Daily Stock Picks Report Archive

November 23, 2008, Sunday Evening                           
www.TradeStocksAmerica.com

The stock market moved sharply higher in the last 60 minutes of the day Friday from -100 points to +494 after the news that a new Treasury Secretary has been appointed.  It was kind of funny that literally a minute before this announcement I had written you an intraday email that the market was not looking favorable for an overnight swing trade.  As soon as the market moved, I went long the financial stocks C, JPM, WFC, BAC and GS and held some of these positions long over the weekend.  So there will be no more intraday emails to you on The Daily Stock Picks Newsletter-it is too hard to give you any timing and it would be much more appropriate to give you timely real-time information on The Trading Room and our goal is to have this ready December 15th.

C, Citibank, and the US Government reached a deal Sunday night that essentially bails out Citibank by separating the toxic assets and injecting up to $300 billion as well.  This should ignite the financial sector at the open and likely ignite all the other sectors.

Although all the stocks started their rebound on Friday, the financial stocks {WFC, GS, JPM, BAC, C] are the most interesting charts for potential rebound.  It didn’t take much of a catalyst to start a rally and it may not last that long.  If the market runs up another big day like today, maybe 300-400 points, I’ll be looking for a reversal to the downside and it could easily resemble the vicious type of selling we have seen in the past.  It is difficult to forecast how far the market moves up but my best guess is we could go up a few more days before selling into the rebound occurs but we will just have to trade it as we see it.

The S&P Futures are slightly favorable indicating a positive open by about 120 Dow points but is only an indication.  The Dow will react most favorably because it is heavily weighted with financial stocks.

The automakers problems will be separate from the rest of the market as we wait and watch their fate these coming weeks.  It is conceivable that they run out of money before the government comes to the rescue.

Intermediate Trade Positions:  If you have existing positions, be prepared to hold for several months to see substantial gains.  If you are looking to buy stocks long for an intermediate position (1 week to several months), tomorrow should be the right day to start opening long positions.  Open gradually and no leveraged positions.  Give wide stop losses that are about 3-4% below the bottom of the intraday charts tomorrow.

Swing Trades:  Choose virtually any stock from the Thursday night list and consider buying tomorrow using an intraday trade stock chart and consider holding overnight Monday evening.  Have stops no more than 3% trailing stop loss.  The speculative stocks reacted to the buying very nicely as well.

Day Traders/Intraday stock ideas:   The drop and pop technique will work if there is any drop.  The intraday charts won’t look quite the same as last week where there was a big drop.  I don’t see a big drop tomorrow before the market heads higher.  It is likely stocks gap up from Friday’s close and make a shallow dip before moving higher.  Look on Thursday night’s list for stock ideas to trade on the LONG SIDE ONLY.  These stocks could easily turn into an overnight swing trade long as well.  The solar stocks did particularly well Friday.

Concluding thoughts:  The bottom we saw in the stock market on Friday probably doesn’t have a long shelf life moving up.  I’ll be looking for this rebound to lose steam within a few days at which I’ll look for entry points to go short.  Two other factors to consider are that the stock market tends to be bullish around and after Thanksgiving AND we have had a very deep oversold condition.  But we are still on a strong downtrend that is the overwhelming trend.  Any bounce we have is exactly that, a rebound within a strong downtrend.

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 15-20% 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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