Good evening StockBandits!
The recent trend of morning highs was broken today as early strength was followed (believe it or not) by additional buying. A gap higher to the tune of about 44 NAZ points held with no attempt to fill, and instead stocks worked higher throughout the session to finish at their best levels of the day. In the end, the indexes posted impressive gains of 3-4%.
While today’s ramp marked a short-term change of character, the fact remains that the indexes are still caught between the converging trend lines of the wedge which has formed over the past couple of months. That means lower highs and higher lows, which conflict until we see one side get broken. That could spark the next meaningful move for this market, although it remains difficult to trust for lasting moves in either direction until the wedge is left behind.
Today’s rally did lift quite a few stocks out of short-term bearish setups which had developed over the past few days, negating bear flags and pennants with a sharp turn higher. In addition, a number of stocks saw enough strength today to put them on my Bullish Watch list (see below), which flips the bias we saw as of yesterday’s closing bell.
For the rest of this week, I’ll be taking a conservative stance in light of the fact that I’m expecting volume to taper off significantly as the week progresses toward Christmas (Sun). I’ll be focused primarily on intraday plays as a way to capture some short-term moves while effectively managing risk in what’s likely to be a reduced-volume tape.
As a reminder these final days of the year, several other factors are at work which aren’t present the rest of the year. Those include portfolio managers exiting positions and adding others for the year-end books, tax-related selling for this calendar year, and of course declining volume at the end of the year as traders stand aside and tend to other matters (holidays with family and simply taking time off to gear up for 2012). With that in mind, it’s a good time to trade lighter and stay selective – I certainly will be.
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: DOV, MAN, PFCB, SIMO, GMCR, VPHM, CLF, RCII, NBR, UA
Swing Trading (muti-day) Candidates:
NONE TONIGHT
[table “190” 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.
