Good evening StockBandits!
The long holiday weekend left traders apparently feeling like stocks were oversold enough to begin accumulating, as today started out with plenty of enthusiasm. A gap up open was greeted with some additional strength, taking the NAZ and S&P 500 right back up to test recently broken support zones.
Those former support zones proved to be resistance however, and stocks turned lower to give back their morning gains and go red on the session. A late-afternoon bounce arrived, and while it was far from impressive, it was just potent enough to nudge the market back into positive territory by the end of the day. All told though, it was yet another win for the bears to have eliminated the morning strength in such deeply-oversold conditions. Even though the market finished green, it had the distinct feeling of a failure to only see minor gains notched.
So many seem to have been looking for an obvious bounce here that it may have actually delayed the arrival of one. As with any sentiment-related expectation, when traders are anticipating a move, they’ve likely already become positioned for it. With many looking for a bounce in recent days, those traders may have largely already done their buying to act on that belief. Clearly, there are still plenty of sellers remaining though, and that’s causing issues with this market gaining any upside traction.
I do think there are a few reasons to watch for a bounce, but I have not been buying ahead of its arrival. For one, this market has been very reversal-prone for the past couple of months, and that could quite easily continue with a bounce. Also, we have experienced a persistent slide over the past couple of weeks which has happened without relent. Anytime the proverbial rubber band gets really stretched in one direction, it’s time to be on the lookout for a snapback move. And finally, failures like we saw today erode trust in the upside, and that causes more to throw in the towel. Once all trust is lost, the path of least resistance will shift again and make way for a rally.
Right now, that has yet to happen, and there are still plenty of bearish patterns worth trading after a review of tonight’s charts. I’ll be keeping any shorts on a tight leash, but the inability of the buyers to produce a bounce just yet is still a glaring issue with the long side at the moment.
Heading into Wednesday, stocks with bearish charts are the ones that look the most ready for trades, so that’s where my focus will be.
Here is tonight’s video:
The Bandit Broadcast Video – Click to Watch!
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Video Stocks Discussed: MON, BID, PCP, ITT, BIDU
Swing Trading Candidates:
BIDU has moved down within its trading range and now is resting on support. A break could come any day, so I’m watching support for a break at $66 to initiate a short sale for a swing trade. My stop & target levels will be on the Hit List post, as usual.
Bullish Watch:
L, DPS, ROVI, VAR
Bearish Watch:
ADBE, LLL, PCP, ADSK, BID, FDX, AMZN, DRI, BIDU, ZION, MED, MON, POT, ITT, BYI, AGP, FWLT, RBC, CYN, F, CLF
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.
