Good evening StockBandits!
Traders responded to encouraging overseas news this morning by bidding up stocks ahead of the bell, which in turn produced an upside gap. A mild pullback attempt was met with buying, and from there we saw stocks trend higher for the next few hours. The S&P 500 and DJIA stopped shy of last week’s highs (both on an intraday and a closing basis), while the RUT and NAZ were each able to mark new recovery highs by nearing prior key levels.
Late in the day, we did see a little profit-taking kick in, but it was relatively mild and did not taint the day’s advance. The uptrends are still intact, although it’s becoming increasingly difficult to trust the market to continue significantly higher here for a few reasons:
First, the clock is ticking for a pullback. We’re going on almost 7 weeks since we last saw a dip of any significance.
Second, there’s some separation taking place here with the NAZ and RUT both marking new highs while the senior indexes failed to do so, which is a bit of a concern with those somewhat mixed signals.
And third, the S&P finally moved higher today after finishing the past several sessions in the same little closing area, yet still remained in the short-term base. A pause and some acceleration ought to be met with an advance out of the short-term congestion zone. That may yet happen, but so far it hasn’t.
The big question here to be asking is whether the easy money has been made for this particular advance yet. With the NAZ up around 13% since the Dec 19th dip, and with an absence of any meaningful rest and/or profit-taking, it’s just tough to buy aggressively here – particularly with major overhead looming not far from current levels.
I’ll continue to highlight the plays I’m focused on, but the combination of the lack of swing-type setups here along with my discomfort of (1) going short into such strength and (2) buying for holds after such an extension in overall prices simply leaves me primarily interested in day trades for tomorrow’s session.
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: CCJ, JOY, SLB, USG, CP, AGP, POT, BAS, UPL
Swing Trading Candidates:
NONE TONIGHT
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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.
