Good evening StockBandits!
Yesterday we saw prices rocket higher late in the day in a highly emotional move as the proverbial rubber band had become too stretched. That provided some short-term relief for those who have been caught on the wrong side of this market of late, but it also gave us some levels to use as short-term support (if ‘support’ is the right word for it).
The newness of the rally wore off quickly though as today we saw the market gap lower and give back some of Tuesday’s gains in the early going. The indexes then spent the majority of the day in choppy trading ranges which were relatively tame compared to previous days, and prices darted back and forth in an erratic fashion until the range was broken this afternoon to the upside. That temporary strength was used for selling, however, and the intraday breakout quickly turned into a breakdown as new lows were made into the closing bell, handing the DJIA yet another decline of more than 500 points.
Volume remained high with today’s action, and the volatility index (VIX) surged higher once again. Alongside the price action, that reminds us that it’s still a highly emotional environment right now, making the technicals hard to trust for anything but the intraday charts. Levels can still be identified there, but the daily charts simply show a market fumbling around for support.
Anything is still possible going forward, as we could see stocks scream higher or fall apart further in the days to come. Another possibility is that we’re trying to carve out a low-level trading range where this market could churn for a little while to digest this move. That remains to be seen, and the next couple of days may prove critical if support is going to hold in the near term. However, on numerous occasions in the past after big, fast declines, we’ve seen short-term periods of indecision (trading ranges). June was the most recent example.
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: SPY, IWM
Swing Trading Candidates:
NONE TONIGHT – 100% Cash
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.
