Daily Stock Picks Report Archive

The government took action to take receivorship of FNM, Fannie Mae and FRE, Freddie Mac.  The futures tonight are showing that we are going to open up 300+ Dow points in the morning and the Nasdaq futures showing +1.8%.  Japan is up 3.7%, HangSang (Hong Kong) is up 3.6%, Seoul Korea up 4.7%,

The financial sector stocks are likely to be up very substantially tomorrow.  IYF, the Financial Sector Index ETF.  The highest quality financial stocks like BAC,  Bank of America and WFC, Wells Fargo are probably going to spike up with a new high over the last 3 months and initiate an intermediate term upward move that could last several months.

The sentiment should shift toward a more positive tone in the housing related stocks, including the builders, basic materials, and this should trickle down through many other sectors as well.

The bond market should spike up as well, which has the effect of lowering interest rates.  I would not be surprised to see the long bond up over 2 full points tomorrow.  US Treasury bond market has had a big month upward in August, basically outperforming stocks.  This probably signals a new trend direction and a lot of the indecisiveness will evaporate.

The US Dollar has been moving up gradually and looks like the trend is going up slightly faster.  Because the US stock market is outperforming the foreign markets right now, this should attract more foreign money into our market.

With commodities moving down so substantially this last 2-3 months, the picture is changing very quickly now.  Oil is down 29%, corn, wheat, soybeans and others are down over 25%, this reduces the expectation of the US economy seeing inflation.  If anything, deflation is the concern with higher jobless claims and demand for goods is decreasing.

I am not even an amateur economist but I do pay attention to these factors and how this will affect our stock market.  So we should see new shifts in money toward different sectors and I’ll continue to identify where money appears to be flowing toward.  

With all this said, I think we are going to shift toward some good times in stocks.  This should be a trend where a longer term purchase of stocks long would be the most profitable position whereas you have heard me describe that this past several months or more have been a trader’s dream and that swing positions of just 2-3 days was what has been working.

Going back to the homebuilder stocks, watch DHI–DR Horton, CTX–Centex, KBH-KB Homes,  TOL-Toll Brothers, and even BZH-Beazer Homes (although this one has been the weakest of the group).  I am not saying that everything is now alright but this government action will start a new trend in stocks starting tomorrow.

I don’t have any specific stocks for you to enter into tonight, which is unusual but this government action requires us to watch the market’s action and see what kind of new trends that get established.

I am still short CRD.B but I am probably covering that tomorrow at a slight loss.

I’ll am short STSI and this moved up late Friday.  This one may continue to move against the short position, in which I plan to hold.  Mid 4s is possible before peaking.

Have a great day.

Mitch King

www.TradeStocksAmerica.com