Good evening StockBandits!
Last week we saw continued volatility as well as a pullback as the market grappled with continued Middle East concerns. The indexes moved toward the lower ends of their ranges, leaving traders to wonder whether recent support would hold or fold.
On Thursday night here I mentioned we were beginning to test (or in the case of the NAZ break) support, but that the possibility still loomed for a head-fake and a reversal back up into the range. On Friday, news out of Japan with a massive earthquake and tsunami warnings in multiple countries (including the US) was plenty of incentive for the selling to continue on the heels of Thursday’s big decline. Instead, we saw the market rebound as key levels were again respected.
That means a potential trap for bears who were looking to short support breaks in hopes of downside continuation, as they’re now caught in a situation where a bit more strength could drive them to cover their positions. In the meantime, the bulls have a good opportunity to maintain the trading range by offering support on dips, so whatever happens, it’s sure to be an interesting battle. It’s possible that this range persists a bit longer, particularly given how many traders are betting on an upside breakout or downside breakdown.
At this point, I’m cautious of the short side given the fact that in the last two sessions, support has been respected and currently is holding. However, this isn’t a market that’s shown us much follow through at all in recent weeks, so I’m still looking to keep most trades short-term until the range is left behind. Day trades have produced some excellent moves (such as OPEN on Friday moving higher by nearly $3 after triggering), so there’s still opportunity for those willing to play intraday. I remain in cash tonight, but am eyeing one potential new swing trade, and won’t mind adding more if we start to see some better continuation from this market.
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: UA, PPO, AN, RAX
Swing Trading Candidates:
RAX has pulled back in recent weeks while remaining in an uptrend, and tonight this stock is sitting just beneath a descending trend line. If price can clear the trend line at $37.50, it may be freed to move higher. I’ll be going long if that level is cleared, and will keep a pretty tight stop on this one should it happen to trigger and then fail. As with all swing trades, my stop and target levels for this trade are found on the Hit List here inside the Hideout.
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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.
