Good evening StockBandits!
Last week the major averages were able to push slightly higher on a net basis, although the day-t0-day action certainly lacked excitement. This keeps the existing uptrends intact, but there’s no disputing that the pace of this advance has slowed considerably in recent weeks. That slower pace has meant more concentrated momentum in select names, but for the overall market it has also brought some basing action and rest – two things which were severely lacking in the early stages of this rally.
The question on the minds of traders right now is whether a pullback will happen sooner or later. With the spring highs not far above, traditional wisdom would suggest we could see some profit-taking before an attempt at new highs is made. However, this market has been anything but traditional in the way it has moved this year. That said, we could see new highs get established first, with profit-taking coming afterward. That kind of move would likely suck in the remaining holdouts of this rally, providing the technical proof that this strength is for real – only to turn lower. The market is known to cause widespread frustration, so that’s one scenario to consider in the days and weeks ahead.
At any rate, this rally has continued to exhibit good health along the way. The higher lows which were established with the August lows (compared to July) have left shorts needing to cover and bulls with cash feeling the pressure to chase strength. Those two factors have combined to keep dips both shallow and short-lived for the past several weeks, and we’ve seen a steady lift as a result.
My game plan at this point is still somewhat simple. Earnings season is underway, and that demands we keep an eye on the calendar to avoid any surprises. Beyond that, there are setups offering potential in both directions, and I’m looking to trade them accordingly. My preferred timeframe of choice right now is still day trading, as that’s been such a good way to participate in some of these moves while still managing risk in an appropriate way. However, there are some multi-day plays I’m in and another one tonight I’m setting up for a potential entry in the days ahead.
As a reminder, for a few weeks I’ll be utilizing the written format of the Broadcast as we’re in the process of moving and therefore without the equipment I use for recording the nightly video. My wife and I are expecting our 2nd child in December, and needed more space for the growing family. Once we’re settled and I have my new office set up, I do expect to be back to the usual video format. To those who prefer the video, thanks for your patience. To those who prefer this written format, I hope you are enjoying seeing more text! At any rate, it’s refreshing to me to be able to mix it up a bit. And of course, your input is always welcomed.
For tonight, my notes are on the charts below for index levels and potential trades I’m eyeing for Monday.
Please leave your comments and/or questions below if you have any, I always enjoy the interaction.
Swing Trading Candidates:
FLR dropped suddenly on heavy volume just recently, and since then the rally attempt has been weak and on light volume. This has created a small rising trend line, and a bear flag-like pattern. I’m watching for a break of the trend line at $49.20 to trigger a short sale. As with all swing trades, my stop and target levels will be on the Hit List here inside the Hideout.
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.
Bullish Watch:
HOGS, FOSL, FSYS, ATHR, BVN, GILD, APC, CNW, VCLK, VHC, REE, BCSI, MIPS, MEE, PXD, ATW, AA, RINO, LAMR, CHRW, KMX, GBX, CLI, SMOD, ADTN, CTRP, FCEA, NVTL, AMG, TSTC, AUMN, AMSC, XRAY, CSC
Bearish Watch:
CRK, IVN, MON, SWN, OSG, JKS, LPS, EQIX, MS, JOE, APOL, FLR
The Hit List post will follow shortly with my trade levels for the swing trades.
