Happy Mother’s Day StockBandits!
Last week we saw recent concerns validated as the indexes broke down very hard from their recent high-level trading ranges. Volatility had been picking up, but once short-term support was broken, the selling really accelerated. That opened the door for waterfall-type downside moves, producing index declines on the week between 5-8%.
Thursday’s action was an all-out crash, as there were virtually no buyers in the face of a massive selloff. Although prices were able to recover slightly from the worst levels set on Thursday, we still have yet to see a 1-day bounce. Ending the week with 4 consecutive declines of significance really squashes the confidence the dip-buyers have exhibited for such a long time. Clearly, the landscape has changed, both from a technical and a psychological perspective.
With that being the case, I cannot stress enough the importance of caution here. While prices for most stocks are far lower than they were just a few days ago, it doesn’t mean they cannot go lower. At the same time, the nonstop selling we’ve seen makes this a high risk spot for initiating short sales for anything but quick trades, simply because the prospects for a relief bounce are increasing by the day. Suffice it to say, this is a time where cash is a great thing to have on hand (as I’ve noted here several times recently), and where you’d better be on your toes if you’re looking to participate in this tape. The sidelines aren’t a bad place to be for a couple of days, so if that’s where you feel most comfortable, that’s entirely fine.
Heading into Monday, I see a handful of plays which interest me, primarily for day trades. The volatility has become very high very fast, which means that holding overnight carries with it considerable added risk. My preference here is to keep my timeframe brief in an effort to manage risk, as individual stocks can turn on a dime without looking back in an environment like this. Once things settle down a little bit, I’ll certainly be looking to add some swing trades.
Please leave your comments and/or questions below if you have any, I always enjoy the interaction.
Here is tonight’s video:
The Bandit Broadcast Video – Click to Watch!
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Video Stocks Discussed: ANV, SLW, SWC, CAM, BP
Swing Trading Candidates:
NONE TONIGHT
Bullish Watch:
ANV, IAG, SLW, DM, CRS, VCI, EGO
Bearish Watch:
UTHR, HAR, SOHU, GMCR, JOE, CF, CLF, SWC, IVN, CAM, BP, RIG, CECO
The Hit List will be coming out soon with discussion on open positions and swing trade stops and targets, so be sure to watch for it.
