The day that was..

Good evening fellow Rebels..

Today started out with the futures down and that is how we started out the trading. I said this morning that I expected some buying to come in on the theory that some large money movers would step in on the decline and start buying up some things at a big discount. Not that their action means the market became safe again, but instead was a signal that many have positioned themselves for the chance that the market had bottomed in this recent turbulent period.

If you look at the DOW chart from today you will see that the index bounced right at the bottom of the trading range that I had identified last week. This is why some of the large money holders placed their bets today. They were keying in on the trading range support and that would be as a good of a spot as any right now to take a position on the chance the market will recover from here. The question still remains of course and that is will this recovery be short lived or not. Will the markets test their support ranges again or not? On Thursday the FOMC will release their statement following their two day meeting. A lot of where the markets go from here will rest on what they say.

Even with the news this morning from the CEO of Toll Brothers (housing sector) that he did not see a recovery until next year did not seem to keep the large money from making a stab on some very oversold stocks.

At lunchtime I was observing the trading on Big Lots (BIG) and we had good up volume following a few days of churning at the trend line support area. I like the play in BIG because the support is strong and the potential is good for about a 15% gain. In other words this play has a good risk/reward ratio. The only thing is that the broad market we are in has been nothing but risky. So that is why I decided to take an entry on BIG with only 1/3 of my normal swing trade funds. This way I got in on the bottom bounce and will add more when the next technical confirmation takes place (which will be on a move up past $30.50). But in the event something else happens in the markets and BIG fails then I am only in with a 1/3 of my normal trade size so if I get stopped out then my loss will be very minimal. But this is a good trade with good potential. Now we just have to get the broad markets to stop playing around and continue it's uptrend :)

The chart shown here is the play I identified on 6-19 for BIG. It is the current chart from today and you will notice that it is very oversold but has been holding up well right around the trend support line during the market turbulence of the last couple weeks. Today's move off the trend line was a signal that the sellers had left the room and the buyers had control. Now we have to find the key to the door and lock it to keep the sellers out ! I'm using a stop loss on this play of $28.20 which is just a hair under the Fibonacci retracement level shown on the chart.

All eyes and ears will be on what comes out of the FOMC meeting on Thursday afternoon. At 2:15pm we will get a read on what their thoughts are. Expect the broad market to be volatile at that moment.