Daily Stock Picks Report Archive

December 18, 2008, Thursday Evening                                                                                                                          www.TradeStocksAmerica.com

No doubt that your trailing stop losses were triggered to sell today with many stocks in the sectors we have been talking about dropped 8-11% today.  Even though many of these stocks are still within an uptrend, we are at a dangerous point where the market could resume its stronger and stronger sell-off as we have seen many times in the past 3 months or if the buy on dips starts to work.  The stock market was only down about 50 points when the White House spokesman said Bush is considering a "controlled bankruptcy" on the US automakers.  The Dow 30 closed down 219 points or 2.5% today.  In a longer time line than we normally have been talking about these past months, we should  be looking for a bottoming process

Intermediate Trade Positions:   FXI, Xinhua 25 etf and PTR still look good to hold but SNP is clearly leveling out on the 10 day moving average and the MACD as well as the stochastics pointing down.  This is clearly a sell signal for SNP for the aggressive trader.  Another way of looking at technical analysis signals is for the fast moving average to cross down through the slow moving average or as on my chart, the blue -green line crossing down through the red-pink line.  That is the formal sell signal but waiting for the crossover give sup a lot of profit.

In the steel sector, X, came down hard today with an 11.3% drop.  Clear sell signal in all respects but your trailing stop should have triggered if you set it at 5%.  SCHN is looking more bullish than the other two and watch these this next week for a long entry point.  Add MT, Arcelor Mittal to your steel sector to be long again assuming the upward trend returns.   

Watch K, Kellog, food and beverage manufacturer for an entry point this next week.

Consider RIMM, Research in Motion as a long purchase.  This is going through a bottoming process that isn’t complete yet.  If RIMM continues to go down, don’t buy it yet; wait for it to turn up on the 10 day moving average with other indicators pointing up as well on the daily chart.

REPEAT:  It is surprising these stocks didn’t correct as much as the oil prices would indicate.  So it is still steady as she goes with the major oil companies, XOM, COP, and CVX even though oil went under $40 today, going back to 2004 prices in oil.  These stocks clearly have completed establishing the bottom from October 10, 2008 and is still a hold position.  Don’t expect huge percentage profits but should be profitable on the market value increase as well as the dividends.  If oil makes any substantial moves, oil stocks will move very nicely along with it-up that is.

Start watching USO, United States Oil Fund ETF for a long entry point; current price is $32.73.  We have accelerated volume this last week and another couple of down days on oil should trigger a buy signal.  USO will probably be one of the most profitable intermediate trades in the next year.

Swing Trades:    REPEAT:  RMBS, Rambus, a memory chip developer is still moving up, continue to watch and wait (the hardest behavior to do in stock investing/trading.  Patiently waiting for a short entry on RMBS.  Note that this is one beautiful looking "V" pattern that I’ve talked about so often these past 6 months (or for 16 years to myself!).  RMBS could continue to move up but without me because the risk is too high of a sharp correction.  The odds are against you to buy it now.

The coal sector stocks (FCL, ACI, JRCC, MEE, CNX) corrected about 10-11% today and sell stops were triggered.  Let this sector correct and look for an entry this next week or so.  If this sector breaks down, like it has been doing for 5 months, it is likely that it won’t make new lows but more of  a pullback type.

REPEAT:  More and more indications are appearing that this commodity sell-off is ending and when the government workings between the Treasury, Federal Reserve, Congress and the White house starts taking affect into the economy, this group, including all commodity related sectors could move up very substantially.  This is definitely worth going back into on the long side after this slight pullback that is developing.   

INTC, Intel corrected hard today and went down 6.5%.  No doubt your trailing stop was triggered but it is still within an uptrend.  I’d still wait before until Monday to consider going long again this stock.  We are still looking to work this as an intermediate or at least a swing in the next couple of weeks. 

HIGHLY SPECULATIVE:  CPE, Callon Petroleum swing short is acting very well.  The target price of $2.00-$2.10 to cover this short position was reached today when it hit $2.08 but the stock was so weak today there was no point in closing it.  This one could go lower and remember another 50 cents in this low priced stock is another 25% profit.  If this continues to drop, it’s your call when to cover but if it makes any sign at all of moving up, my strategy is to close a short like this that you already have a 40-45% profit on it anyway.

Day Traders/Intraday stock ideas:   The drop and pop intraday trading technique is working well again giving up 2-3% on our favorite group.  FSLR gave two this morning, a 2.1 and a 2.9% profit potential on the second one; RIMM 3.1% and AAPL gave a 2.6%.  DSX, Diana Shipping, which has been up a lot this last week or so gave a big drop (13%) and a 7.5% pop.  Look for that pattern again tomorrow as DSX will have selling pressure.  DRYS, Dryships and EGLE, Eagle Bulk shippers could also be good drop and pop candidates tomorrow.  If the stock market has even a slight negative opening tomorrow, this would help create bigger drops and look for the pop. 

Concluding thoughts:  Even though the stocks that were setting up to be intermediate long positions are still within the tolerances or channel of an uptrend, any selling of price would put them below the bottom line of that channel I’ve been talking about this week.  That would tell me to stand aside before making any long or short position, other than an intraday trade.  We are getting back into the pattern where intraday trades give us the highest probability chance of making money but the strategy will be to still look for buy on dips with extra caution and extra patience to go long.  Since your trailing stops were hit today at some point on your long positions, don’t be in a hurry to jump back in on the long side.  You should be trying to gauge if the market is continuing to tip over or is creating a buying opportunity.  If and when you get frustrated or confused, step back and make no trades or positions because eventually, you will get a really good opportunity to buy.  If you take all the "outstanding" high probability times to make a trade, long or short, your frequency of transactions usually decrease and your profit percentages go up, just what we want.  So in times like these, best to sit aside now that we are in a wait mode after being stopped out, hopefully with some small profit this week.

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 represent more than 10-15% 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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