Good evening StockBandits!
A mixed and indecisive morning saw the NAZ struggling to overcome AAPL weakness, while the other indexes were able to go green for a while. As the afternoon arrived, apparently sensing a lack of strength, traders raised cash once again to produce some late weakness, taking the market out near its lows of the day.
While the day-to-day action of the past few sessions may nauseate some, the fact of the matter is that this market has simply been marking time. That’s an excellent way to digest the recent run, as it allows the market to work off the overbought conditions which had developed with double-digit percentage moves over just the course of a few days. Since then, we’ve simply churned, and that’s allowing stocks to actually base for the first time since July.
On the way up from the lows, the pedal was kept to the metal by short-covering and underinvested bulls, and that may keep a bid beneath this market. Shorts who still want or need to cover are likely to do so if lower levels are seen, creating some natural buying on weakness. By the same token, bulls hoping for an end-of-the-year run will be eager to allocate capital on weakness, so there are some favorable circumstances for a higher low to be established once this dip runs its course.
The wild card is the news flow, as not only are we getting into the thick of earnings season for the next few weeks, but the market remains very fixated on European debt news and rumors alike. That’s likely to keep things headline-sensitive for at least a little while longer, so we’ll have to stay on our toes and manage risk accordingly.
From a technical standpoint, quite a few potential flags and pennants are under construction, and another day or two of resting or light selling could leave us with a ton of setups along those lines. I’ll continue to work the charts while keeping an open mind for what may happen next. After all, there’s no guarantee we’re about to exit this range, even if it appears to be a distinct possibility.
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: JEC, ADSK, INTU, DE, DLTR, TZOO, RIMM
Swing Trading Candidates:
NONE TONIGHT – 100% cash.
[table “149” 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.
