Good evening StockBandits!
Stocks gapped sharply lower this morning after the long weekend on concerns tied to the middle east turmoil. The weakness initially found some buyers, which took the indexes well off their opening lows to fill about half the gap by mid-morning. The recovery was short-lived, however, and the market slid lower for the remainder of the session.
We’ve been in a buy-all-dips environment for quite some time now, but the pullbacks have been much more shallow. The only similar slide to what we saw today occurred on January 28th and was essentially erased over the following two sessions. What makes a sharp selloff like today’s difficult to respond to is the fact that it was so relentless after the initial bounce attempt. It’s hard to gauge whether the market is just quickly pricing in a poor outcome with Libya, or if we just changed character.
Rather than predict which it will be, it’s best at this point to respect the pullback and the possibility that the long-in-the-tooth rally has run its course for now. That means greater caution until we see how this pullback is treated. Fortunately, I had raised stops for my swing trades coming into today, and the damage was minimal.
Going forward, I’ll take good setups as they come along, but there’s no problem with holding cash for a short time here until some of the dust settles. I don’t want to chase shorts here, nor do I want to catch the proverbial falling knife by attempting to get long on these steep, sudden drops – even in stocks which are still in uptrends. Once the smoke clears a bit, the added volatility will give us some great opportunities, regardless of which direction this market goes.
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: AAPL, NVDA, SNDK, AMZN, AMAT, MTL, RCII, ANN, CSCO, CSC
Swing Trading Candidates:
NONE TONIGHT
Bullish Watch:
VXX, RCII, SFY, PWE, IO, ANN
Bearish Watch:
CSCO, NSC, APA, MGA, DRIV, BYI, COH, RDY, CNW, KOL, KMT, CSC
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.
