Daily Stock Picks Report Archive

The world markets are in absolute panic mode tonight with Japan’s Nikkei average down as much as 11.4% tonight.  This is the biggest drop in stock market prices since 1987.  Hong Kong was down over 9% at one point and all other markets are down from 6-9%.  The European markets are down at the open almost 6-8%, the Russians closed their markets for the 10th time and the S&P futures are indicating the US markets will open down another 2-3% in the morning.

As I wrote a few days ago about how this could spiral down further is the redemptions from individual investors.  Investment companies in the US have reportedly received redemption requests at a rate of $32 billion US dollars this week alone and $52 billion in the month of September.  This is the worse time investors could do that but many studies have shown the masses tend to do the worst thing at the worst time.  Time and time again, these kinds of losses see recoveries the following months and prices tend to go up to higher highs.

With a few money markets that were stating their money markets were below par value of $1.00 NAV, people withdrew like a run on a bank with one Putnam money market last month, which was subsequently closed.  So the fear is in the minds of the public that mutual funds and banks are not as safe as they were, which likely accounts for the

The situation we are in now around the globe as stock markets continue their freefall, is that this causes margin calls from brokerage firms, collateral calls to investment rated investments held by various large corporations, reserve requirements need refunding by banks as people withdraw from their banks and now individuals withdrawing from their mutual funds from investment companies.

Indicators that we saw today: 

1.    The VIX, Volatility Index reading was 64.92 today and it looks like it is going higher tomorrow.

2.    95.1% of the NYSE volume was down volume.  Usually it is somewhere around 51-49 and that will be enough to be move a normal market one way or another.

3.    The lowest percentage of stocks above its 40 day moving average at 1.20% after today’s close.

4.    14 stocks were down to 1 up on the NYSE.  A bad market day is considered 3 to 1.

What was working today was the intraday trades with the extreme volatility in stocks today.  Many stocks had such volatility that an intraday trade could have 4-6% and some stocks had 10% swings today.  RIMM and AAPL were two stocks that I worked with today that had high volatility.  I’ll continue working with that strategy tomorrow.  I stayed away from the financial stocks because we could get into that mode we saw with financials getting un-relentless selling now that the short sale ban has expired starting with today’s trading.  But I am still watching GS and MS to see how they acted today.  They saw no tradable bounce.

One idea that I am seriously looking at for tomorrow’s intraday trade stock pick is shorting SKF, which is a leveraged short ETF on the financials.  So when you buy this stock, you are assuming that financial stocks will go down in price and this fund goes up.  See the video above.  If I short this SKF tomorrow, I am assuming that financial stocks will rebound.

FCX, Freeport McMoran had high volatility and was also an excellent trading stock.  My strategy is to continue trade stocks on an intraday basis tomorrow with smaller than normal position sizes on the short side and weight the long side heavier.  Since we have a 3 day weekend, it is possible that the opening on Tuesday could also be negative if tomorrow (Friday) opens down.

The list of stocks that I have posted this week are still outstanding ideas and should be approached as a several month holding period.  So you don’t want to be heavily leveraged without room for taking further drop in stock prices.  Follow the charting setup as I’ve discussed in The Wizard Training Course or on various tutorial videos I’ve given in the last several months.  Use a 3 minute chart and a 1 minute chart for intraday trades.  The volatility is so high that I am not using stop losses on intraday trading tomorrow.

Have a great day and I’ll talk to you tomorrow.

Mitch King

www.TradeStocksAmerica.com

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