO, MTL, BYI, FORM, OAS, LAMR, TWI
Bearish Watch:
FFIV, VMW, RAX, RHT, MCP, BBT, MTB
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.
