Good evening StockBandits!
With the indexes reaching new recovery highs last week, traders returned from the weekend feeling once again in the mood to buy stocks. That left us with a gap up on the open this morning. Limited follow through was seen as the highs of the day were set just 35 minutes later, and from there the action turned sluggish. The remainder of the day was spent in a choppy range with some late-day selling erasing the bulk of the early gains. The weak finish after short-term breakouts does suggest the presence of some fatigue setting in, and the hesitation to move higher after short-term resistance was cleared isn’t what the bulls want to see. Ultimately though, the indexes all finished in the green, and despite some profit-taking, the bulls do remain in the driver’s seat.
This kind of action is keeping the trading environment somewhat tricky, as chasing strength isn’t paying very well at the moment. On the other hand, the short side hasn’t proven fruitful either, as bears needing to cover and underinvested bulls are combining to keep a pretty steady bid beneath this market. Conditions like this require trading timeframes of just a few minutes, or of several days – there really isn’t much in between. Pockets of momentum are still being found in select names, but we’re not seeing very many trend days despite the fact that the overall market continues to advance. Toss into the mix the fact that we’re right in the midst of earnings season, and there’s no shortage of reasons to exercise some caution.
Opportunities still exist for us as short-term traders, we simply need to be selective. I suspect that once we see a shake-up in the bigger picture, whether that be some upside acceleration or the first meaningful pullback since August, more setups will emerge for us on both sides of the tape. The early-September run was a vacuum which took with it virtually all stocks, but since then the pace has cooled and not everything is ramping higher. Separation is likely to be seen once the mood shifts, but as of yet that still hasn’t happened. I’m going to stay patient for now and take what the market offers, as that’s the path of greatest productivity. Money can be made quickly when there’s better intraday momentum present than we’re seeing right now, but it can also be given back fast when trades are forced. I’m doing my best to avoid the latter while I wait.
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 Tuesday.
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.
Bullish Watch:
TCO, CNW, SMT, YHOO, IGTE, HS, SOL, AA, OEH, IDCC, KMX, PCX, SMOD, AMSC, PTEN, GPC, SPRD, LDK, EXAS, BSBR, CCME, UTIW, DRWI, TNDM, AONE, DDS
Bearish Watch:
MMR, CRK, DV, CNX, DGX, SWN, OSG, EQIX, MS, JOE, APOL, FLR, BLK
The Hit List contains stop and target levels for my swing trades.
