A few week ago market was in a good rally mode. The Market Monitor readings were indicating a breadth thrust. A breadth thrust of 2 plus indicates above average buying pressure. The secondary indicators had reached 20 plus levels. That kind of level is not frequently seen. It indicates that there were big moves happening on month time frame. Earnings were leading to large one or 2 or 5 days moves.
Last week the market experienced a 600 plus day to the downside. However as has been the trend in this market for last 6 month or so the dip buyers were immediately active. So we had a modest pullback. Since then in last 3-4 sessions market has bounced back.
Unless we see a 300 plus down day , this is range being formed and market might remain in that range for some time. There are no immediate catalysts on horizon till next earnings season. The next earnings season will start mid April.
The market has largely discounted the geo political tension. But any escalation in it might act as a catalyst for further pullback.
Range bound action means more selective approach to finding trades. When breadth thrust is absent, breakouts do not necessarily follow through. In this kind of environment a pullback kind of methods work better for a smaller swing trades.The narrow range day kind of approach which has been discussed is kind of approach to look for for small target swing.
Some breakouts like TRGT were still offering opportunities and if you see the Stockbee Trend Intensity breakout scan yesterday, there were 5-6 decent buy setups and some of them were highlighted intra day as the breakouts were happening.
Besides that breakouts in right sector will continue to work. Sector with high Trend Intensity ratings is something to focus on.
At the same time be mentally prepared to take quick evasive action in case of renewed selling pressure.
On the short side some good setups are developing and if you keep an eye on the Stockbee Trend Intensity Short, Stockbee Dollar Breakout Short, Stockbee Power Breakout Short, And Stockbee 50 cents breakout Shorts you will see some short setups. A deterioration in breadth is required for many of these short setups to work.