The Daily Stock Report Mitch King
December 2, 2008, Tuesday Evening
www.TradeStocksAmerica.com
The stock market reacted to the upside today which does not change the downtrend that we are in now. After such a big point drop yesterday (-679 points on the Dow 30), it doesn’t mean too much yet that we have a reactionary up day. It would not be surprising to see stocks drift lower for several days, perhaps starting tomorrow.
Intermediate Trade Positions: none unless you want to lose money.
Swing Trades: swing short ideas with the coal stocks [FCL, CNX, ACI]; financial stocks such as JPM, WFC, BAC should drift lower as well. Ag-chemical stocks MON and MOS are also possible candidates for a swing trade on the short side for 2-3 days. Housing stocks such as DHI, TOL, PHM, LEN, also look very good as a short position. Solar stocks FSLR and SOLF also look interesting as a short position. If the stock market in general moves up, that would be an opportunity to look for higher prices to sell short. Keep position sizes small, especially if you are new to selling short.
Day Traders/Intraday stock ideas: Big drop and pop should be profitable tomorrow. If the market opens down tomorrow morning, let the stocks drop longer and deeper before looking for a intraday position long. Again, switch to different chart settings from 3, 15 and then 1 minute charts after you open your position. Set a 3 minute chart to look at consistently throughout the day as your "base" chart and then rotate through other charts on the same stock to get a different view on it.
Concluding thoughts: The market should start selling down, probably tomorrow and for a couple of days after that. If there isn’t selling tomorrow at the open and the market goes up use those better prices to open short positions based on the 3, 5, and 15 minute chart settings. Don’t be buying long overnight yet-you are not trying to be a hero and jump on a live grenade. The market is rewarding the intraday traders, you can make a lot of money with this volatility on intraday trades.
Thoughts: 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. Trade what you see, not what you hope for.
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 tomorrow.
Mitch King
www.TradeStocksAmerica.com
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