Good evening StockBandits!
Last night I mentioned I had a prior commitment today and wouldn’t be able to put out a newsletter, but a schedule adjustment made room and here I am. I’d always rather under-promise and over-deliver.
Today’s market action was noteworthy on several fronts, and all of them were positive. Not only did we see the indexes tack on solid gains across the board, but the buyers maintained their recent momentum. Also of note was the fact that the June highs were eclipsed for the NAZ and S&P 500, while the DJIA cleared the August peak as new recovery highs were made from the summer lows. That confirms the higher lows we recently saw established on the daily charts of the indexes, which is extremely positive for this market as the 4th quarter quickly approaches.
When it comes to concerns for this market, the only one I currently have is that this rally is getting a bit too hot. The RUT is the lone exception, as it did spend most of last week basing and is therefore not stretched at this point. However, the big 3 have become overbought here, which is very hard to argue when the NAZ just posted its 12th gain in 13 sessions. It’s rare that we see runs like that, and although the bigger picture contains many positives (higher lows, higher highs), in the short term this market is likely getting primed for some profit taking sooner than later.
So with the charts telling us tonight what they are, things are certainly bullish and looking up. Regardless, it is a difficult spot to be adding much long-sided exposure, and that’s important to keep in mind here. The best bet would be to buy the next dip, provided it’s relatively shallow and arrives on somewhat benign volume. For now, it’s a waiting game though as we wait for that dip to begin. When the bulls have momentum, they sure find it hard to back off the accelerator.
Tomorrow we have the FOMC announcement on interest rates and the accompanying policy statement, which is always a big event for the market to digest. It could be that we see that news, whether positive or not, used as an excuse for some selling to kick in, so it’s of course a time to stay vigilant and watchful for a possible short-term peak to be set as this rally reaches crescendo levels.
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: CHS, SMT, CSTR, IAG
Swing Trading Candidates:
NONE TONIGHT
Bullish Watch:
FOSL, DPZ, BXP, QSFT, PSA, SPG, RIG, NFLX, GMCR, MAN, WLT, CHS, ENDP, BIG, NE, SWC, SMT, MFC, BRE, ADS
Bearish Watch:
RIMM, CREE, CSTR, IAG, SNDK
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.
