Good evening StockBandits!
A sharp selloff yesterday elevated the possibility for a narrow-range day today with the need for some rest. That’s exactly how things shaped up early in the session with some quiet price action and a lack of momentum. The indexes spent the morning in positive territory, but a growing impatience with the lackluster bounce left traders wondering whether they should sell again to avoid a deeper decline.
That delivered some afternoon selling, which not only erased the minor early gains, but accelerated the pace of the decline into the closing bell. In the end the indexes gave up another 1% as they took out additional support zones to reach new correction lows. Clearly, it was an ugly way to finish the quarter.
The scenario from here could easily play out with some kind of exhaustion move to the downside tomorrow before an upside reversal kicks in. That isn’t to say that the lows would hold, but rather that the odds of a bounce are increasing exponentially by the day. The QQQQ just shed 10% since last week, for example, with 8 consecutive declines. While I’m not one to be over anxious to fade streaks, the fact that this decline is unsustainable and the breach of support zones opens the door for traders to get trapped with how easy the downside move has been. The bears have faced no opposition lately, and anytime either side finds the waters that smooth, it’s an excellent clue to watch for a possible shift – even if it’s only short-term.
The next couple of days are going to be quite interesting, as we’re deeply oversold and facing the first day of a new quarter tomorrow. Then we have Friday ahead of a long holiday weekend (with the market being closed on Monday in observance of Independence Day). Friday could very well be a quiet day as traders disappear from their screens to head out for the holiday, and we’ve seen a lot of big moves on Thursdays in the past 2 months as well. Therefore, tomorrow could prove to be pivotal if this market is going to reverse…we’ll just have to see.
I’ll outline what I’m looking for in tonight’s video, but the bottom line is that this is a spot to be very careful with new shorts and best to wait for signs of life before getting long.
Here is tonight’s video:
The Bandit Broadcast Video – Click to Watch!
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Video Stocks Discussed: BIG, DRI, LEN, PCP, DIA, SPY, QQQQ
Swing Trading Candidates:
NONE TONIGHT
Bullish Watch:
CBOE, LNCR, NTES, NEM
Bearish Watch:
GS, RAH, DWA, MFE, LEN, MON, DRI, MED, BIG
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.
