Good evening StockBandits!
A weak open this morning found some tentative buyers as the early gap was attempting to fill. However, a little over an hour into the session, the selling intensified and stocks trended lower into mid-afternoon. We did see a late-day bounce from the lows of the session, but the indexes suffered more technical damage with new pullback lows being set.
The situation in Japan is clearly the primary focus right now, but there’s a mixture of opinions surrounding it. Some are proclaiming that things are “out of control” while others suggest this is one big overreaction by the market. There’s no question that Japan has suffered immensely already, and there are economic implications tied to a major country shutting down plants while they tend to more basic needs. However, the issue this market is facing is one of uncertainty due to there being no consensus for what to expect going forward.
Traders tend to sell first and ask questions later, and that’s preventing this market from being able to stabilize. We’ve undercut support zones and trend lines in recent days, and that also opens the door for more downside as the shift takes place from buy-all-dips (just a few weeks ago) to sell-all-bounces. Yesterday, anyone who tried to short into the weakness was caught leaning the wrong way as the market spent the rest of the day recovering. Today, anyone who attempted to buy the dip was punished as the bounce failed.
The market will continue to humble traders left and right, not only because it has a tendency to do so, but because the tape remains extremely headline-sensitive. A rebound will take place at some point, but this is not the place to step out in blind faith that the worst is over. We’ve seen corrections of 6-7% off the highs, and it’s certainly possible that the pullback hasn’t been completed. The hard part in trading often is to wait patiently, but that’s the best course of action with uncertainty running so high right now.
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: AN, GMCR, IL, WHR
Swing Trading Candidates:
NONE TONIGHT
[table “5” 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.
