Good evening StockBandits!
Today we saw stocks gap lower after a very strong finish yesterday as profit-taking kicked in. I mentioned here last night how historically we’ve seen closes at extremes indicate continuation moves for the following day, but that quite often of late it’s been followed by a reversal. Today fit the recent mold, and it’s yet another example of how paying close attention to recent price action can benefit us as traders.
While today’s pullback suggests that perhaps the initial bounce is done for the moment, it was not an exceptionally weak day. We saw the net changes somewhat mild compared to recent declines, as well as a finish well off the low of the day. Stated otherwise, it was just the kind of pullback the bulls would prefer to see – particularly after getting drummed since late-July.
The big question tonight is whether today’s dip will bring a return to the recent lows for a test. While that remains to be seen, the fact is that the magnitude of the initial bounce does afford this market some breathing room should we happen to see this pullback continue. Tomorrow could of course see intensified selling, but if I had to make a comment on today’s dip, I’d say it was rather mild. If the market pulls back quietly and in a relatively shallow fashion, the large V-shaped move may have established a low which can stick for at least a little while.
It’s still quite a minefield out there with a ton of charts looking sloppy and broken, and it’s possible we’re in the midst of carving out a low-level (but wide) trading range here. Nonetheless, some range-bound price action would go a long way towards helping the charts of individual stocks set up for cleaner plays. Additionally, should volatility contract we’ll see some much better conditions emerge for swing trading in addition to the day trading ideas which are so predominant at the moment with these frequent overnight gaps.
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!
–
Video Stocks Discussed: FCX, BG, RKT, APA
Swing Trading Candidates:
NONE TONIGHT – 100% Cash
[table “101” not found /]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.
