TheStockBandit.com

Good evening StockBandits!

An early upside pop gave way to a gradual slide lower today as the indexes surrendered their morning gains to ultimately post another decline.  By mid-day, each of the averages had moved into the red, and they never recovered.  In the end, the NAZ shed more than 1% while the S&P 500 gave up roughly half of that.

The bull flag-like patterns I outlined last night saw the upper ends get tested early in the session, but by day’s end it was the lower trend lines which were being threatened.  That puts the market in an interesting spot heading into tomorrow if these flags are going to be able to continue building.  With it being a summertime Friday as well as an option expiration day, anything’s possible.

If prices are able to stabilize soon, then some kind of a higher low would be formed as a result.  That would offer a potential secondary advance in the weeks ahead which might ultimately get the market out of its very wide multi-month trading range.  However, if that doesn’t happen we should still see opportunities for moves in both directions as the range boundaries are respected.

At this point, we’re in a short-term rest phase until further technical evidence suggests otherwise.  The recent sharp rally is being digested and we’re seeing some profit-taking, but the verdict is still out on whether or not this is yet another lasting reversal.  Volatility remains elevated, and we’re still seeing some wide-ranging days and frequent overnight gaps.  Rest has been extremely limited of late. For that reason, there still isn’t much to consider for multi-day trades at this point (since so few stocks have been able to base), although there is one candidate tonight which I’ll review shortly.  Otherwise, my focus for tomorrow will be on grabbing short-term moves.

Tonight I’m going with the written format as I know some of you enjoy being able to skim the setups.  The videos are not going away, but I will be utilizing more written newsletters to compliment the videos. My notes and trade levels are provided on the charts below.

Please leave your comments and/or questions below if you have any, I always enjoy the interaction.

Swing Trading Candidates:

MPEL remains in a solid uptrend but has put in some needed rest of late.  This has formed a very clean ascending triangle pattern, so I’m watching for a breakout to get long.  This stock has essentially ignored the broad market movement and continues to move to its own beat, which is why I don’t mind taking a breakout trade in the midst of what has been a range-bound market environment.

Chart courtesy of TeleChart

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. Please see the Day Trading Strategy for more details on how I manage these trades.

Chart courtesy of TeleChart

Chart courtesy of TeleChart

Chart courtesy of TeleChart

Chart courtesy of TeleChart

Chart courtesy of TeleChart

[table “85” not found /]

The Hit List will not be posted tonight as I am 100% cash overnight and there are no new swing trades for Tuesday. The Hit List typically contains stop and target levels for my swing trades.

Trade Like A Bandit!

Jeff

Good evening StockBandits!

Stocks got a jumpstart this morning with an upside gap, and whether it was accumulation or short-covering, we saw continuation higher into mid-day.  At its best levels, the DJIA was up over 165 points, while the NAZ had added 44.  The short-term oversold situation we discussed last night had given way to a bounce, but ultimately that’s all it was.

After settling into a high range, the buyers hit the pause button and the next thing they knew profit-taking had kicked in.  That gave way to a series of intraday lower highs and lower lows, producing an afternoon downtrend which partially filled the morning gap.  In the end, only minor gains were held.

In the after hours tonight, news has hit that ratings agency Moody’s has warned of downgrading U.S. government bonds, which in turn has sent the futures heading south.  Obviously, plenty of time remains until Thursday’s opening bell, but at the moment this market is poised for another potential gap lower at tomorrow’s open.  If there’s one thing that has remained constant in this market of late, it’s the fact that the market is highly sensitive to news right now.  From European concerns to domestic debt issues, there is no shortage of problems and relief headlines right now to cause knee-jerk reactions.  That’s making for some volatile times and sloppy charts, both of which make risk management a greater challenge.

One thing I’m encouraged by tonight is that quite a few stocks are beginning to build some bases.  I’ll walk you through them in the video to add them to your watch lists and learn what I’m watching for.  In terms of Thursday’s session, however, I’ll be a day trader as there simply aren’t appropriate charts at the moment for adding overnight exposure.  Soon that will change, but for now capital preservation is critical and there’s no reason to force trades in a shaky environment during the middle of summer.  There’s plenty of year left ahead of me to capture opportunities, and if my 11 years as a full-time trader has taught me anything, it is that those opportunities will come.

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: PLCE, SOHU, TZOO, PWRD, HFC, MPEL, LXK, CROX, REDF, MAKO, EZPW

Swing Trading Candidates:

NONE TONIGHT

[table “84” 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.

Trade Like A Bandit!

Jeff

Good evening StockBandits!

The market flip-flopped around with only minor net changes for much of today’s session, with the main event being the 2pm ET release of the FOMC Minutes.  By seeing what was discussed at the last FOMC meeting, the market attempts to jump to conclusions about what may be next.  When it broke that there was some talk of a possible QE3, the market caught a bid and went positive.  However, the buying cooled off and the pullback from there became another downside reversal.  That left stocks limping once again across the finish line at the closing bell, ending right at their worst levels of the day.

We’ve now seen a 3-day pullback, and it’s been somewhat of a sharp one at that.  The NAZ has shed nearly 100 points since last Thursday’s high, which is certainly enough to have stripped the market of its overbought status.  We also saw volume pick up today, which may signal a bit of an exhaustion selloff.  Time will tell of course, but as I’ll point out in tonight’s video, the previous couple of volume spikes on distribution days were followed by bounces.  Stated otherwise, I’m leery of being caught short here given the downdraft of the past couple of days, and the impressive strength which preceded it.

In looking though hundreds of charts tonight, again I’m seeing plenty of sloppy price action.  The straight-up and straight-down moves of the past several days has allowed very few stocks to base out properly, which is to say about the only plays worth eyeing here are for potential turns after pullback have been completed.  That may require a bit more selling first, so as a result I’m taking a focused list into tomorrow’s session.

Capital preservation remains key right now for a few reasons.  First, it’s the middle of the summer, which is notorious for lighter volume (which we’ve been seeing).  Second, concerns out of Europe are still justified, and the market remains aware and sensitive to that development in this global economy.  And finally, the debt ceiling topic is still front and center, and the market will continue to fixate on it until that uncertainty passes one way or another.

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: WLT, HOG, RENN, GGC

Swing Trading Candidates:

NONE TONIGHT

[table “83” 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.

Trade Like A Bandit!

Jeff

Good evening StockBandits!

Following weekend concerns about the ongoing debt ceiling saga, and the fact that the indexes were still stretched after their early-July run, stocks sold off hard today.  A gap down this morning was met with additional selling pressure as dip-buyers shied away, handing the major averages their biggest loss since the June 1st decline.

Today’s slide doesn’t in itself threaten the technical health of this market, although it did serve as a good reminder that stocks do move in both directions.  After seeing Friday’s downside gap met with buying, the bulls took that minor dip in stride and likely expected to see something similar today.  However, a 30-minute bounce from the opening bell erased only a small portion of the opening gap and actually marked the highs of the session.  From there, it was nonstop distribution even though the pace of the selling slowed in the late afternoon.

Volatility continues to run high, despite a VIX reading in the teens.  We are still seeing more frequent overnight gaps, as well as wide-ranging days, reminding us to manage risk at all times.  Lately that has largely consisted of day trading (to avoid the gap risk), although even when swing trade candidates come along it’s imperative to protect the downside just in case.

As for where this selloff is taking the market, I do not know (or care).  As traders, we will continue to see opportunities so long as prices fluctuate, so the key here is to stay attentive and prepare for anything.  Clearly, this market is fixated on government actions both here and abroad, and until earnings season gets into full swing, that’s likely to remain the case.  I would expect this pullback to result in a higher low (relative to the June low), but there’s no reason to step in at arbitrary levels and just start buying.  The best bet is to let things stabilize and start to show signs of recovery before embracing the long side.  Until then, event risk remains high.

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: QIHU, RENN, EL, HFC, VIT, ATI, GGC, CREE

Swing Trading Candidates:

NONE TONIGHT

[table “82” 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.

Trade Like A Bandit!

Jeff

Good evening StockBandits!

The sell-the-news scenario I discussed as a possibility here on Thursday night came to fruition Friday morning as the reaction to the jobs number left stocks heading lower in a hurry.  The futures spiked lower, bids disappeared, producing a sizeable downside gap in the major indexes at the opening bell.  That was the move of the day, and it took place outside of market hours.

No real attempt was made to fill the gap for the first several hours of the day as the market spent those in a choppy range.  Then the final hour of the day arrived, and we saw a modest lift out of the range into the closing bell, erasing a fair amount of the morning losses.  Nonetheless, in the end it was a down day, which this market actually needed.

While the bulls may balk at the notion of lower prices being a good thing, the fact of the matter is that this market badly needed rest.  The NAZ 100 had tacked on nearly 9% in the previous 8 sessions, which is clearly an unsustainable pace to maintain.  Lower prices are actually a positive for both camps, as they allow bears to cover at better levels while the bulls who want more long-sided exposure are able to step in and buy the dip.

The big question at this point is how far this dip carries.  Is it a one-day selloff?  Is this the start of a multi-day decline that will spook out anyone who went long in the past few days?  Those are good questions, and since my battery ran down on my crystal ball, I’ll have to simply defer to the charts and go with the patterns and levels I see.  We’re sitting shy of the May highs, which could pose a threat to the short-term health of this rally.  Therefore, in the bigger picture we’re back up to the upper end of a multi-month trading range, still overbought.

My plan for this next week is to take it pretty easy on the front end, then if we see some consolidation and bases begin to form on the charts, there should be some good opportunities for adding more swings to the day-to-day cash-flow day trades.

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: NTES, OPEN, X, SOHU, FSL, ATI, GGC, VIT, P, EL, IPI, ANR, CIEN

Swing Trading Candidates:

NONE TONIGHT

[table “81” 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.

Trade Like A Bandit!

Jeff

Good evening StockBandits!

The market melt-up continued today as the NAZ and S&P 500 both added more than another percentage point to the run which started a week ago Monday.  I’ve noted here recently that this pace is unsustainable, which it actually is, and yet it’s still going.  What’s perhaps so interesting here is that those who have been long are now wondering if a quick trade on the short side is reasonable, while at the same time those who are short are considering caving in and going long just to avoid the daily punishment of being on the wrong side.  Clearly it’s a very interesting time right now.

Technically, this ramp has pushed the indexes beyond prior support levels which were expected to serve as at least temporary resistance.  However, those areas have been ignored as the buying persists.  We’re now not far at all from the May highs which seemed like such a long way off just two weeks ago.  This market over the past two months has been alot like springtime weather here in Texas…if you don’t like the conditions just wait a little while, because they’re likely to change.

With the market being extremely extended here, it’s important to be on watch for a potential short-term pullback.  That may not evolve into an all-out reversal, but it would be quite healthy after a run of this magnitude and is becoming more likely by the day.  Tomorrow morning in the premarket we have economic news with the Nonfarm Payrolls number which could produce a knee-jerk response, and given all the positivity of the past 8 sessions, a sell-the-news reaction isn’t out of the question.  I’m sticking with day trades for new positions tomorrow with that in mind, as well as the fact it’s a summer Friday (typically lighter volume) and there are very few quality patterns to choose from in the charts anyway after this rally.

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: ZIP, P, VMC, MOS

Swing Trading Candidates:

NONE TONIGHT

[table “80” 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.

Trade Like A Bandit!

Jeff