Good evening StockBandits!
Traders have been waiting a few days for a market rebound after several sessions of weakness from last week’s highs, and today we started to see a bit of buying. The indexes were holding most of the day in positive territory, although not by much and the bounce was anything but impressive. However, true to its recent form, as the closing bell approached, we saw the selling pick back up. By the end of the session, the day’s gains were completely erased and the bears posted yet another (albeit small) decline.
That late-day selloff served as a psychological win for the bears, and it reminded us all that we’re still in an environment where bounces are getting sold. With that said, this market is certainly due for a bounce, and perhaps even a multi-day rally. It has not been exhibiting the kind of strength that would suggest it’s going to stick and take us straight back to the highs, but the pace of this decline isn’t sustainable and at some point we’ll see a combination of bulls stepping in to buy perceived value as well as the bears covering shorts.
We have yet to see that bounce begin, as evidenced by today’s late-day slide, but it’s coming and we need to stay on our toes and watch for its arrival. There are still some setups out there which could break down further, so the short side still has a handful of opportunities, but for the most part this wave is likely nearer to the end than the beginning.
In looking through many charts tonight, I realized again just how few setups there are out there right now on either side of the tape. Additionally, the setups which are present are anything but leadership stocks, so this is still a time when capital preservation and patience should be our goals while we let some of the dust settle.
Last Thursday evening I noted I’d be interested in buying a downside gap on Friday, and we got one. It didn’t last but a few hours, but it was worth catching. Tonight I feel the same way, and if we get a gap to the downside tomorrow morning, I’ll be eyeing longs in major ETF’s (IWM, SPY, QQQ) for trades with tight stops, as those could offer the kind of short-term washout-types of moves this market appears to need. Otherwise with a flat or up open, I’ll continue to move with caution and wait for more charts to build better patterns than they’re currently offering.
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: ARCO, NLSN, PAY, COP, LTD
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.
