Good evening StockBandits!
Default fears tied to the unresolved debt ceiling issue sent stocks to lower levels today as an opening gap to the downside reflected the market’s dissatisfaction with the weekend developments. Friday evening’s headlines set the tone for a weak start today, and the situation simply didn’t improve over the weekend.
It’s interesting how these kinds of events can occur when trading range boundaries are being approached, and it’s one more reason to play things close to the vest until we truly see a technical exit from this range. We’ve rallied nicely off the June lows, but that left the indexes at the upper ends of their ranges, making them ripe for some profit-taking when the news flow turns negative and uncertainty creeps back in. Traders have a mindset of “sell now and ask questions later.”
We did, however, see stocks rally off their morning lows, and the NAZ actually went positive by mid-day. The dip-buying didn’t persist though, and we saw stocks drift back down in the afternoon.
Currently, the market is still somewhat antsy about how this debt ceiling stuff will get resolved, and whether Washington will make a deal before next week’s borrowing deadline of August 2nd. All politics aside, this market doesn’t seem to be pricing in a U.S. default. It has seen considerable uncertainty for a while now and remains not far from 52-week highs. That’s certainly some fuel for the bullish case, but another look at the charts shows we’re still caught inside a range and therefore the buyers will still have to capitalize on that if the news flow turns positive.
While we’re in the range and with some important levels looming not far overhead, it’s a time to stay vigilant and keep positions on a short leash. I aggressively raised stops over the weekend, and was taken out of all my overnight positions today (3 of them on weakness, 1 at Target 2). That puts me back to cash for the time being, which isn’t a bad thing to have some solid profits booked. I’ll of course keep my eyes open for setups which have potential as plays in the coming days, but won’t be pressing the matter with the market so sensitive to the headlines right now.
Tonight I’m going with the written format as I know some of you enjoy being able to skim the setups. My notes and trade levels are provided on the charts below.
Please leave your comments and/or questions below if you have any, I always enjoy the interaction.
Swing Trading Candidates:
NONE TONIGHT
Day Trading Candidates:
These are the trades I’m eyeing for potential plays tomorrow. I will not be holding these overnight, and will wait for these levels to be crossed before entering trades. Please see the Day Trading Strategy for more details on how I manage these trades.
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The Hit List will not be posted tonight as I am 100% cash overnight and there are no new swing trades for Tuesday. The Hit List typically contains stop and target levels for my swing trades.
