Good evening StockBandits!
Indecision continues to run rampant on Wall Street, as the bulls and bears have been taking turns grabbing the steering wheel of this market lately. One day we ramp higher, the next we sell off hard, with both moves being delivered in a convincing fashion. Such was the case last week as the major indexes zigged and zagged back and forth, ultimately finishing mixed.
The truth is that until the current trading ranges get broken, we could see plenty more of this kind of price action. That’s simply the nature of trading ranges, which is what this market is currently dealing with. We do have some higher volatility at the moment, which is producing more frequent overnight gaps as well as more wide-ranging bars on the daily charts, but the bottom line is that the tape is best characterized by indecision. Anytime that’s the case, follow through is fleeting and the market tends to exaggerate its response to every headline which crosses the wire.
I noted recently that “the mood has shifted decisively from a buy-all-dips mentality to a sell-all-bounces reality…that will take some time to heal, so our expectations for lasting upside should be set accordingly.” That’s still very much the case, particularly as long as we remain beneath key short-term levels like 2705 NAZ, 1294 S&P, 807 RUT and 12100 DJIA. Beyond those levels, there’s plenty more overhead to contend with, but for now those are the areas where sellers have been camped out.
Now for some encouragement! First, my watch lists are beginning to expand once again, which is to say more stocks are attempting to set up for trades. Second, we know this market won’t be dipping and ripping in this range forever, so every day spent inside it not only verifies the levels but brings us one day closer to the next meaningful move.
The market remains in correction mode for now. It’s imperative that we keep an open mind to what may come next, whether that’s a turn higher or a continued slide toward lower levels. Being short-term traders, we have the flexibility to stay sidelined when conditions warrant (like now) or participate on either side of the next move. The key right now is not getting committed for more than a few hours, at least until we see these ranges left behind one way or another.
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: GNOM, UA, FIO, P, VIT, JDSU
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.
