Daily Stock Picks Report Archive

The stock market moved up with fierce buying today with the second biggest point gain for the Dow Jones as financial stocks led the charge.  The financial ETF, IYF moved up 12.24% today with financial stocks moving up anywhere from 11.7% to 18.61% (MER, Merrill Lynch).

MS, Morgan Stanley had a big trading range today and after dropping 35% from the open, it rebounded from that low a whopping 50% the last half of the day.  So we are going to continue to see volatility in such a wild market.  I mentioned in the video last night that we normally see the day before and morning of the FOMC announcement on interest rates, the markets tend to be low trading volume and volatility.  But nothing is normal with all world stock markets now.

Light Sweet Crude Oil prices edged down to close at $62.73 per barrel.  It is becoming irrelevant to the stock market what oil prices do but does affect prices of oil, coal, and solar stocks.  Long term, this will benefit the consumer to have this low of gas prices but longer term, we are likely to see oil prices move up.

Last night I went through on the video the various indicators that I look at when trying decide an entry point to buy long as a swing trade up to 7 days or an intermediate term position that may last for months.  Let’s look at those indicators again tonight as see what kind of changes take place on such a big move up in the stock market as we saw today.  The VIX, VXN, T2108-Stocks above 40 day ma, T2100-Advance Decline Line, as well as some of the short ETFs like SKF, SRS, SDK and others.

It has been most difficult to forecast directional moves in the stock market this past 4-5 weeks with so many strong forces at work from the failures of mortgage companies, investment banks, money center banks, insurance companies and credit lock-up.

The purpose of this list below is to have a list of stocks ready to buy when prices are extremely low and all indicators are screaming "buy signal."  You won’t have the time or calmness to assemble a group of stock picks when the markets are ready to buy.  Every time in you see a big sell-off in the stock market in your career, you want to have your "go to" list ready.

List of most profitable and highest quality stocks  V, Visa International

MA, Mastercard
KO, Coca-cola
SLB, Schlumberger
DD, Dupont
DOW, Dow Chemical
BP, British Petroleum
COP, ConocoPhillips
CVX, Chevron
WMT, Wal-Mart Stores
PG, Procter & Gamble
IBM, IBM
BRKB, Berkshire Hathaway Class B shares, lower priced than Class A shares.
GSK, GlaxoSmithKline (major drug manufacturer)
BAC, Bank of America
PEP, Pepsi-cola
GOOG, Google
AAPL, Apple Computer
APA, Apache Energy

Follow through with some stocks we have talked about in the past few weeks:

POT, Potash.  It would be ideal to see this stock to go at least sideways with a slight upward move.  This could start building a base here.

FCL, Foundation Coal.  The coal sector will start moving up when oil prices stop dropping.  We are getting a little hint from some of the indicators that this could be starting a move up but it is too early to conclude that yet.

ACI, Arch Coal still moving down but take note this is 80% lower than June 2008 highs.

BAC, Bank of America, is looking better now that it did not go below the July 15th or October 10th low.

GS, Goldman Sachs hit a low of $82.22 today and was very weak on this rebound we had today.  Study further any news that may be affecting it.

CVX, XOM, COP, BP, major oil stocks had a huge move up today from 13.3% to 15.3% moves up.  These are 4-5% dividend yielding stocks moving up in stock price. 

X, SCHN, AKS, MT, steel stocks have taken 80%+ losses since the June 2008 highs in this sector.  The odds are overwhelming that this sector starts moving up in a general direction. 

PRU, MET, HIG-insurance stocks look like a decent bounce is coming in this sector.

None of these sectors will move straight up but in a general trend.  Some days will be up and some will be down but the net trend should start leveling out, gradually moving up with some spurts of sharp gains in stock prices.

Try to remain even keeled emotionally on this market.  Don’t get depressed when you are losing money on your stock positions and don’t get overly excited that we just gained 889 points or 10.9% on the Dow 30.  We have not been seeing many days following through on the upside with stocks and I don’t expect as big of a move up continuing tomorrow. 

The most likely scenario, based on the pattern we have been seeing for months, is that the market may have a slightly positive opening tomorrow morning but could be easily met with selling.  Remember that this is going to be a process of working in a true bottom in the stock market indices (Dow 30, S&P 500, NASDAQ Composite).  It is a really good sign to see such a decisive move up today because this type of move tends to signal the future intermediate direction of a stock or index.

I talked to an elderly gentleman today and he said he wanted to sell all his stocks this morning.  After questioning his reasons, he said he couldn’t take it anymore and I said to hold on to these long positions.  The same I say to you, don’t make decisions to buy or sell stocks based on emotions or feelings.  It may allow you to feel better for just a moment after you sell the stock but you will likely start questioning yourself after you sell as if to say "What did I just do?" 

I explained to another lady last weekend that stocks will move up so fast that you won’t be able to benefit from the big move up when you are out of the market.  There will be a panic buying trend over the coming months and the stock market will very likely overshoot on the upside, as it usually does.  We are seeing history in the making before our eyes!

If you don’t need the money for a few months, the odds are overwhelmingly in favor of stocks moving upward, the highest quality and most beaten up stocks the most.  (Actually, almost all stocks are beaten up!)

When you are in a situation like we have been in with the stock market and if you have a losing intermediate or swing trade, you have to keep looking at where the stock is going and monitor if it is still within the parameters of keeping the position.   It is obvious that I have been wrong for not directing you to sell after the big run-up in the intermediate positions that I was pounding the table on October 10th (I think that was the date) but I do know that after such big percentage drops from last summer’s highs on these stocks (70-85% haircuts on many stocks) that it doesn’t take much time to make up for losses near the bottom of the stock’s trading range.  (Hope that makes sense).

Don’t be too alarmed that the market may move up a little tomorrow and selling could start again but it will probably be a mild type of selling for a couple days compared to what we have been seeing in the past.  See the explanation in the video.

For the short term trader, I am looking for stocks like MON, Monsanto to continue its trend to move up a little tomorrow and possibly sell down (See VIDEO) clip) for a couple of days.  This is a short term swing on the short side for experienced traders who can closely monitor this strategy.

Keep your position sizes small and no leverage.

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

Mitch King

www.TradeStocksAmerica.com

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