Daily Stock Picks Report Archive

November 17, 2008, Sunday Evening                           
www.TradeStocksAmerica.com

 

It was the same pattern today in those last 30 minutes when the sellers and short sellers took the stock market down.  It wasn’t as strong as previous days but it is becoming an all too familiar pattern.  It is starting to feel like Chinese water torture as the market continues to pummel us with down days with relentless selling.  We should be due for another big day up if the market continues down for another couple of days.  The pop today after the usual drop was stronger than most days but most of the drop and pop stocks listed in last night’s report were not strong enough to carry over the night for a 2 day swing.

It looks like the market will have a negative opening tomorrow with Hong Kong down over 6% tonight.  It seems as though the type of trading action we are seeing throughout the day as well as for weeks now is that the market is trying to get used to the idea that we are going into or are already in a deep recession that may last longer than most typical recessions.  Other factors could be Obama, the US Government spending on bailouts, rescues and liquidity purchases.  The fears that this one may be different or that it could be a depression as Donald Trump was the first to call it, and no country has been spared.

The intraday trading strategy is clearly the only thing that has been working on the long side or short swings lasting several days, the last one of which we closed the short positions last week. 

 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 continues to get heavy selling which dropped from $12.65 Friday to a low of $9.07 today.  This is getting to be dangerous to do any trading on this stock.

The VIX, Volatility Index is still climbing gradually and was p today 2.84% to close at $69.15. 

Oil prices dropped another 2.4% to a new low since January 2007 at $54.95 per barrel today.

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 wait longer (days) until we see a substantial bounce.  See Last Note below.

Swing Trades:  GS, Goldman Sachs, along with all financial stocks are just finding new lows.  No bounce can be seen yet.

Day Traders/Intraday stock ideas:   Continue to look for the drop and pop intraday trading technique to work tomorrow.  The only stocks that acted strong toward the close was RIMM and FSLR.   Drop and pop stocks:   FSLR, RIMM, IYF, and AAPL.   

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:  Reduce your trading tomorrow to very limited and highest quality stock trades.  There could be some heavy selling tomorrow that would make it difficult to profit on the long bounces although 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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