Good evening StockBandits!
Stocks came under significant pressure again this morning as crude oil took a big hit, reaching levels not seen since February. The blue-chip averages have exposure to major oil, which left them deep in the red early in the session. Add that to the fact that Bernanke & Co. offered nothing of substance yesterday to suggest things are improving on the economic front, and traders woke up in the mood to lighten exposure.
By mid-morning, last week’s lows had come into view with the S&P 500 and DJIA each getting within just a few points of those levels. Fortunately for the bulls, that’s right when the buying kicked in. Aggressive bulls put cash to work, likely using support as their line in the sand, and bears moved to cover shorts quickly into the weakness. That combination produced a grind higher into the early afternoon before one last pullback was made just to be sure the lows would hold. They did, and stocks spiked higher and rallied once more with vigor into the closing bell.
Today’s volatility is exactly the kind of price action we expect to see within trading ranges like the one we’re currently in – and particularly near the lower end of the boundary. Follow through is hard to come by, and emotions in general have been running higher of late. That raises the propensity of the market to reverse suddenly, which keeps traders on both sides very attentive.
It’s likely that in the days ahead, we can expect more of the same until this trading range is left behind. It’s easy to get worried about yesterday’s late selloff or excited about today’s rebound, but the fact of the matter from a technical standpoint is that this is all simply noise. Price is fluctuating, at times violently, within defined trading ranges, and that means we’re still on hold waiting for technical reasons to trust this market for some follow through. We’ll eventually need to either undercut the lows and head further south, or reclaim former support and start creating some higher lows on the way back up. Until then, follow through will be fleeting.
My watch lists remain rather anemic, which is a fair tell right now that there’s just not many names in play when it comes to constructive price patterns. I fully expect that to change sooner than later, but for now it’s a reminder to stay selective and keep timeframes short while we wait for some smoother conditions for swing trading.
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: KKD, ELN, PLCM, VIT
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.
