Good evening StockBandits!
Volatility was the word of the day today as stocks finished considerably higher on a roller-coaster day. After tanking yesterday and more weakness in the futures last night, the tone shifted positive with a big turn higher and an opening gap to the upside. The early gap was quickly filled, but then the buyers kept prices aloft into early afternoon.
That’s when things got really interesting, as a huge rollover move took the market well into negative territory ahead of a final-hour short-squeeze to the tune of 625 points. The initial rebound was met with a few minutes of indecision, but the last 20 minutes of the day saw nonstop buying as the market went out at its highs.
Today’s move represented a 2/3 recovery of Monday’s losses. While that’s only a partial rebound in relation to the damage of the past 2 weeks, for now it gives us an important set of levels to trade against with today’s lows. Clearly, we closed a long way off those levels, but as I noted last night here, it’s possible we now carve out a short-term, wide trading range while this market digests this correction and sorts out what may be next.
So for now, the relief rally appears to be underway. We could see a continued thrust higher tomorrow on the heels of today’s turnaround as some jump on the moving train, but there are still some important things to remember here. One is that the overall trend is still down – a single day’s rally doesn’t change that. That means caution on the long side for anything but quick trades (with stops of course in place).
Another big element to remember on the way back up is the number of folks who have been caught on the wrong side of this move. Those who were long during the trading range or who bought into this downturn are underwater, and thus may become sellers on the way back up. Just where that occurs we’ll have to wait and see, but it’s one aspect following a market selloff to keep in mind, as the psychological damage shifts the mindset of many.
**One last note is that we will be conducting some maintenance tonight on the server, so if you happen to encounter any site issues, they should only be temporary. We don’t expect that, but it never hurts to mention it!
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.
