It was a very ugly day, and in the direction of the main trend. Volume, all things considered was not that big. I’m not sure that there is too much to be read into the volume not being extraordinary, but it does mean that we can’t say there was any kind of flush.
The market is in a down trend but as day traders I think we’re still in a market with good opportunities long and short.
The case for the bulls is that none of the market watch took out the August 9th lows. For longs I’d prefer to be in stocks that have held those lows. A few of the stocks on the list actually traded up relative to their open. If this case a long OR reversal above the pivot would be a good trade.
Another long trade to watch for will be a breakout over the prior days high. There are only a few stocks that are in a good position to do that, and unless it is a defensive stock, trading over the prior days high after a huge down day in the market is a sign of real strength.
The case for the short is that the main trend is reasserting itself after flagging nicely. Because of the day’s range, there should be some nice shorts on OR reversals below the pivot. If the market bounces strongly tomorrow then reversals at R1 may work well.
If you’re shorting an OR breakdown make sure to check that you have either take out or have a some room above the prior day low and the Aug. 9th daily lows.
Long Focus
IYR
UUP
KCI
AAPL
LO
HANS
SUG
BIDU
CVI
SINA
CF
ORLY
IDCC
SLW
RAI
AAP
DLTR
OTEX
GME
Short Focus
SCCO
PCLN
SLB
SMH
IYT
HAL
