Daily Stock Picks Report Archive

November 18, 2008, Tuesday Evening                          
www.TradeStocksAmerica.com

The stock market had small bounce up today that means nothing technically.  We are still in a sharp downtrend that could change if the October low prices still hold on the Dow.  Trading action is slightly more bullish which could give us some movement upward in the next couple of days but only to the intraday trades on the long side.

We are approaching a critical point with many stocks that have reached their previous lows set in October.  Technical analysis considers this point a double bottom and is often considered a support level.  The theory is that many investors or buyers come in to buy at a price level because of valuation or previous bounces have occurred from this point.  But we have see many stocks continue to break below this level and reach new lows.  Examples of the daily charts that look like this are the banking stocks BAC, JPM, C, GS or some of the commodity stocks like MEE, FCX, PCX, FCL, all the steel stocks [X, AKS, MT) and many more.  Even Warren Buffet’s stock looks like this, BRKA and BRKB.  If you look at the daily charts of many stocks, you will see a high percentage of stock prices on the lower right of your screen.

The next round of stocks that are at this double bottom point that should be monitored for possible bounces are stocks like FSLR, AAPL, RIMM (moving up the last several days), HIG- Hartford, POT, MON, SOLF (speculative),

BIDU, Baidu did bounce over $7 off its bottom of $12.50 to close at $128.76.  In a normal market this stock should have a sharp bounce upward but we are in such a negative mindset now, people are scared.  It seems logical that eventually BIDU makes a move upward but we can say the same for many stocks as well.

PRU, Prudential Insurance, and MET, Metlife, are in a free fall now although MET bounced sharply off its $17.44 low today to close at $20.72.  Keep watching these two.

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 peaked at 73.13 today and closed at 67.64, down 2.1% from yesterday.

Oil prices dropped another 1.0% today to a lower low at $54..25.

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.  Any stocks you consider should be of the highest quality fundamentally and time your purchase when the technical indicators are supporting a long purchase at the same time.  So in other words, have the fundamental analysis and technical analysis be coinciding at the same time to buy long.

Swing Trades:  Watching RIMM, Research in Motion, for a possible short sale tomorrow on a swing trade SHORT but this is an aggressive play.  Another day up would be a smart play before entering a small short position.  The assumption that this stock may resume its downward direction after this rise in price is over.

Day Traders/Intraday stock ideas:   Continue to look for the drop and pop intraday trading technique to work tomorrow.  RIMM was particularly strong today with its second up day in a row and it moved up 11.8% today alone.  Drop and pop stocks:   FSLR, RIMM, IYF, and AAPL are still good stocks for  long trades with BRKB as a possible stock to watch for a good bounce.

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:  We are still in a bit of a "wait and watch" mode as many high quality stocks are approaching the support level of lows made in October.  Many stocks have already broken below this point and the downward direction is continuing so far.   There is still no sign of stocks leveling out and moving upward yet.  The best we can hope for is a substantial countertrend rally that we could have 3-5 consecutive days upward before making another obvious top to short into.

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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