Good evening StockBandits!
A multi-day pullback left the indexes sending mixed signals last night as the NAZ broke a rising trend line while the S&P 500 held short-term support at 1130. I mentioned my hesitation in jumping to conclusions, at least until we saw the indexes moving more in tandem, and today that’s exactly what happened.
Right out of the gate, the buyers embraced stocks with an opening gap which never attempted to fill. Instead, cash was put to work and stocks moved steadily higher into mid-day, where they leveled off for the remainder of the session. The indexes went out only a short distance from their intraday highs, sending a unified signal yet again that the trend remains up.
The difficulty at this point for a disciplined trader is what to do next. Aside from having seen the market make a huge run over the past few weeks with hardly a rest, we’re now coming into some significant overhead resistance zones which could quite easily diminish the intensity of this rally. At the same time, we’ve yet to see any technical change of trend, so there’s no reason to be overly bearish.
The best way to handle this dilemma right now is to exercise patience, take only the best setups, and keep stops in place at all times. Walking the high wire here is the only way to attempt to participate, yet as traders we aren’t forced to do that. Throwing caution to the wind and chasing an extended market is a recipe for pain once the momentum train slows down – and it will. So in the meantime, I’m planning to locate high-quality setups for short-term trades, and will keep a stop in place at all times should things happen to reverse.
After today’s breakout, there’s no shortage of names which are in uptrends. And while many simply lack the patterns I prefer to trade from, there are some which are on my radar for Wednesday.
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!
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Video Stocks Discussed: MMR, BORN, SOL, SGY, RHT, MTL, ROVI, ATPG
Swing Trading Candidates:
ATPG has been grinding higher in recent weeks, and right here looks to be stabilizing after a minor pullback within the uptrend. A move up through the trend line at $13.75 will trigger a buy for me as this one gets back on the move. As with all swing trades, my stop and target levels for this one will be on the Hit List here inside the Hideout.
Bullish Watch:
MMR, IVN, BORN, RRC, GDP, SGY, RAX, RHT, HMIN, TIE, MEE, ARBA, MYGN, CIB, PHH, ROVI, SOL, CMI, MTL, ATPG, NANO, GPS, HAR, TRE, LLNW, SNIC, OCLR
Bearish Watch:
EJ, ADBE, BIG, BKE, SWN
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.
Hi Jeff. New Sub here. Could you share what criteria you use to determine if a setup will be a day trade or swing trade?
Thanks
Hey Brendan,
Welcome! Ask anytime you have questions like this, I’m always happy to help out.
Essentially I decide my trading timeframe based on a few factors…
One is the quality and maturity of the pattern…if it’s mature and high quality (tight and has developed over the course of ~ 4-5 days or more), I’ll consider it for a swing trade. If it is a bit more sloppy or has developed over the course of just 2-3 days, I’ll just take the initial move as a day trade.
Another factor is the ability of the stock to run beyond the entry price…if there’s big resistance nearby, it may have trouble, so I’ll day trade it rather than hold it for a multi-day move.
Another issue is pending news, such as an upcoming earnings announcement, as that will also play a role in how long I’ll hold a trade.
Does this help to clarify?
Yes – thanks. What’s the average hold time of your swings?
Good to know! Hold time for swing trades averages a little over 5 days. Some stop out on day 1, some might run for a couple of weeks, but on average it’s just over 5 days.
Go get ’em today!