I had pointed out in my last post that the markets had reached overbought levels. Now, there are two ways a market can work off overbought levels - (a) sharp correction or (b) low volume consolidation, which is exactly what we have seen the markets do in the last couple of days, thus putting the bulls in a strong position.
Here are two stocks that I will be keeping an eye on tomorrow. TZOO reports in pre-market on 26th. With an amazing number of shorts in this stock, it would not be surprising to see a short covering rally in this stock. And if does reports good numbers, this could just go ballistic. But no matter what, I wouldn't be holding it through earnings, as that would just be gambling, wouldn't it?
Here's another chart just to give you an idea of how far it has fallen during the last one year.
And here's another setup I like for tomorrow with the resistance levels marked on the chart.
Take care and good luck!
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