Daily Stock Picks Report Archive

November 11, 2008  Tuesday Evening                                                                                                                           www.TradeStocksAmerica.com

The stock market was down again today for the 4th day out of the last 5 trading days.  The market has been a little more negative than I expected but it looks like the probability is increasing that we should start turning upward soon and get some support in stock prices.  The Asian markets are down again tonight which might weigh on the US stock markets at the opening tomorrow morning.  The important thing to watch for is if we stay above the lows set in October in both the indices (Dow 30, S&P 500, Nasdaq Composite) as well as individual stocks.  Stay away from stocks that are making new lows and broke below that October support level.

The financials took another hit today with the SKF, Ultrashort Financials moving up another 5% to close at 156.  The IYF, the long ETF in financial stocks is getting close to a long position on an intermediate or at least a swing trade.  IYF did get under $47 today and this should start gradually moving upward fairly soon.

GS, Goldman Sachs acted the way we wanted on my favorite chart pattern before going long.   It continued to drop further and gave us a good price and we got an excellent rebound of over $8 off the bottom of $66.70 and moved up 12%.  I am looking for $90-95 for the first target price level, probably within a couple of weeks.  Set a trailing stop loss on this of about $4.  We probably get a second chance to buy this as it may open down with the market slightly and look for another bottom to go long if you missed today’s opportunity.

Keep an alarm on HIG and PRU as they continue to move down more today.  This is shaping up to be a decent long position in the next couple of days.   I’d be looking at PRU, Prudential close to $25 as a possible long and HIG, Hartford, close to $9 before trying to buy as a swing trade.

The VIX, Volatility Index moved up very little today, only 2.4% to close at 61.44.    We should see the VIX drop as the stock markets tries to move upward these coming weeks.

Intermediate Trade Positions:  If you still have stocks long and did not sell in this latest rally, be prepared to hold for a couple of months to move to higher highs.  It is a little too late to be selling now.  The stocks under Swing Trades column could easily turn into intermediate term positions.

Swing Trades:  GS, Goldman Sachs is most interesting as a long swing-see note above.  BLK, Blackrock is an investment brokerage firm and looks very interesting as a long purchase, probably tomorrow although I’d like to get a better price than the $115 it closed at today.  These other stocks are also good candidates for long purchases:  FCX, AXP, AAPL, TOL, and BAC is an excellent idea only when it stops dropping!

Day Traders/Intraday stock ideas:   The drop and pop pattern that we have been using on the intraday trades should still work well on the long side tomorrow.    You will notice that the last two days these stocks have been taking longer to pop because the stocks have had so much selling pressure but I am expecting the market to become a little more bullish as we approach a general support area in stocks.   As long as a technique works, we keep using it.  These same stocks should be good candidates of the drop and pop technique for LONG intraday trades with AMZN, AAPL, RIMM, FSLR, and POT.   FSLR, First Solar had selling pressure as expected but should be a little more bullish tomorrow. 

Last Note:  We are still in a bear market with a strong downtrend.  This recent rally we just had in stocks was just a counter rally within a bear market.  They are powerful and can be very profitable, as you just have witnessed (and hopefully experienced).  We use whatever stock trading technique the market requires from day trades to swing trades (2- days), intermediate trades for months, short selling and long positions.  We can buy stocks, stock options, ETFs or occasionally bonds.

Other ideas:  Make a note to yourself to keep watching YHOO, Yahoo, put on alarms on the low price that may hit $10,$9,$8.50 etc..  The stock is making new lows today after hitting $11.06 and closed at $11.35.  At some price, there is a good deal for MSFT as a buyer.  MSFT has only about 6% of the search engine market and YHOO has around 22% with GOOG, Google having around 65%.

Also keep alarms on FSLR as it continues to drop, maybe wake you up at $110 per share.

Try not to let the negativity surrounding our economy get you down, there are still plenty of was to make money, almost everyday in the stock market, if you know what you are looking for.  It reminds me of when a couple asked me what I was looking for on the beach when I had my fishing waders, a small net and a shovel.  I told them I was " looking for holes in the sand."  I was razor clamming.

Don’t trade unless the setup is there for you, then use the charts to tell you when the odds are heavily in your favor.  I recommend wide stop losses when using this technique otherwise you get stopped out frequently which is expensive, frustrating and distracts you from the bigger picture of making a successful trade.  Don’t force anything to work for you tomorrow, let the setups develop and then take advantage of that.  Be patient the next couple of days.  Stay in position sizes without letting any intraday trade be more than 25-30% of your total account value.  As you build your account, your position size percentage should get smaller and smaller to lower your risk.

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

Mitch King

www.TradeStocksAmerica.com

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