Good evening StockBandits!
September continues to buck the historical trend this year, as ever since the first came along two weeks ago it’s been up, up, and away. That move has included more then an 8% rise from the August lows for the NAZ in just 8 sessions, which is a pace that’s hardly sustainable. Nonetheless, the buyers have momentum at the moment, and they’re undeterred in their buying efforts.
Today as a new week began, more key levels were neared or cleared in each of the indexes. The NAZ completely filled the gap to 2277 from August 11th we’ve been watching, the DJIA pushed past 10,480 and is sitting just shy of 10,600, the S&P 500 is fast approaching 1130, and the RUT is well clear of 639 on its way toward key resistance at 670. That’s technically great for this market, but the story isn’t that simple.
For one, the August highs are still overhead and will likely not be easy levels to vault beyond. In addition, stocks and the indexes are each becoming rather short-term extended with this rally. Those two factors combine to make it more difficult for this ramp higher to continue, given the difficulty in buying stocks at current levels as well as the temptation for many to book profits just shy of major levels.
In the bigger picture, this strength bodes well for the higher-low scenario to become a reality. We already have established higher lows in each of the averages, but a move above the prior intermediate-term highs will be needed to truly confirm those higher lows. The trouble here is seeing a market which is generally too extended to buy, yet still too strong to short.
My inclination here is to do less and be patient. We could see some further upside from here, but most likely a pullback will arrive sooner than later. We may simply get a rest in which stocks mark time without giving back too much ground, but either way some consolidation or basing action is needed. We’ve moved swiftly back up toward the upper end of a multi-month trading range, and that could involve a pretty good battle before that level is reclaimed.
I’m still utilizing the written format of the Broadcast as I’m away from the office and therefore without the equipment I use for recording the nightly video. My family and I have done some house-hunting in recent days, and before the week is out I do expect to be back to the usual video format. To those who prefer the video, thanks for your patience. To those who prefer this written format, I hope you are enjoying seeing more text! At any rate, it’s refreshing to me to be able to mix it up a bit. And of course, your input is always welcomed.
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:
CYH is in a downtrend but in the past two weeks has bounced back up to test former support. The stock seems to be struggling with that zone, and in the meantime has formed a rising trend line of support. A break of rising support could bring more selling into the picture, so I’m looking for a short sale opportunity in this one if it undercuts the $29.40 level. As with all swing trades, my stop and target levels for this trade 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:
CECO, ESI, BVN, CMG, CAB, HCP, EJ, SPRD, BORN, GCI, BKD, CHRW, TCO, RRD, ISLN, GGAL, MMYT, MBI, PHM, KBH, RYL
Bearish Watch:
CSTR, MA, CYH, MCK, NAV, V
The Hit List post will follow shortly with my trade levels for the swing trades.
