6 Bounce Plays To Keep An Eye On

by Ryan Mallory

I'm  not oblivious to what is going on in our country and economy, but I am, nonetheless, surprised that after the S&P has been down for 7 straight days, and the Dow, 8 straight days, the bears are still piling on the short positions. So much so, it appears that I might be one of the very few people out there right now buying stocks for the bounce. I'm not talking about long-term investments, just a bounce. Because folks, markets don't go down forever, and not all is bad out there with earnings among S&P companies being pretty good, despite the horrid economic reports we keep seeing.

With that said, the market is like a rubberband: the more you stretch it in one direction, the more, when you finally let it go, is going to make for a nasty reaction in the opposite direction. So be warned. These levels are not where you want to be piling on the short positions. 

In any case, my screen for bounce plays, involves a mixture of high-risk knife catching setups with out-sized reward setups, should the stock bounce as their internal indicators are starting to suggest. These stocks have taken a royal beaten of late, and while the trend could very well continue down in the short-term, there is becoming an increasing likelihood that these stocks could bounce any day now.