Good evening StockBandits!
The market was making its best attempt at a relief rally today – which was far from impressive, I might add – but the morning bounce stalled out mid-day and we saw the sellers return in the final hour to erase the early gains. The NAZ and RUT finished positive by a couple points, while the S&P and DJIA finished slightly in the red.
The character of the morning advance revealed something that will either inspire the bulls tonight or dampen their hopes, which was that momentum was nowhere to be found. The buyers who did step in apparently had no company, and it was soon evident that a little selling could easily invite more selling. This continued reluctance on the part of the dip-buyers is either a trap to suck in the bears, or it’s a warning signal that the complexion of the market could be changing after a 2 1/2 month rally. The fact that this is the first decent pullback we’ve seen since August is reason enough to pay close attention here, although the verdict is still out on what will transpire from here.
Tonight we have inside days for each of the indexes, which is similar to Monday’s bars. These can often be continuation bars when found in the midst of a trend, and with the short-term trend currently down, that’s worth noting. We also have descending trend lines overhead to mark the pace of this pullback, and for the NAZ and S&P 500 those trend lines coincide with Monday’s closing levels. If we see a turn higher on Thursday, I’d look for a rally back up to those levels.
Several setups are on my radar for tomorrow, and once again I’ll be utilizing multiple timeframes and directions for new plays. This pullback is certainly helping to shake up the charts of many individual stocks, which is just what this market needed whether you’re a bull or a bear. We should see more setups on the way in the days to come, and the event risk has subsided with the passing (mostly) of earnings season. That could bring the focus once again solely to the economic data, which is something this market is certainly accustomed to.
As a reminder, for a short time longer I’ll be utilizing the written format of the Broadcast as I get the new office set up with the equipment I use for recording the nightly video. Once that’s ready, 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 Thursday.
Please leave your comments and/or questions below if you have any, I always enjoy the interaction.
Swing Trading Candidates:
MFC displayed some big momentum early in the month as it left a multi-week trading range in its rearview mirror. Since then, the stock has pulled back only slightly and consolidated, possibly in preparation for another thrust higher. I’m watching the trend line just overhead for a break at $15.15 to trigger an entry on the long side in case this one gets moving again. As with all swing trades, my stop and target levels for this one 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:
BEAV, CY, SVVS, MOTR, BMRN, CODE, IMAX, MEE, ROST, RES, SODA, MFC, CREE, ROVI, PXP, TTM, VMED, CROX, AMTD
Bearish Watch:
LZ, OFC, LNCR, MMYT, PRGO
The Hit List contains stop and target levels for my swing trades.
