Good evening StockBandits!
The major averages continued to rebound last week, showing some upside follow through to the previous Thursday and Friday bounce attempt from the March low. The indexes went 4-for-5 on the week, making new recovery highs on Friday. At their best levels on Friday, the indexes had rallied 5-6% from their lows of just 7 sessions prior, leaving little doubt that the bounce has become short-term extended.
Adding validity to that claim are the lack of recent upside volume, as well as Friday’s finish well off the highs. We’ve seen consistently light volume over the past several sessions, showing us on the daily charts that as price continues higher, it does so with limited participation. And Friday’s finish off the session highs may have merely been profit-taking ahead of the weekend, but the fact remains that many stocks are short-term stretched, and therefore ripe for some rest.
At this point, trading the long side is extremely difficult to trust for any timeframe but day trades. We know many stocks (and the market) have become extended, that prices have risen accompanied by light volume, and that Friday’s turn from the highs may point to some fatigue setting in. Additionally, we still have the remaining possibility of another lower high forming on the daily charts, particularly if prices turn lower from here without threatening the early-March highs. It’s still a time for caution, as well as an open mind with more changes of direction likely to come our way in the weeks ahead.
Traders will closely monitor the news flow this week for clues, knowing the market has responded often of late to the headlines. As a result, it’s in our best interests to stay on our toes, knowing the market momentum can turn on a dime and the correction can resume. I’m planning to keep my trading timeframes short for Monday, but am open to adding some overnight exposure if the right setups present themselves in the coming days.
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: CBE, BEXP, CIE, FFIV, RCL
Swing Trading Candidates:
NONE TONIGHT
[table “12” 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.
