Good evening StockBandits!
Following a solid rally from key support zones since the beginning of the month, the market did a very nice job last week of holding onto those gains. Some additional upside was seen, and even an attempt at some rest was made.
The indexes now are each near key levels, with some above them (NAZ and S&P 500) and others just beneath them (RUT and DJIA), so we have a bit of a mixed bag as the battle wages on. Even if these zones can be cleared across the board, more overhead remains at higher levels which the bulls will have to contend with. Nonetheless, in the bigger picture, we do have higher intermediate-term lows (relative to July), which bodes well for potential improvement into the remainder of the year.
As the end of the year approaches, we could also see performance anxiety start to kick in with money managers and fund managers. Should the market continue to climb, more institutional money could feel left behind by a rally, and thus chase performance. That could bring a solid rally into the picture, which is not a prediction, but simply something to keep in mind as a possibility in the coming weeks and months.
Quite a few stocks have seen big bounces since the first of the month, with minimal rest in recent days. It would be ideal to see more basing to help not only alleviate overbought conditions which some stocks are exhibiting, but also to help more patterns mature for new plays going forward. While the short-term direction has been up, I am mindful of the reversal-prone nature of this market in recent months and therefore reluctant to chase stocks for anything but the shortest of timeframes at this point.
I’m looking to maintain high levels of cash for now, focusing primarily on intraday trades with some occasional overnight positions (adding one candidate tonight) while waiting to see if the most recent rally can stick. We have options expiration this week, along with the indexes each right near key levels after nice rallies. For that reason, I’m comfortable keeping my timeframe rather brief for new trades at this point, at least until the market can offer better short-term signals. A rest here would come as no surprise, yet the buyers have maintained nice momentum recently and may show no hesitation to continue putting cash to work.
For tonight, my notes are on the charts below for index levels and potential trades I’m eyeing for Monday.
Please leave your comments and/or questions below if you have any, I always enjoy the interaction.
Swing Trading Candidates:
SMN is the leveraged inverse ETF for the basic materials, and this ETF looks to be at a pivotal spot. After a harsh decline (a rally in basic materials), this ETF has stabilized just beneath former support. A push back up through that zone to reclaim it could invite more buyers into the picture, and an unfilled gap remains in place from September 1st. I’ll be a buyer if the $32.60 level is cleared to the upside, looking for that gap to get filled on a bounce. 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:
SMN, AEO, ESI, CMG, GILD, TKR, BORN, AUXL, AGCO, DO, SHLD, LL, DRI, TTM, MCP, CEG, GCI
Bearish Watch:
XEC, MMR, RIMM, LNCR, CSTR, MAR
The Hit List post will follow shortly with my trade levels for the swing trades.
