Good evening StockBandits!
A choppy session ahead of the FOMC turned ugly this afternoon, sending the major averages to new 5-day lows. The knee-jerk response to the news was selling, but soon after the market found its footing to return to pre-announcement levels. However, the next wave of selling didn’t stop until the closing bell as the market went out on its lows after shedding 2-3% across the board.
The market right here is still range-bound, so it’s still important to maintain an open mind for what comes next. As long as the indexes are in these ranges, there’s not much to get excited about. Serial bottom-callers have proclaimed each dip to be ‘the final test,’ while perma-bears are eager to short every bounce. Over the course of the past several weeks, each camp has only been right for a couple of days before another reversal sets in. With that in mind, I’m much more interested in seeing a break from this zone which sticks before looking to embrace a directional bias either way.
The longer this range persists, the more valid the channel lines become, whether lateral (DJIA & RUT) or rising (NAZ & S&P 500). The consistent absence of rest phases, along with frequent gaps have prevented individual charts for the most part from establishing worthy bases from which to trade. As a result, we’ve been left with a lot of quick-hit types of plays lately while waiting for multi-day setups to arrive. Eventually they will, but for now capital preservation alongside cash-flow trades is the name of the game.
One final note is that while today’s late-day move was indeed a decisive one, the door is still open for stocks to take another avenue. Big FOMC announcements sometimes leave a lot to be digested, and traders are prone to taking a “sell first and ask questions later” approach. So I’m not a buyer at these levels for the sake of getting long into the dip, but it’s still possible that stocks head higher. Stated otherwise, don’t count anything out, no matter your current bias.
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: SWKS, CTSH, ATI, USO, PFCB
Swing Trading Candidates:
NONE TONIGHT – 100% cash.
[table “129” 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.
