Good evening StockBandits!
A steady pullback from the recent high was followed by a few days of inactivity. It was uncertain whether that would prove to be stabilization before a bounce, or merely a rest before more selling. That uncertainty disappeared today as stocks broke down hard, gapping lower and continuing south for the remainder of the day to post 3-4% declines in the major averages.
The NAZ and S&P 500 each marked new correction lows today as they took out both the June and May lows. What was perhaps most notable was the fact that no attempt was made at a bounce from those zones, exhibiting the sheer lack of buying interest. This of course means the bulls have squandered an opportunity at creating a higher low, and serves as an excellent reminder that we’re still in a correcting market environment.
What’s so tricky right now, however, is the fact that stocks are breaking down but are too extended near term to be shorting for anything but quick trades. While the weakness could certainly persist before we see a relief bounce (or rest), most names have already made sizeable moves in the past 7 sessions, elevating the risk on initiating new short positions for timeframes outside of a few hours. Keep in mind, we’ve seen market declines in 6 of those 7 sessions. It’s important to recognize that even though some key levels have been broken, a snapback rally could kick in at any moment.
Heading into Wednesday, my game plan is to remain in cash and stick with intraday trades. The dust needs to settle a bit before clean enough patterns for swing trading will emerge, so it’s important to protect capital in the meantime and let those trades come to us.
Here is tonight’s video:
The Bandit Broadcast Video – Click to Watch!
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Video Stocks Discussed: BIG, DRI, DWA, RAH
Swing Trading Candidates:
NONE TONIGHT
Bullish Watch:
SRCL, DPS, EXPR, NEM
Bearish Watch:
MED, BIG, MDC, AGP, NTRI, DRI, LEN, DV, MFE, DWA, RAH
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.
