November 29, 2006 at 12:55 pm | | Comments 0

The Welcomed Return of Emotion

Man, this market has been boring. Up a few points every day it seems! The bulls took control back in the summer and they haven’t relinquished it since. The 4-month gain has been impressive, but it’s occurred in a very dull fashion without intensity.

On longer timeframes, the climb has been incredibly steady, but new buys along the way have been harder to find if you like to buy pullbacks. After all, about the only “dips” we’ve seen these past few months have been a few days of rest before the next wave of buying begins. Finding new buys for the most part has been like jumping on board a moving train like the one pictured at the top of this page – not easy to do.

That’s why this week has been so refreshing to see. Take Monday for example. This market was due for a good shakeout, and it’s already improving the trading environment for us short-term traders. Whether it proves to be a one-day wonder or if it’s the start of a little larger correction remains to be seen, and as usual I’m making no predictions. It will either end up being just a dip within the uptrend, or it will be the start of a change of character for this market. Either one is fine by me, I’m just glad to see a return of volatility and more important, EMOTION!

This has already been my best trading week of the month, thanks to plays like VSE. I noticed this energy stock over the weekend as it recently broke a lengthy trend line and since then has been stair-stepping higher. It had formed a bullish ascending triangle which looked ripe for a pop, and I went long at $23.00. Here are two looks at this stock’s chart, first the original chart given to members at on Sunday night, and then a look at it today as it reached our Final Profit Target for a 14.78% Gain:

VSE Bullish Wedge (Click for full size.) VSE was poised for a pop as the rebuilding process was already underway. We went long at $23.00 on Monday.

Chart Courtesy of TeleChart

VSE Breakout (Click for full size.) VSE wasted no time as it blasted higher by 14.78% in just 3 days to reach our profit target. I love to “Take the Money & Run!”

Chart Courtesy of TeleChart

As you can see, there are some great setups out there for the taking, and I think the recent volatility will only serve to create more short-term trading opportunities for those of us who are day trading and swing trading.

I’m excited about the market conditions heading into the end of the year, regardless of which direction things move. Just the fact that some emotion has again entered the equation will no doubt mean more chances to exploit profitable opportunities.

Jeff White
President, The Stock Bandit, Inc.

Sorry, comments for this entry are closed at this time.