Good evening StockBandits!
Last week proved important for the bulls, in a couple of ways. On a technical basis, we saw weakness on Monday mark a new pullback low from the early-July highs, only to see a late rebound erase some of those losses. Then from Tuesday through Friday, stocks continued higher to help confirm the higher-low scenario we’ve been watching over the past couple of weeks.
On a psychological basis, the bulls know they have company after a move like this. The rally off the June low was very momentum-based and included high emotions and ample short-covering. That made it hard to determine just how much was actual accumulation, but now that we’ve seen the first dip get bought and some follow through, it’s a big boost for the bulls. That could quite easily create additional confidence on subsequent pullbacks now that the May and June lows look likely to hold for at least awhile.
At this point, the indexes are facing some important tests on the upside in the near future if this strength continues. We have the aforementioned early-July highs, followed by the May 2nd highs as potential resistance zones. A breakout which is able to hold above those levels would open the door for considerable upside in this market between now and the end of the year, so it’s got explosive potential. If instead those highs are able to hold, then there will be some short-selling opportunities back down toward lower levels within this very wide multi-month trading range. My hunch is that this market is headed higher, as it has effectively shrugged off a variety of negative events and plenty of uncertainty in recent months. Should the news flow actually turn positive, this big range could serve as a launch pad for another bull phase to kick in on the bigger picture.
We’re getting into earnings season and it’s time again for a reminder to check the earnings calendars daily for any multi-day trade. I like to check both EarningsWhispers and Yahoo Finance. No matter where you look, just be sure to look and compare multiple sites to help confirm reporting dates.
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: HMY, CDE, SCCO, RGLD, SVM, SOHU, NTES, SLW, EXK, GG, RTI
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.
Wondering thoughts about MPEL knocking at 15.75 much of the day with very large volume at 74/75. The Short Interest is not too high (1 day to cover). But if there would be a short squeeze above the 15.75, then being careful about the target 2 would be prudent, for people who are watching intraday.
I did find that interesting Jon, although with Target 2 in sight just a quarter away, I just upped my stop real tight for my remaining position. That way I’m risking little to make a little more since the trade has gone almost to completion. Been a nice move…