Daily Stock Picks Report Archive

November 16, 2008, Sunday Evening                                                                                                                            www.TradeStocksAmerica.com

Although I personally had a good trading day on Friday using the intraday (scalping) trading strategy, there still is a lot of volatility caused by the push and pull of the bulls and the bears (people who buy long vs. those who short).  It was not a clean buy signal Friday on the drop and pop compared to Thursday and although the pop was a good general trend upward, it was a real schizophrenic from a 5 minutes time frame to the next 5 minutes.   The last 30 minutes, the sellers and short sellers really took the stock market down.  This is probably a program sell with what some call the robotic cyborgs coming in to attack the market on the short side.  The short selling robots seem to be weakening somewhat.

I am looking for the market to have a negative opening tomorrow, and drop with a substantial pop later in the session.  It is conceivable that stocks could be held overnight as a swing trade long although it is doubtful we will start a run as big as that 6 day run upward a couple of weeks ago.  I’ve outlined a handful of stocks that

If you are working with this intraday trading strategy, it would be good to have an intraday chart open during the day of SKF, Proshares Ultrashort Financials.  I use it as another indicator what the stocks are doing and it can be used to confirm your bottoms in charts when you are planning to go long.  SKF chart will be going vertical and turning over and that tells you what the market is doing.  The VIX, Volatility Index, has a delayed reaction so I use the SKF instead for this purpose.  It is kind of a pulse of the market as a contrarian indicator.    

GS, Goldman–I still think this is a stock to be long in the following weeks. I am looking for low $90s in a few weeks, maybe into January.

HIG, Hartford Life Insurance was strong Friday and should be watched for a long entry at a lower price.  Read what kind of news is affecting that stock.

The VIX, Volatility Index is still high at 66.31. 

Oil prices went to a new low at $55.69 per barrel on Friday.

Intermediate Trade Positions:  If you have existing positions, be prepared to hold for several months go see substantial gains.  If you are looking to go long for an intermediate position (1 week to several months), I’d hold off a little longer until we get a direction change in the market.  See Last Note below.

Swing Trades:  GS, Goldman Sachs, still is on a steep downward trend although the odds are getting good for a substantial bounce. 

Day Traders/Intraday stock ideas:   Continue to look for the drop and pop intraday trading technique to work tomorrow.  The following stocks are ideas that could easily pop in the last few hours of the day tomorrow and carry over into Tuesday on the long side.   Drop and pop stocks:   FSLR, IYF, AAPL,  POT, GS, JPM, BAC, BLK, MT, RIMM (intraday only) and  coal stocks like MEE, FCL, ACI, CNX (but not PCX).

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.

Concluding thoughts:  I still think we are going to have a lot of opportunities both long and short with continued volatility.  This makes intraday and swing trades the highest probability for the most profit in stock trades.  If your desire is to not trade frequently and you are looking for stocks to buy and hold for several months, then it would be better to wait until we see a more obvious point at which stocks may rebound substantially for an extended period of time.  You may be waiting for some time though.  In the meantime, the short term strategies we have been using from intraday to swings and lately as long as 5 days, have been working for us.  I like the idea in this market of taking small bites as opposed to going for a home run.

Best odds only, be decisive, aggressive, mentally flexible, stay in position size, don’t overtrade and wait a little longer to buy and wait a little longer to sell.  You will find that will make you more money on your trades.

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 tomorrow.

Mitch King

www.TradeStocksAmerica.com

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