Top Stock Picks
for the
NYSE, Nasdaq, and AMEX, Archived
Traders Notes from July
1, 2008 to October 31, 2008
| October
26, Weekend Update 11:45 AM EDT |
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The SP500 closed at 876.77 ( chart ) down 6.7% on a high volume of 25 billion shares. This is the second week in a row Monday has rallied only to have the remainder of the week turn ugly. The only good news is we did not close below long term support near 775-778. The lows of 2002-2003 are being watched by many traders. Friday's pre-market trading halt was a signal fear is near extreme. The VIX ( chart
) 79.13 made another intra-day record for the week. Friday morning we
touched
89.53 after overseas markets in Asia and Europe suffered large losses. The
USD index 86.42 (chart
) continues an upward trend, rising 4.8% for the week. The next upper
resistance to the rally is 90-92. Going back to the older charts from 1929-1932 clearly shows major support levels can fail. The current SP500 has managed to re-test the 840-850 levels and bounce for now. Unless we close below 800 and then drop to 750, we are expecting a rally. Being in cash until we know the direction of this market may be the most defensive position. Suggested reading Technical Analysis of Stock Trends, 8th Edition, Robert D. Edwards and John Magee - see Amazon.com |
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| October
18, Weekend Update 12:58 PM EDT - Emailed members update |
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Bouncing
on a local bottom. Earnings
Season The market
could rally again next
week. The October low of 840 should be watched for a possible retest?
As the
earnings season kicks off, we could see some companies beat
expectations. As
these earnings are reporting revenues before the sell-off of October,
we could
be sidetracked of how well companies were performing over the summer.
Companies
are not keen on giving forward looking guidance these days, which could
benefit
any market rally – given the uncertainty in the market. Traders’
notes The fear index, or the VIX ( chart ) 70.33 made another intra-day record for the week. Thursday morning we touched 81.17 after the massive sell-off Wednesday. The market swings continue to keep the VIX above 40. Last weekend we commented that parabolic moves often end with retracements which are equally fast. SDS closed down 13.6% on the week to close at $96.40 ( chart ). SDS broke below our suggested stop-loss of $100 on Monday morning. The trade would have been an overall profit of 29% from our October 3rd triple top break-out at $77.11 as posted October 3rd. The short position ( SDS ) is too risky at this point in the market bottoming phase. A sharp rally could occur in the next 3 weeks. Bottom
Fishing and a Market Rally.
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| October
12, Weekend Update 11:45 AM EDT |
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The Market has Crashed, we are close to a local bottom. For the week, the SP500 closed at 899 ( chart ) dropping 18.2% on a high volume of 35 billion shares. To end the week, Friday opened sharply lower and intra day low of 839. The low 839 could have marked the low for October ? Fear and panic selling usually indicate we are near the low. The fear index, or the VIX ( chart ) 69.95 closed at a record for the week. A spike in the VIX usually indicates a bullish indication for the market to rebound. The probability of the US Market moving higher in the short term is increasing. The USD index 82.62 ( chart ) has broken to the upside of a local double top formation. World currencies have fallen with respect to the dollar. A target of 84.87 is calculated with a measured move. Proshares SDS up 43% on the week, $110.88 ( chart ). Last week we noted a triple top break-out. The move higher was fast and could signal a top almost as fast as the break-out. Parabolic moves often end with retracements which are equally fast. A suggested stop-loss is $100-$105. Bottom Fishing
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| October
4, Weekend Update 9:50 AM EDT |
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| Another week of the unexpected. For the week, the SP500 closed at 1099 ( chart ) dropping 9.4% on high volumes in a choppy week. Friday was a day when traders expected a pop on the news of a bailout plan. It would seem the panic in the market has turned a large percentage of the bulls into bearish traders. Traders are selling after as little as a 5% profit on fear of a trend reversal mid-day. The USD index 80.47 ( chart ) continues to show a positive uptrend. The chart suggests we could be in a local double top formation as the move from 71 to 80 has been fast. GLD $82.59 ( chart ), after reaching a high of $92 on the week, dropped back in one of the largest commodity drops recorded back to 1950's. Last week it appeared GLD could move higher, on Monday it touched $92. The remainder of the week was a grind lower. The CRB index 326 down 10.4% ( chart ), topped out at 473 back in July. Since then, the index has dropped to below 330. Unless we a headed for a deep recession, a retracement of the CRB index could be expected. The 200 day moving average is 400 and the CRB could be oversold. Checking the technicals for the CRB index, lower support 181-181 from 1999 and 2001 could limit the downside move, if we were to fall into a long recession. Proshares SDS 77.11 ( chart ), has gained 15% for the week. On a weekly chart, we have just broke out to the upside on a triple top near 67-68. Volumes are near all time highs for the ETF. The markets continue to be too choppy to stock pick for more than a 2 day outlook. ETF's are safer bets , if you can call this market safe. If we were to go bottom fishing, Apple AAPL $97.07 (chart) , and Research in Motion, RIMM $60.96 (chart), are too oversold techs were a rally could start ? |
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| September
28, Weekend Update 1:32 PM EDT |
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For the week, the SP500 closed at 1213 ( chart ) dropping 3%. It was a slow week with news coverage dominating financial markets. The market drifted down at the start of the week and never fully recovered. Watch the charts, the bailout can only modify the market's overall direction at a slow pace. For Friday's closing prices, our stock scan could only find 1 name with the potential to break-out to the upside. The bear market is taking hold. Break-out Stocks, New Stock Scan Results :
If we cannot find great stocks during uncertain times, a technical review of an ETF could help new traders learn what to look for. StreetTracks Gold Trust, GLD $86.64 ( chart ). First chart the ETF. If we go to the weekly chart, you will see GLD has made several attempts to cross over the 40 week moving average $88.40. At this point, GLD would need to overcome the 40 week MA to advance. Checking volumes - as important as price, we notice the last 2 weeks have had a surge in volumes. Price action has followed the volumes to the upside. We conclude the probability has increased GLD will cross the $88.40 level based on all of these criteria. If all else fails, we place a stop-loss just under the stock as we enter the trade. |
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| September
21, Weekend Update 2:30 PM EDT |
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The SP500 ( chart ) has rallied for 2 days after another 52 week low of 1133 on the week. If we stick to the technicals of the chart and ignore the Fed bailout by Paulson, volumes suggest a local bottom. On the bearish side, the SP500 remains below the 50 day moving average. Volumes tend to slow after major news/earnings events. We may see a pullback as the Fed may not be able to pass these fast sweeping changes? Last week we touched on the fear in the market. Are the common investors going to jump back in this market with new cash ? It will take some healing before confidence returns. Quality stocks will lead the recovery as any speculative companies will be sold off. Limit your trades to the top names with the best earnings potential. Rallies followed major lows in 1962, 1966, 1970, 1974, 1987, and 2002. Please review the 1974 bottom ( chart ) on google, some sliding of the chart to zoom in on the year is needed. The major low of 1974 was not straight down and back up. A double bottom was observed. The case could be made for the SP500 to have put in a local double bottom at 1200 and 1133. As we see on longer charting, a low of 800 on the SP500 could be a key support level if this bailout fails to provide confidence to the markets. For the next 5 days, either the SP500 trades above 1300 on a big rally or just treads water and consolidates the Fed's actions. The best case at this point on the charts would be a rally to the 200 day moving average of 1343. It would take 2-3 weeks for this move. Anything is possible. Update on last Week's picks
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| September
15, BLACK Monday 10:30 PM EDT |
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The Financials have pulled down the SP500 to below support at 1192. The SP500 closed down 4.71% on 6.9 billion shares. Today was a day when fear was in the market. The news and media have placed the market drop as a top story. It may be time to watch how this plays out. SDS was up 9.79% and SKF up 17.14% on record volumes. The VIX, ( chart ) jumped 23% today to 31.70 and could signal a local bottom. Bottoms are made on fear and record volumes. The next support level for the SP500 is near 1150 if we do not see a rebound in this month. |
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| September
13, Weekend Update 5:03 PM EDT |
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The SP500 is a a key support area near 1200. On a 3 year chart, the SP500 looks to be putting in a bottom. Wells Fargo has caught our attention and worth a review.
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| September
9, 2008 Tuesday eve 10:00 PM EDT |
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Looking at the SP500, the 3.4% today suggests a re-test the 1200 level. Volumes were high on Monday and Tuesday as the bears and bulls trend sideways. The Financial rally was a bear trap. As far as history will show, it's turning out to be a bear market with one of the greatest housing meltdowns in the last 30+ years. On Monday morning, the pre-market bids indicated Lehman Brothers to open to the upside along with Citigroup. The overseas action was clearly a good news rally with big moves higher on the financials. On what was to be a relief to the fears of the Fannie and Freddie meltdown, we have Lehman crashing 45% and Citigroup down 7% today. For the traders, the Ultrashort Financial Proshares SKF ( chart ), up 10.99% today, has made fast moves in both directions in the past 2 days. The close today is under the 200 day moving average, but today's volumes suggests another move above the 200 day MA. The fed may need to save a few more banks before we hit bottom. Foot Locker FL, $17.55 ( Chart ) , continues to move higher - at least the stock scan scans are still working. I would use caution, as sell-offs could happen at any time in this bear market. |
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| September
8, 2008 Monday Pre-Market 9:00 AM EDT |
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The Pre-Market will be a surge in the Financials. Fannie and Freddie are fueling a rally in overseas trading. The futures are pointing to an open up greater than 2%. Asian and Europe markets have approved the bailout. What we do not know at this point is if the SP500 will rally all week or the jobs numbers out Friday will bring down the rally. Some caution is needed as we look past Monday's trading day. Hurricane IKE is on track for the Gulf by the end of the week. ( link ) this could redirect attention from the financials by Friday to the Oil markets. For the morning, traders will be pushing up the financials. Set you stop-loss as you enter these trades. We could see a pull-back after the Market opens for 1 hour ?
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| September
4, 2008 Thursday Eve 11:35 PM EDT |
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A sell-off as technicals break down across several sectors. Thursday's drop was 3% on the SP500 on above average volumes to close below the 50 day moving average. It does look like we will re-test the 1200 area. Given we are bearish on the current market, the ETF's could be the way to play this downtrend. SDS $69.96 ( chart ) up 5.8% today. A suggested stop-loss is $67. The upper target is $75. To give our readers how unpredictable the market is, last night we ran a scan of some big names which looked like they were breaking out. The list included H&R Block. HRB ( chart ). Today it dropped 9.7% from yesterday on 2X volumes. $26.66 was yesterday's high, today we close at $23.93. We are not tossing out picks for our readers as our confidence in this market following a 3 day uptrend is lacking. Playing the ETF's may be safer. The public is being kicked hard with great companies in a bad market. Footlocker FL $17.32 ( chart ) , managed to make some gains in a down day. However, if the selling were to continue to 1200 on the SP500, these short term advances could give way to rapid losses. To follow-up on our US steel pick from the weekend, X, $112.67 ( chart ) has broken down below the 200 day moving average. The next level of support could be $90-95. This technical breakdown is very bearish. We now see the 200 day moving average as technical resistance. When a stock closes below a key technical support level, just exit the trade. The next day you could find the trade gap down below your stop loss. West Texas Oil ( graph ) has closed below the 200 day moving average. If oil drifts lower, we could be heading lower to the $100 support level. |
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| September
1, 2008 Long Weekend Update 11:45 AM EDT |
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Hurricane Gustav will halt the production of oil for the near term. With the Oil and Gas companies last traded pre-Gustav, Tuesday's open will be based on current spotty news reports. Major support for Oil ( graph ) remains at $110-$111. The near term Oil outlook remains in a trade between $111- $119. We make this call, with the assumption weaker than expected long term damage is done in the gulf. The USD index 77.31 (chart ) has not retraced and is building some support in a bullish formation. We could see the USD advance as the index is above the 200 day moving average and finding support at 76.50. A move above 78 could confirm another advance. Reversal Stocks and Break-out Stocks, New Stock Scan Results :
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| August
23, 2008 Weekend Update, 12:25 PM EDT |
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The USD index 76.81 (chart ) has slowed the upward move. The very fast sell-off, and move Friday suggests more consolidation to come. We would not be a surprised to see the dollar drift back to the break-out point of 74-74.50. A Friday rally does not change the big sell-off on Thursday. Gold $833 ( chart ), and Gold stocks have put in a good week. We are not as bullish as last week's comment on a reversal. If the USD does move lower next week, gold could gain. StreetTRACKS gold trust shares. GLD, $81.08 up from $ 77.63 (chart ). on last weeks update. up 4.4%. GLD made a high of $84.54 for the week and rolled over as it touched the 20 day moving average. A new suggested stop-loss is $80.50. Oil closed this week at $114.59 ( graph ). At $111.50 oil moved up sharply bouncing near a major technical support level for oil at the 200 day moving average of $109-110. We have discussed this move for the past few weeks. What's next ? We provide 2 options. (1) Oil could re-test the support level at $110-111 and put in a rounding base and consolidate in the next 10-15 days. (2) A move higher to $120 -125 with a drop in the USD. With the Hurricane season in progress, keep an eye on the gulf NOAA for possible storm tracks. Update on last
Week's picks
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| August
19, 2008 Tuesday Eve 9:05 PM EDT |
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10+ new stock picks and stop-loss points were emailed to our members. Membership is free. We have re-posted this email for our non-members 24 hours later on Wednesday, August 20. Coal
stocks have just moved higher as the leading sector for the day’s
gains.
Natural Gas stocks are included in the bottoming formations of charts.
Devon, DVN,
Chesapeake CHK (chart ), XTO
Energy XTO (chart), and
Apache APA (chart ) are
a few names to watch. The
oil market also put in a good day.
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| August
16, 2008 Weekend Update, 11:05 AM EDT |
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The SP500 1298 closed for flat the week up 0.15% on average volumes. Trading was sideways with no clear direction. The bear market continues attempted rallies and sell-offs. In the last 40 trading days, the SP500 has moved from a low of 1200 and moved slowly up. We see a weakening rally as we move near resistance between 1320-1340. Late September to mid-October may see another re-test of the 1200 low ? Last week we commented the USD index 77.15 (chart ) was moving higher. The gain in the dollar was impressive. From a technical view, resistance between 77-78 could slow down the dollar's advance. Above 78 we could see further gain, but for now we could see some consolidation in this quick move up. Gold $792 ( chart ), and Gold stocks have been selling off with the USD's move higher. The sharp move down could set the stage for some very fast moves higher. Let's wait to see this reversal before going long on the trade. StreetTRACKS gold trust shares. GLD, $ 77.63 (chart ). GLD is at technical support between $77-82. We could see a pause in this move lower in the next 5 trading days. Oil closed this week at $113.94 ( graph ). Oil could be slowing this pace lower with a major technical support level for oil at the 200 day moving average of $109-110. The slowing price decline is apparent on the charts. The probability for oil to rally goes up with this extended 5 week decline. We have suggested break-outs which have failed as traders are not holding long term positions and are taking quick profits. Until the end of June stocks related to potash, coal, steel, oil, gas, and gold were making new highs. The CRB index, (chart ) was shows the demand for the raw materials of the world changed at the end of June. Follow up : Stock scan picks
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| August
10, 2008 Weekend Update, 10:01 AM EDT |
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Finally what could be a small rally is under way. The SP500 1296 closed for the week up 2.86% on average volumes. We are now just nearing the 50 day moving average and it would be bullish if we close 15-20 points higher next week. As we mentioned last week, a move nearing the 200 day moving average (1375) could be expected at some point. This may not be the time to be shorting the index. The USD index 75.86 (chart ) has moved higher and pulled the price of commodities lower. The bullish move above the 40 week moving average is a signal the dollar could be moving higher in the weeks ahead. Currencies around the world have moved lower. Oil's move from $147 to $115 ( graph ) has been fast. We expect a major support level for Oil at the 200 day moving average of $109. Last week, $121 was a key technical support level. DUG, $38.32, Proshares Ultra Short Oil and Gas. Lock in some profits as this oil and gas sell-off will not continue without a near term buying opportunity for these resource stocks. We are up 17% from our initial pre-market email alert to our members. -see trading notes Gold $864.80 ( chart ), and Gold stocks have been selling off with the USD's move higher. Gold has moved lower and closed below the 200 day moving average (bearish). StreetTRACKS gold trust shares. GLD, $ 84.43 (chart ). GLD could be moving lower with lower levels of technical support between $77-82. Follow up : Stock scan picks Thursday, August 7th at the close.
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| August
7, 2008 Thursday 11:40 PM EDT |
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| Profit taking is making any
stock a short term trend. We are in a 10-14
day trend environment. Our top airline pick, Southwest Airlines LUV, (chart)
drops 7% as a nice uptrend was forming ? Walmart $56.96,(chart) down 6.25% on what looked like a break-out at the $60 range. We were not in this trade, but even the pros may not have seen this move lower. We may need to re-tool our stock scans for short term trades, no clear leadership exists in this market.... yet. The market is looking for direction. We could be making sector bottoms as the falling knife sticks in the ground and vibrates. Raw stock scan results for Thursday at the close. JNJ, MCD,ADPT,ALXN,DLTR,MYGN,PWAV,THOR. Use a stop-loss on all trades. |
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| August 5, 2008 Tuesday, Pre-Market Email to members | |
West Texas Oil (chart) $119 down $2 in morning trade. Oil's move lower is making the headlines. The next few days will give us more of an indication if this drop is just a re-test of support. World events can move crude. Crude is just under technical support and could rebound. Possible Trades for the near term Southwest
Airlines, LUV, (chart)
$16.08 ,
stop-loss at $15.40. The trend is up with the falling fuel costs. This
depends
on a continued energy theme of lower oil prices. Proshares Ultra-short Oil and Gas, DUG ( chart ) $38.89 is just crossing the 200 day moving average. We first picked this at $32.59 on July 16 as a reversal to the oil trend. It’s worth watching if oil does make the next leg lower. Higher than average volumes were traded on Monday. Use a stop-loss near $37.50 |
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| August
2, 2008 Weekend Update 1:30 PM EDT |
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The SP500 1260 closed for the week unchanged. In the past 4 weeks, the low of 1200 has remained lower support. The week was very choppy, down and up. Longer term, a rally to the 200 day moving average 1381, is to be expected at some point in this downtrend. West Texas Oil $125.10. We reached our target of $121 last week and made a near term low at $120.42. With Friday's close, the chart suggests a move higher to $134-135 ( the 50 day moving average ). A move lower is still possible, but traders have limited this downside move near term. Break-out Stocks, New Stock Scan Results :
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| July
28, 2008 Monday 11:30 PM EDT |
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The financials pulled down the market. The only good news was the SP500 drop today of 1.86% was on lower than average volume for the past 10 trading days. On the short side SDS, $71.20, up 2.96% today could be moving higher, if we have weaker than expected market news Friday. Ultrashort Financials SKF $141.98 up 7% with a stop-loss increased $130 this is a trade with a short term target of $160. Update on our break-out stock-picks. JNJ, OSIP, and HAS. Wait for the break-out and if it fails to materialize, move on. If we do break-out in a sector, or if the market moves sharply lower, all sectors will get pulled down. This market is choppy and at the moment, it is unclear if the financials will make another bottom this week or move higher. Of the 20 stocks breaking out last week, all have moved lower today. We may be moving to cash/sidelines if a trend up or down does not appear. |
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| July
26, 2008 Weekend Update 12:30 PM EDT |
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The SP500 volumes Friday were below average on Friday. For the week, the index hit a high of 1291 before reversing direction. As this rally failed to go higher, it confirms we are making lower lows - a bear market. The financials have reversed direction for the week, XLF $20.87. After testing the 50 day moving average, XLF has moved lower. The trade could be to go to the Ultrashort Financials SKF $132.60 with a stop-loss at $125. For the short term, both directions could be limited by a few percent gain or loss. West Texas Oil $121.61 is a first key technical support level on this leg down. The short term trend will be to (1) drop below $121 support on the way to $110 or (2) to bottom at $120-121 and move toward $135. The market likes symmetrical patterns, and a head and shoulders top was described in (2) above. In any case, we need 2-3 trading days to determine the direction. Break-out Stocks, New Stock Scan Results :
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| July
23, 2008 Wednesday 11:40 PM EDT |
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| The financials and the drop in
oil have created some bright
sectors in the market. The SP500
could be on the way to 1325 near term with 5 days of high volumes,
momentum is to the upside. West Texas Oil has broken below the 50 day moving average. $121.61 is a first key technical support level on this leg down. Last week (July 16) we suggested oil has topped at $147. We moved into a defensive position on oil and gas stocks. If this is the real break in the oil run, $107-110 are possible technical support levels. We could see West Texas at $95 this fall if the world demand slows. Updates from our Weekend picks DUG, $36.16, Proshares Ultra Short Oil and Gas , after making the target of $36 what's next ? The volumes today were 40 million shares which is 2X the average volumes. If we pass above the 200 day moving average, which is usually a resistance point - the older resistance of $44 would be a target. For now, reset a suggested stop-loss at $32.50 Citigroup, C, $21.12 up 28.2% from our $16.47 Thursday pre-market email. The volumes slowed and a pause in the uptrend could be near. Suggested stop-loss $20 JP Morgan, JPM, $41.96, up 16.7% from our July17 pick @ $35.94, Suggested stop-loss $40 Break-out Stocks, New Stock Scan Results : US Airways, LCC, $5.06 up 18% today on 3X volumes. The 50 day moving average has been broken to the upside. In the last 2 days, big money is moving into this uptrend. Stop-loss $4.50 Southwest Airlines, LUV, $15.88, Near term targets are $16.50 to $17. A suggested stop-loss is $15. |
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| July
19, 2008 Weekend Update 4:31 PM EDT |
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| A Wild ride on Wall Street. The
market changed direction for the
financials in the last 5 trading days. Our members were emailed in time
to catch most of the action. This market is not trending in
one direction and fast moves are needed to avoid losses. The SP500 at 1260 is below prior technical support levels of 1256 and 1270. The market may weaken if it were to reach 1280-1300 and re-test 1220 as a double bottom. The VIX Volatility index, 24.05 is moving lower. After reaching a high of 30.81 in the last week, the market has made a single bounce off bottom. West Texas Oil $129.47 has fallen below support at 130. Near term, oil may stabilize in the next 2-5 days and move back toward $135. Oil's move was fast and this trend will not be straight down. Update on Stock Picks
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| July
17, Thursday Pre-Market 8:55 AM ET |
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Financials could make a 2-4 day rebound. This would be like unwinding a tight spring. Take advantage of the market's short term uptrend. Citigroup, C, $16.47 , short term target is $17.50 JP Morgan, JPM, $35.94, short term target is $39.53 We stopped out of : Ultra Short SP500, SDS stopped out @ $71 with a gain of 12% from our first post June 20 at $63.37 UltraShort Financials SKF, stopped out @ $190, a 13.7% gain from the July 11 Pre-market email alert $167.04. |
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| July
16, Wednesday Pre-Market 8:45 AM ET |
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West Texas Oil $145.66 may have topped @ $147.90 for the next 10-20 trading days. The 50 day moving average of 132.79 is a possible short term target. Oil and Gas stocks could be moving lower. A possible trade is: DUG, $32.59, Proshares Ultra Short Oil and Gas , short term target is $35-36. Several of the bank stocks look oversold and a short term rebound is near. From our weekend stock picks we suggest increasing stop-losses for: |
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| July
13, 2008 Weekend Update 11:40 AM EDT |
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The SP500 at 1239 is below key technical support levels and is moving down on a sell-off. From a technical view, the weekly volume of 23 billion shares is or near an all time high. The VIX Volatility index is moving higher with a 29.44 intra day high. When the VIX hits a value of 30+, we could see the market reverse direction. For now the financial turmoil on Wall street needs to clear for this rally to materialize. Even the best minds need to be flexible in this fast market.
Break-out Stocks, New Stock Scan Results : The US traders' notebook is updated with new stop-loss positions for Ultra Short SP500, SDS $71.31 and Barrick Gold ABX $49.21 Goldcorp, GG, $48.29, moved higher Friday and is either going to spike above $50 or retrace lower. It's near the break-out. Watch this next week for buying on volume to confirm the buy signal. A suggested stop-loss would be near $46. |
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| July
11, Friday, Pre-Market, Email Alert to Members 8:53 AM EDT |
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| Pre-market stocks/ETF's to watch streetTracks Gold, GLD $93.53, Barrick Gold, ABX, $46.72 UltraShort Financials SKF, $167.04 is going up on the open. Suncor , SU, $58.30 , could have made a base, support at the 200 day moving average. Mid-week it looked like the financials could have bottomed, XLF This is not the case, wait for a better entry point. Oil is trading higher, it's time to exit short positions in Oil stocks. West Texas Oil. at $145 we could see a spike higher. |
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| July
8, Tuesday, at the Close 11:36 PM EDT |
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The SP500 at 1273 could have put in a short term bottom of 1240. As the market moved up today, we are watching the trend to see if this is just a bear rally to cover short positions.
We have stopped out of:
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| July
5, 2008 Weekend Update 8:30 AM EDT |
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The SP500 at
1262 is within points of key technical support levels. We could be
bracing for a bigger sell-off.
Develop your own trading rules and stick to them. A 5% loss from a stop-loss is easier to swallow than a prolonged drop of 37% over 6 months C $16.82. Often rookie investors will watch a penny stock drop to near zero, "hoping" for a recovery. As a rule, the higher the stock price, the more a predictable trend is observed. POT was a $105 stock and moved up 100% in 2008. A new trader may pick the lower priced stock IVAN because it looked cheap. POT has two trading advantages: (1) large trading volumes and (2) a greater market cap. Penny stocks can move on pure speculation and no earnings. Your style will be to know how glued to the screens you are. Penny stocks are the most intense, often moves of 5-20% per day are common. Penny stocks are the wrong place to start a rookie trader. We have watched the coal and steel stocks sell off in the last week. Walter Industries, WLT, $87.57 has now clearly broken a trendline on a daily chart. On a weekly chart, the 40 week moving average is $56, and a possible target price if we continue to see more downward pressure. Break-out Stocks, New Stock Scan Results : The US traders' notebook is updated with new stop-loss positions for Ultra Short SP500, SDS , UltraShort Financials SKF , and UNG. SKF has closed at a 52 week high on July 3.
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| July 2, Wednesday, at the Close | |
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The SP500 at 1261 is within points of key technical support levels. We could be bracing for a bigger sell-off.
A sell off in Steel and Coal stocks. It looks like the fast money could be leaving some of these commodities. One coal name we have been following for months, James River Coal, JRCC $45.75 down 22%. US Steel , X , $153.40 down 12.5%. Both drops are textbook with high volumes a signal of a move down. Walter Industries, WLT, $89.32 looked like it may have a possible break-out last weekend. A stop-loss at $108 was suggested. With the drop today of 20.45/share some trading discipline is needed. WLT opened with a high of $111.99 and then fell all day to the close. If you are new to trading, entering a trade with no stop can be ok, provided you can sell when you need too. It takes real fear of losses to perfect your downside risk. Remember the hot money will leave the trade as fast as the stock moved vertical. Oil is up and Oil stocks are down ? The Ultrashort Oil and Gas ETF, DUG, moved 5% higher on 2X volumes, 35,000,000 shares. With West Texas Oil at $142.10 and positioned to move higher, this move down on Oil and gas stocks could be to lock in profits. |
| Archived Trades and Traders' Notes |