Good evening StockBandits!
The indexes came under some pressure again today as early strength was entirely erased by mid-morning. Stocks sold off their morning highs, stabilized midway through the session to hover around the flat line, then rolled over once more in the final hour to reach new session lows. Volume remained light, but the indexes marked new pullback lows on a closing basis and are threatening to undercut short-term support.
It could be that we see those support zones get defended, but that’s not a bet I’m willing to make. What we have are broken uptrend lines from 2 weeks ago, a solid decline, and some basing action since then. Even though the trading range of the past 8-9 sessions has been rather wide, the fact remains that this is a consolidation following a momentum move, and that could easily spell downward continuation for this market.
We’re in the late stages of summer between now and Labor Day, which is a reminder that activity will likely pick up in a couple of weeks. However, there will continue to be opportunities surface for us between now and then, so long as we’re watching for them and not allowing ourselves to overtrade while this market is range-bound. From the looks of the daily charts, that could change as quickly as tomorrow. With that being the case, high levels of cash continue to look good, as this market is still struggling to put together a bounce.
One final mention is that I’m visiting family in expectation of a new family member to be born tomorrow. That could delay tomorrow night’s newsletter depending on how the day goes, but I’ll have something out for you.
For tonight, my notes are on the charts below for index levels and potential trades I’m eyeing for Tuesday.
Please leave your comments and/or questions below if you have any, I always enjoy the interaction.
Swing Trading Candidates:
PLCM recently broke support and has been unable to reclaim it. A move lower out of this short-term wedge could bring about another decline, so I’m watching this one for a potential short sale with a trigger price of $27.15. As with all swing trades, my stop and target levels will be on the Hit List.
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.
Bullish Watch:
CF, BID, IT, MMYT, TSLA
Bearish Watch:
THOR, F, VMC, LLL, NUE, EL, ASH, V, SKX, NAV, SLAB, VECO, CECO, CAVM, BRCM, PLCM, CRL, CREE, ALTR
The Hit List post will follow shortly with my trade levels for the swing trades.
I’m scaling back my PLCM position size in accordance with the Swing Trading Strategy on gaps:
https://www.thestockbandit.com/swing-trading-strategy/
The idea is not to chase a stock too far, so anytime I have to chase it at all for a swing trade, I reduce my size to offset the initial added risk.