Good evening StockBandits!
After faltering at the end of the previous week, the major averages staged a nice comeback last week to rally from short-term support zones. It wouldn’t have taken much to break to new August lows, but buyers emerged and produced gains of 4-6% across the board.
The wide trading range I anticipated 3 weeks ago remains intact, and we’re seeing prices flying back and forth between the boundaries. Frequent changes of direction have become the norm, which is always a distinct possibility during periods of digestion like this market currently is.
Emotions are running high, producing breathtaking rallies and gut-wrenching selloffs, but overall no significant progress has been made in terms of an exit from the range. We’re off the lows for now, but remain shy of the mid-August highs, which means a directional bias right now has no grounds from a technical basis.
We are seeing ample movement on any given day, which is providing many opportunities for day trading. For a multi-day timeframe, however, it’s much more of a guessing game at this point than the strategy-based technical approach I prefer. Swing trades are requiring very wide stops and small positions, along with a willingness to endure large overnight gaps. That makes it very tough to manage risk effectively, and also forces more attention on such trades than usual since a game plan can require adjustments by the day (sometimes twice!).
I’m sticking with day trade candidates heading into Monday, which is what the charts are offering right now. I’m looking forward to having more swings available, but with the market running back and forth as erratically as a caged wild animal, the best setups remain absent.
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: OPEN, SNDK, GOLD, MAN, WBMD
Swing Trading Candidates:
NONE TONIGHT – 100% cash.
[table “110” 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.
Greetings; new member question: Do you use the pre-market, both index futures and specifically pre-market stock action, in aqny last minute evaluation before placing a trade (that you recommended the night before)? Thanks
Mike Morrison
Hi Mike,
First of all, welcome! I’m glad you asked this.
I do pay attention to the premarket strength or weakness in the futures, and I typically will check quotes on the stocks I’m looking to trade just to be sure they aren’t poised to gap big. From there though, I’ll still take the trades as they trigger. My day trading strategy is such that if a stock gaps beyond my intended entry price, then I’ll either skip the trade or exit right away if my order has already filled. That way, I’m sticking with trades which resemble the charts I originally planned the trade from.
Does this help to explain?
Thanks for explanation; makes sense especially the issue of gapping.
Mike