Good evening StockBandits!
Opening selling pressure took the market lower this morning to continue Monday’s pullback, but it proved to be a headfake. Once the first half hour was out of the way, stocks reversed higher to make up their morning deficits and turn green across the board. Although the NAZ, DJIA and RUT weren’t able to fully recover what was given back Monday, they got very close. Meanwhile, the S&P was able to eclipse that mark as it posted both intraday and closing recovery highs, finishing just shy of the 1230 zone it’s tested a few times. All told, it was a constructive session due to the fact that the market is attempting to consolidate over the past several days.
The dip-buyers are making their presence known, and despite becoming very overbought, the market has yet to collapse. Instead, it’s doing its best to base, which is something that’s been notably absent for the past couple of months with the market repeatedly shifting from one extreme to another with panic buying followed by rushes for the exits. Time will tell whether this time it will be different, but this is a step in the right direction for the bulls.
After the bell we saw earnings reports from big names like AAPL, INTC and YHOO. The after-hours mood has cooled off with futures trading lower, so the buyers may have some work cut out for themselves tomorrow morning if things don’t improve. Regardless, some more time spent in this area would be constructive and helpful for these bases to mature.
I remain in cash at this point on an overnight basis, but a bit more rest for this market could easily change that in the next couple of days. Today was an absolutely huge day for last night’s day trade candidates, so the intraday timeframes are still offering quite a bit. Hopefully you were able to capitalize on them as well. Nonetheless, I’d like to have capital at work on multiple timeframes once conditions warrant it. An exit from the range would qualify for that, but there’s still some work to be done before that happens. The charts of tons of individual charts have improved, leaving them with potential trend shifts should the next dip result in a higher low. And now with some consolidation, new patterns are building which may soon offer plays with some multi-day potential.
I’ll run through some notes on the indexes here and then share more thoughts on their charts below, along with the trades I’m eyeing for tomorrow’s session.
NAZ – Morning dip was bought and followed by a test of Friday’s high today at 2667. After testing the 2600 area over the past few days (since initially clearing it last Wed.), this index is holding up well and may soon be ready to attack the 2740 area where it broke down in August.
S&P 500 – Briefly cleared 1233 today but not on the close, leaving this index at the top end of its range. The past few days qualify as rest, but a bit more wouldn’t be bad. The buyers remain in charge in the short-term, and they deserve respect. A push higher could take this index to its next key level at 1260.
RUT – 718 is back in view after a quick Monday pullback and subsequent bounce today, and this index could push past that level with ease from here if the buyers stay motivated. Beyond that is 737, the recovery high.
DJIA – Flirting with 11650 area the past few days, and a push through there could deliver a test or break of the recovery high at 11716. Next stop past that could be June support around 11875.
Tonight I’m going with the written format as I know some of you enjoy being able to skim the setups. My notes and trade levels are provided on the charts below.
Please leave your comments and/or questions below if you have any, I always enjoy the interaction.
Swing Trading Candidates:
NONE TONIGHT
Day Trading Candidates:
These are the trades I’m eyeing for potential plays tomorrow. I will not be holding these overnight, and will wait for these levels to be crossed before entering trades. Please see the Day Trading Strategy for more details on how I manage these trades.
The Hit List will not be posted tonight as I am 100% cash overnight and there are no new swing trades for Tuesday. The Hit List typically contains stop and target levels for my swing trades.
