A Quick Note on Hammer Time

For all of those plentiful “hammer” potential upside reversal candles printed on Tuesday, of course upside confirmation is key for any type of short-term bounce.

But a more pertinent issue, if bought on Tuesday, is that you know have a well-defined level against which to trade. No one knows for sure if this is a major bottom or instead a 2011-style trap which will crash lower.

Either way, we do know with clarity that a stop-loss on a name like NetSuite just below $77 makes sense, below the lows of Tuesday’s hammer, seen on the daily chart. A more conservative trader can place the stop below the midpoint of Tuesday’s hammer.

Which stocks are at the top of your watchlists this morning?

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