Good evening StockBandits!
The market kicked off the holiday-shortened week with a gap lower this morning on news that the supercommittee formed to reduce the federal deficit by $1.2 trillion in the coming years may fail to reach an agreement. Political comments aside, it was a disappointing headline for traders to absorb as concerns continued that the U.S. economy could face headwinds for quite some time. The gap lower was met with additional selling before things stabilized mid-day. From there, we saw a modest lift off the lows, but the market still closed below where the day began.
Interestingly, the S&P 500 finished narrowly above the 1190 level I’ve noted here a number of times in recent weeks (including last night), while the DJIA finished just a few points from the 11529 area. The NAZ created a new gap, but filled about 1/2 of the gap which remains unfilled from the 10/7 close.
Today’s breakdown added emphasis to last week’s downside resolution to the symmetrical triangles (or wedges), which likely pleases the bears a great deal in the short term. However, I’ve mentioned several times how this pullback has a good shot at resulting in a higher low (vs. the October low) once it runs its course, and there’s still quite a bit of room to allow for that, provided the buyers are willing to create some support via dip-buying.
While this correction does create some headwinds for a Thanksgiving rally, a Santa Claus rally may still be on the table. We can’t count that out in the weeks to come, particularly with the NAZ and S&P 500 down 5% on the year and with money managers scrambling to outperform by year’s end.
I’m looking to capture some short-term moves, both due to the holiday week but also due to the charts right now just showing a lot of indecision. In terms of the Broadcast, I’ll have them ahead of Tuesday’s and Wednesday’s sessions, but then will take the remainder of the week off to spend time with family. I also don’t think the market will be worth trading on Friday anyway, for what it’s worth.
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: RCII, RCL, VRX, NIHD, USO, BYI, SGY, FSLR, NFLX
Swing Trading Candidates:
NONE TONIGHT – 100% cash
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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.
