Good evening StockBandits!
Just a day after a light-volume, minor advance, the indexes surged higher today as buying pressure returned. A small upside gap saw only a brief attempt at a fill, but prices turned quickly higher and we saw a steady ramp into the afternoon. Although the pace of the run cooled off later in the session, it was still an impressive trend day which alleviated some of the pain bulls have endured recently.
Despite today’s sharp rally, this market remains in a precarious spot on a technical basis. Key support was last seen just a couple of sessions ago, and we are still a very long way from even the prior swing high set on May 31. Well beyond that are the highs from May 2, so there’s no shortage of overhead levels this market will have to contend with on the way back up. That is, if it continues to go back up.
Psychologically, bulls have suffered a loss of capital on this pullback as well as a loss of confidence, as seen in the shift to a sell-all-rallies environment in recent weeks. That’s not going to be reversed easily, which means the battle could rage on for a little while between bears and bulls.
In the short term, this market may face continued volatility with a fixation not only on the situation surrounding Greece, but also tomorrow’s Fed day comments from Bernanke regarding the economy. Clearly, there’s a lot going on right now on the psychological and technical fronts, as well as with anticipation of the news flow. That’s likely to keep things somewhat unstable, so it’s of utmost importance to continue to manage risk in this kind of environment. Missing a trade is one thing, but getting run over by incorrectly anticipating a move is far more costly.
One other note is that I had intended last week to introduce a new feature here which I’ll periodically do, but the market simply isn’t conducive to it at the moment. My plan is to do some Video Chart Reviews by request, whereby you Bandits submit stocks you’d like to see me review and I’ll run through them in video format and discuss what I see in the charts. With my own watch lists about as sparse as they’ve ever been, my concern is that I’d sound like a broken record reviewing your stocks right now (repeating something along the lines of “I don’t see a clear setup here in either direction.”)!! So, I’ll give it a few more days and then give you a heads-up when the trading environment appears ready for that, and hopefully it’ll be of benefit to you.
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: ZAGG, VHC, SQNS, VPRT, FLS, ADBE
Swing Trading Candidates:
NONE TONIGHT
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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.
