Good evening StockBandits!
Opening weakness kicked off Q4 this morning, but soon an upside reversal took the indexes slightly positive. In keeping with the rest of the recent bounces, however, the advance was short-lived as sellers returned to take the market back to new lows on the session by mid-day.
That was followed by a steady slide lower and an afternoon consolidation, leaving the S&P 500 to test its August low for the final couple hours of the day. With one final wave of selling, a breach occurred with a new intraday and closing 52-week low on the S&P.
Today’s decline was actually led by the small-caps, with the RUT shedding over 5% on the day. It was the leader to the downside, not only in terms of percentage decline but also in the fact it was the first to crack support on the daily chart earlier in the session.
We also have the NAZ within spitting distance of breaking new lows (2335 vs 2331), while the DJIA sits just 58 points off its 52-week low. This is THE test I’ve been referring to, and if it’s unable to hold, then we could see another significant decline kick in. Taking the heights of the multi-week trading ranges and subtracting them from the lows brings the July 2010 lows into play, corresponding with 1010 S&P 500, 9614 DJIA, and 2061 NAZ.
The bearish best case scenario would be a rest here around the 1100 area for a few days to absorb the short-term oversold conditions and then break without looking back. However, with indecision having run so high for so many weeks now, a clean move simply may not be in the cards. It’s possible we attempt to crack, only to see dip-buyers rush in to play a potential bounce from oversold conditions, so it’s extremely important here to maintain an open mind. The wild card is that many are holding high levels of cash at this point, so there would be ample fuel for a spike higher should this market happen to catch a bid.
The charts themselves remain bearish, so continued caution is still warranted here until conditions change. My bearish watch list is still much larger than my bullish watch list, although many of the stocks listed here last night have since broken down hard and look like a chase here.
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: PH, APKT, JEC, RVBD
Swing Trading Candidates:
NONE TONIGHT – 100% cash.
[table “137” 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.
