Daily Stock Picks Newsletter from August 6th, 2008
The FOMC meeting was held today and as expected, no change in interest rates. It is doubtful that rates will be increased in the coming months as the credit markets, housing and now rising jobless claims try to regain some sort of stability.
Oil prices dropped to a low of $118.80 and the Federal Reserve made no changes today in interest rates while issuing favorable language in the press release today caused the stock market to have a broad rally in all sectors, except oil. The Dow went up almost 3% for the day.
The pharmaceutical, large drug manufacturer and biotech sector is still the strongest sector moving these past weeks. Look at BBH, the Biotech Holders ETF. I don’t think this sector is a buy in the short-term, considering the run we have had.
Even the larger pharmas are moving, JNJ and PFE.
KO is still moving, and looks strong.
I am still looking for a rebound in the oil stocks for a rebound that may last 4-6 weeks. We should be seeing a bottom fairly soon.
All of the independent oil drillers XTO, ATPG, GDP, COG that we have been following, including the natural gas etf UNG should also start turning upward.
CLHB continued up, this is still a hold.
The ag-chemical stocks (AGU, MON, MOS, POT) dropped hard today as a group around 11% and I still see this group as lower lows and lower highs continuing an overall downtrend. I see the air being let out of that bubble or at least that is what the pattern looks like.
Both CEDC and TXT moved down although they still are within a holding pattern..
Main point tonight: hold the oil stocks long and small short positions in financials.
I am watching YHOO although that acted anemic considering the strong bullish day today.
Copper manufacturer FCX, Freeport McMoran and industrial metals company, CNX, Consol Energy charts look really interesting as a possible bounce similar to what I am looking for in the oil industry.
The financial stocks are starting to breakout and move higher although it still remains to be seen whether that has much sustaining power to move up. The second trade in the SKF long position was stopped today at just over $119.50. I am abandoning this idea for a while that financials will break down and cause SKF to move up.
It is a tough market environment to get a pattern going with any positions longer than a 2 day swing. It definitely looks like the market is wanting to move up off the bottom put in on July 15th.
Keep your discipline with stop losses and position sizes that are relatively small. This keeps your account more stable and you actually make money more consistently this way. The old tortoise does better for sure.
Have a great day.
Mitch King
PS: Saturday, August 23rd is scheduled 1 day workshop at my house. Please email me at [email protected].
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