Daily Stock Picks Report Archive

This is Sunday Night and Lehman Brothers looks like they are going file for bankruptcy protection tonight or tomorrow.  Bank of America is buying Merrill Lynch for $29 a share or $44 billion.  So we are going to see some negative influences on the market with some positive but the news on Lehman bankruptcy news will have a stronger effect on the market than the positive. The overseas markets are down sharply, especially in the financial sector as you would expect.  The Dow futures are down 320 points

It would not be totally surprising to see an emergency rate cut by the Federal Reserve this week if the markets appear to be out of control on the downside but it is fairly low odds that this would occur.  The history for the Fed to have an emergency cut is well established under similar conditions.

We are seeing history in the making in "real-time" that will forever change the face of Wall Street.  Out of the 20 primary dealers, we have seen 4 disappear this year — Countrywide Credit, Bear Stearns, Lehman and now Merrill Lynch.  A primary dealer is a bank or broker that can trade directly with the Federal Reserve System.  The days of Wall Street investment banks are coming to an end.

FCL, MEE and ACI (coal stocks) had a follow through up day on Friday and are likely to continue. 

The housing stocks (DHI–DR Horton, CTX–Centex, KBH-KB Homes,  TOL-Toll Brothers, and even BZH-Beazer Homes)  are likely to pull back substantially with a low probability of hitting higher highs for some weeks to come, unless the stock market sees these banking stocks drop as the event that "marks the bottom" in housing prices.  Are we done going down on housing prices or a decrease in foreclosures?  We are probably 80-85% done going down and the way the housing stocks have put in a low in mid July 2008 looks like we might see a bottoming process start that may occur in 2009.

The ag-chemical stock sector MON, MOS, AGU, and POT have had 2 or 3 strong up days with AGU and MON moving up the most.  These are likely to drop for a few days and I’ll be looking at shorting these two tomorrow.

The next major opportunity in the stock market is going to be in the financial sector when it stops going down triggered by the LEH, Lehman Brothers bankruptcy filing and in the next rebound in the oil sector.  

Oil still continues to go down tonight to $98.58 as of this writing but when the oil stocks make a bottom and turn upward, the rise will likely be an exaggerated move upward, as stocks usually go further in a direction than we think.  

It is best we watch and wait how the market acts the next day or two before identifying any stock picks the for swing trading positions.

There should be some excellent intraday trades that will appear during the day.  Use 15 minute charts to identify a bottom I suggest NOT to use 1 minute charts on a day like tomorrow and Tuesday.

Have a Great Day today (and everyday) and we will talk to you tomorrow.  Keep your position size small and maintain stop losses. 

We will have a 1 day workshop on October 4th at my house in West Linn.  If you would like to register, go to this link.  This page might show an August date but this will be for October 4th from 8am to 4pm.  I recommend you bring a laptop with a brokerage firm’s trading platform software loaded onto it.  You will have high speed wireless internet access at our house.

I will provide a link in a few days for registration.

Have a great day and keep your position sizes in your stocks small relative to the account size!

Mitch King

www.TradeStocksAmerica.com

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