Daily Stock Picks Report Archive

The stock market sold off today with the Dow 30 correcting -400 points or 4.4% in the first 30 minutes and sold off hard in the last hour as much as -698 points (or 7.6%) in the last 15 minutes.  The Asian markets have also sold off by a higher percentage drops as much as 9.4% in the Korean markets.  

The European markets were down almost 5% before their close this morning and will likely drop again as they open later tonight.  This might pressure our US stock market tomorrow at the opening but I am looking for the beginning of a rebound that may carry over into Friday morning, assuming no bombshell news appears as we consistently saw last week.

There was no bombshell negative news today other than global economic and recession worries resume.  Yesterday and today was no panic or high anxiety as we saw last week; perhaps we are getting used to the news.  We didn’t get near as high of trading volume as the October 10th and 17th down days in the last two weeks.  I mentioned a couple of days ago that if the market drops to new lows, lower than the October 10th and 17th lows, we could be in for further substantial drops.  Just in case, we should be on the lookout if that is happening.  

These series of events in the past month are so unusual that it makes the forecasting of stocks and stock markets so difficult.  There are so many variables and forces at work now compared to a normal market.  What isn’t clear yet is if the market has priced in the gloom and doom of the future deep recession.

Many stocks broke below its previous low and made lower lows, which is clearly a negative sign.  Let’s look at some of these stock charts that made new lows and should now be considered as vulnerable to further substantial drops:  FCL, FCX, X, CNX, ACI, HLX, TCK, MT, AGU, POT, BZH, and DHI.

Note that Light Sweet Crude Oil prices dropped to a low of $66.75 per barrel and continues its freefall.  Look at the MACD lines have hit the bottom of the range and have never hit this low since the beginning of its charting on Worden in 2003.

You’ve been hearing from me that oil (and oil stocks) is oversold weeks ago (when it was 35-40% higher) and now there is even more opportunity as all energy stocks have dropped.  The profit potential is very substantial and the safest (but lowest profit potential) are the largest oil stocks like COP, CVX, BP, and XOM.

The independent oil and gas stocks that look good now are APA, APC, XTO, COG, EOG, and GMXR.

Stock charts just don’t go down like this as spot oil has and stay down.  I just don’t buy the explanation that "demand destruction" occurred to this extent.  The theory is that the $147 a barrel price caused people to alter their buying habits to such an extreme that around the globe people have reduced their driving.  This is clearly an over-reaction and should give us an intermediate term opportunity that lasts for months well into 2009. As soon as people start feeling good again and not hearing the drumbeat of fear from the media, most of the habits people had before this last month will start to return to near normal levels.

Several stock ideas that are getting interesting as a long position fairly soon are:  BLK, STT, PRU and I still like PEP.  It would be ideal to see further selling in these first three stocks.  Do some reading on these first three stocks on your own so you know the issues that are driving them.  BLK, Black Rock, is an investment brokerage firm.  This has gone down with all of the financial-brokerage-bank stock’s sector.  STT, State Street is an investment company that manages large amounts of money in various mutual funds they started.  PRU, Prudential Insurance is one of the largest life insurers.

Remember that a bad number in economic recessions for unemployment is in the high 7’s, like 7.7%.  Greenspan always said that there was a 4-5% group that are "unemployable" anyhow so my basic logic is that 92% would be employed during a bad recession and how can that be so bad compared to what we keep hearing on the media.  Maybe it is just because I hear and read it all day and the media keeps beating the same drum until they find something else to talk about.

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

Mitch King

www.TradeStocksAmerica.com

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