Best Daytrading Stocks
We are now at a point where the market is revisting the October 10 lows, and this appears to be the test of significant importance. It will not really matter if the market blows through these lows tomorrow and closes below them. Of more significant importance will be how the market acts on Monday. No matter what the market does on Friday, we need the market to close higher on Monday, or at least set itself up for a strong Turnaround Tuesday. Nonetheless, if we trade through the October 10 lows on Friday, and we are still trading below them on Tuesday, this market will be heading lower for the foreseeable future.
Keep your fingers crossed!
Scott Cole
www.bestdaytradingstocks.com
In spite of a weak jobs report today, and further concern regarding the auto industry, stocks managed to rally today, ending the dismal decline that began on Wednesday. The government reported that a total of 240,000 jobs were lost in October, slightly above estimates, and September lost more jobs than first reported. The nation’s unemployment rate now stands at 6.5%. Apparently, this bad news was priced into the market over the previous two days, and the market actually may have been expecting worse news. Nonetheless, it was a bad number and a reminder of just how weak this economy is currently.
The market will now be turning its eyes to Washington to see what Congress and the Bush administration, along with input from the income Obama administration can do to stimulate this dismal economy. However, the primary issue is that banks refuse to lend money to anyone at decent terms, even to the most qualified of loan applicants. This is in spite of the fact that the credit markets have thawed dramatically over the last couple weeks as the 3 month LIBOR has dropped from its high of about 4.8% to about 2.3% today.
Until the banks begin to lend money for car loans and home loans, and other business loans, this economy has no chance of improving. The federal bailout has simply allowed the big strong banks a chance to consolidate and strengthen their positions by buying distressed banks. Yet, there does not seem to be any outrage at this in Washington.
More to come!
Scott Cole
www.bestdaytradingstocks.com
More weak economic news drove the stock market down another 400+ points today, as stocks have now lost almost 1,000 points in two days. The culprit today was weak retail data out of the nation’s big retails, some posting double digit losses in same store sales for October. Furthermore, the Big 3 automakers are seeking more handouts from the Federal Government. Traders suspect that if Congress bails out the automakers, companies from other industries may try to get their hands in the cookie jar as well. This will result in a massive Federal Deficit, and little room for the income Obama administration to maneuver through this economic minefield.
On the bright side, the Oil complex continues its slide, nearly breaking through the $60 level to the downside. Oh, how times have changed since the days of $150 dollar per barrel just a few months ago. Remember this…a trend in motion tends to stay in motion! The trend to the upside was far more choppy than this downtrend. This downtrend is more dangerous as it has not allowed traders many opportunities to enter short positions on pullbacks. Watch for continued low prices on weak economic data.
The other big news of the day was that the Bank of England cut interest rates by 150 basis points, an unprecendented move. The European Central Bank cut rates by 50 basis points. Initially, this was welcome news prior to the U.S. stock market open. But, the weak economic data immediately put a damper on that. The Dollar ended the day a little stronger against the major currencies and interest rates were relatively unchanged. Commodity prices, again, lead by the energies, were generally lower again today.
In regard to tomorrow’s trading, watch for a volatile reaction to the jobs report. The general consensus calls for job losses of 150 to 175K.
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
It looked like today was going to be an inverse mirror image of yesterday, as stocks opened lower, and hovered around the down 300 points on the Dow level for much of the afternoon. Then, once again, the last hour selling kicked in, and the market got clobbered, off nearly 500 points on the Dow and 100 points on the Nasdaq.
The primary culprit today was a week ADP jobs report, a precursor to the government’s own employment report due out Friday. The ADP report held that over 150,000 jobs were lost in the private sector. The market was already lower when this report came out, but trended lower the rest of the day.
Many other markets flip flopped from yesterday as well. The Oil complex, Grains, and Metals all sold off sharply today after nice gains yesterday. Obviously, this was in response to the weak economic data. It is notable that on many of the commodity charts, there are small consolidation patterns within their current downtrends. A break below recent lows will indicate a continuation of those downtrends. This would not surprise me as there are still many analysts on the financial news programs suggesting that energy and commodity stocks are the place to be going forward. Always be a contrarian!
On the other hand, the interest rate futures continued their rally today. It seems that Treasury traders may have been anticipating today’s data yesterday, as they rallied yesterday in the face of a weak dollar and strong commodities. In the Forex markets, the Dollar did not move much today.
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
The U.S. Stock Market scored big gains as Americans headed to the polls today. Asian markets were up strongly overnight, and the European markets followed suit in the morning. A solid earnings report by Mastercard also buoyed stocks in the U.S. Some pundits, however, attribute the rally as a relief rally in response to polls suggesting a solid Obama victory, and a view toward the future.
Due to the big rallies in stocks around the world today, commodities responded with a big rally of their own, lead by the energies. Crude Oil was up over $6 today, and these gains were mirrored in Heating Oil, Unleaded Gas and Natural Gas. Such a strong day in these markets suggests a bottom of at least short-term magnitude is now in place. Gains in commodities were seen across the board, including the metals, grains and others.
One surprising trend today was the move up in Treasury prices, resulting in lower yields. This was quite odd in view of the strength in the commodity markets, and the weakness in the Dollar against most of the currencies today in the Forex market.
Tomorrow will be another day, and I suspect the markets will at least settle down tomorrow. Later in the week, we have a jobs report that could provide some significant bad news.
Stay Tuned!
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
The U.S. Stock Market traded within its narrowest range in weeks today, ahead of the all important Presidential Election on Tuesday. Volume was also extremely light, as the markets eked out a small gain for the day. The markets will be watching closely to see whether the Democrats are able to achieve a filibuster proof majority in the Senate. That will allow them to push through any agenda they wish, without any kind of consent from, or compromise with the Republicans. This includes increases in Capital Gains taxes and taxes on dividends, two policy issues Wall Street does not like.
With that in mind, I suspect that the market will sell off a bit if the Democrats achieve that majority in the Senate. Otherwise, I anticipate a bit of a relief rally after the election, no matter who is elected.
In other markets today, the Dollar rallied sharply against the Euro and the Pound again today, reversing the losses of late last week. Treasuries perked up on week auto sales data, as October looks to be the slowest month of sales in 25 years.
Commodity prices were mixed, with the energies sharply lower and grain markets up a bit today.
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
As we noticed on Friday, the stock market ended a terrible month on a nice up note. Now we are faced with a huge election on Tuesday, and at this point, it is anyone’s guess how the market will react to a likely Obama victory along with significant Democratic gains in the House and Senate. On the one hand, the financial markets generally do not like the rhetoric that comes out of the Democrats, and the markets generally prefer a government where checks and balances are in place, such as a Republican President and a Democrat controlled Congress. Therefore, an Obama victory could lead to a sell-off.
On the other hand, there could be a relief rally as we finally get past the election and can look forward to a new administration. The focus will then be on the economy and corporate earnings. We already know that the 4th quarter is likely to be weak, but I suspect it may not be quite as weak as expected. I would also venture to guess that the stock market has discounted a significant recession already, and so any economic data that is not as bad as expected will be greeted favorably by the market.
In other markets, Treasury Futures at the long end of the curve sold off sharply again Friday in response to the continued decline in short term interest rates. This week, there will also be a new monthly jobs report, and a weak report could help stem the tide. For now, the trend is down, which means higher long term interest rates. I noted in my newspaper today a significant jump in mortgage rates, with the average around 6.5%. These rates won’t do anything to help the housing market.
The Dollar enjoyed solid gains across the board on Friday, with most strength against the Euro and the Pound. It looks to me that the Yen has likely topped out against the Dollar for now, but it appears that the Euro and Pound may need to test their recent lows against the Dollar before consolidating at these lower levels.
In the commodity markets, Gold was sharply lower, while Crude Oil actually managed a solid gain of nearly $2 on the session. Agricultural markets were generally mixed, with no real big moves on the day.
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
In the present market, consider the possibility of daytrading ETFs or even stock index futures. For Tuesday, we are looking at the possibility of a lower stock market. As such, consider QID and TWM for ETF daytrading opportunities. These are Proshares Ultrashort ETFs, so you will buy them, rather than sell them short.
In the Stock Index Futures, consider the Nasdaq 100 and Russell 2000 as shorting possibilities, as they have underperformed the Dow in recent sessions.
Good Trading!
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
The U.S. Stock Market is now trading like that of a developing country stock market, with another 7% down day in the Dow Jones Industrial Average. There is absolutely no confidence in the markets, and investors are pulling out in droves. Whenever there is a little sign of strength during the day, the selling hits hard. This is mainly due to the amount of redemptions in hedge funds and mutual funds, as investors in these vehicles want to sell out. These trading firms are also being forced to raise cash to cover losses in other markets. The end result is that nearly every stock is just getting hammered without prejudice. Even IBM, which reported good earnings overnight, closed down almost 2% on the day.
If you are invested in this market, this is a time to turn off the TV for six months and maybe have a look at your portfolio statement then. Markets that go up or down this fast tend to reverse and go back in the direction from whence they came just as fast, at least for a bit, until equilibrium is found, and the market can form a new base to work off of in the long run.
If the money you have invested in the market is not needed for at least a couple of years, stand pat. The market will come back eventually. If you have cash on the sidelines once the market has found its bottom, it will be when of the best buying opportunities of your lifetime.
So far this week, the Dow Jones Industrial Average is down over 18%. There have only been two other such occasions in the last 80 years….the week of the 1987 crash and the beginning of the 1929 crash. The difference this time around is that the market peaked a year ago, whereas in 1929, the crash was only 8 weeks removed from its top, and in 1987, the market crash was also only 8 weeks removed from its top.
In 1929, there was a couple more weeks of pain before the market rallied nearly 50% from its lows over the next few months. However, the government was slow to react to the economic issues of the day, and there were clearly valuation excesses in place.
In 1987, the Fed was very quick to react, adding liquidity instantly to the markets, resulting in a bottom for the market, which rallied 30% over the next six months, and within less than two years, was making new all time highs.
I think it is safe to say that governments around the world are not standing still, but are actively adding liquidity to the markets and attempting to solve the other issues troubling the financial markets. With that in mind, I would suggest that a bottom of significance will be in place in the near future.
In other markets, Treasury futures continued to sell-off today as the yield curve continues to steepen with all the liquidity being added to the market. This suggests that Treasury traders are convinced that inflation will be an issue to worry about next year, and is the main concern, rather than economic weakness.
The Dollar also strengthened a bit today, while crude oil futures dropped under $85 in after hours trading, and Gold pulled back $20 by the end of its trading session.
In the near future, Kungfutrader.com will begin a new newsletter that will cover the stock market as well as futures markets with trading ideas for all of these markets discussed in this blog.
Stay Tuned!
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
The U.S. Stock Market closed at session lows, as selling accelerated in the last hour, leaving the Dow Jones Industrial Average with a 500 point loss after trading higher earlier in the session. The market started to head lower shortly after the positive open, and selling began in earnest during and after Fed Chairman Bernanke’s speech. As I write this blog this evening, Asian stocks are plunging further.
There is not much else to add, except that it does appear that the markets are in the capitulation phase. The rate of descent is simply too fast to continue for much longer. However, there is the possibility of a very scary sell-off this week that could finally trigger the final capitulation.
Aggressive traders who are able to follow the markets intraday should pay close attention, because there is an opportunity at hand. When this market decides that enough is enough, the reaction to the upside will be violent. ETF’s may provide a decent vehicle to capitalize on this situation.
An ideal intraday setup will look like a double bottom after a steep drop early in the session. The market will make an intial low, off of which it will bounce a bit. The market will then test this low and bounce violently to the upside, and this is when aggressive traders can put on a position.
Another scenario may just involve a rubber band that is stretched way too far. In this instance, a huge sell-off will run out of steam, and the market will react violently to the upside. This scenario is more difficult to trade. In the case of the S&P 500, if there is a big sell-off early in the morning, and the market then proceeds to rally off of that low by 40 whole points (say from 950 to 990) by noon, then you have quite likely seen the bottom.
If you are a long term investor, and not a risk taker, these scenarios will offer good opportunities to add to long term positions at bargain prices.
Keep in mind that the markets are acting purely on emotion right now. Fundamental analysis has been thrown out the window. It has been quite painful for long term investors to watch their portfolios dwindle, but this should be viewed as one of those few major buying opportunities of a lifetime, similar to the recovery from the 1987 crash, and the end of the 2002 bear market. Still, traders and investors must continue to be careful in this environment.
In regard to any potential Ultimate Stocks, it will likely be at least six months after the low is in place until the candidates we seek will be trading in a manner that will allow us to capitalize on major new uptrends. This is why we should focus our attention on trading indexes, ETF’s and mutual funds to enhance portfolio profits.
Stay calm, stay cool…the opportunity will soon be at hand, and possibly as early as Wednesday!
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
The U.S. Stock Market shifted its focus to the actual economy today after the Senate passed its version of the financial bail-out plan Wednesday night. Weak employment and housing data over the last couple days has focused the market on actual economic data, which is likely to get worse before it gets better.
Surprisingly, the Dollar has been able to rally very strongly over the last couple of days, particularly against the Euro. Today, this strength spilled over into Gold weakness, as commodities continue to sink across the board. It was notable that many of the stocks that lead the market to its peak in 2007, the agricultural related stocks, coal stocks, and the dry bulk shipping stocks, continue to sink, and many actually made 52 week lows today.
Although the U.S. Government is ready to provide a huge bail-out plan that will include lots of new spending and the printing of more dollars, the markets are suggesting that inflation is not of concern in the foreseeable future. The air in the commodity balloon continues to be let out, and leading economic indicators such as the industrial metals, aluminum, platinum and copper, continue to drop. Oil is now ready to test its mid-September lows while gasoline and heating oil have already gone through those lows.
The bottom line is that these are positive developments, and once we get through this current credit crisis, and normalcy returns to the financial system, the stock market will begin to look forward. With commodity prices falling, the Dollar rising and interest rates remaining low, the platform will be in place for the market to begin a new bull market. UNLESS…the next administration decides to screw things up by raising any kind of taxes. If there are tax increases on business and the top income earners in the country, those that provide the jobs, the recovery will be slowed considerably. The financial bail-out will do nothing if jobs continue to be lost.
Stay tuned!
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
The U.S. Stock market is set to open much weaker Monday morning in spite of the fact that Congress appears set to pass the Bush/Paulson financial bail out plan, althought it may be a close vote in the House of Representatives. News that Wachovia is being bought out by Citigroup is pressuring the market, along with concern that the bail out package may not pass in its current form.
Nasdaq stocks are being pressured by some downgrades to Apple as consumer spending is likely to slow in the coming months.
In the face of the forecast economic weakness, Crude Oil is dropping sharply this morning, and the Dollar is rallying as a result.
Stay Tuned!
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
The U.S. Stock Market ended a tumultuous week on an up note, in spite of the fact that Congress did not pass the Bush Administration’s financial bailout plan. The Dow finished with a triple digit gain, although the Nasdaq indexes finished modestly lower.
In consideration of the bad news that came out on Friday, the market’s performance was nothing short of miraculous. Overnight Thursday, the government forced a buyout of Washington Mutual, the largest bank failure in U.S. history. J.P. Morgan ended up buying the bank for a mere $1.9 billion. It was also reported the 2nd Quarter GDP was actually a bit weaker than the 3.3% growth originally reported. Also, housing data came in very weak for the month of August. And finally, Research in Motion (RIMM), came out with an earnings forecast well below market expectations, which sent the share tumbling nearly 30%, weighing down the tech sector.
Incredibly, the Dow Jones Industrial Average and S&P 500 managed to post decent gains on Friday, while the Nasdaq tried hard to claw its way back to breakeven, falling a little short. Does this mean we no longer need the Bush bailout plan? The public remains skeptical, and we continue to hear both sides of the argument. Credit markets have clearly frozen up, so some sort of plan is required. The question is, does it need to be this big government bailout, or is it something the private sector can fix with some creative solutions? And, does it really need to happen this quickly in order to avoid Armageddon in the financial markets on Monday?
The end result of the week is that the major averages closed lower than the previous week, but still well above last week’s lows. The trend is down, but we could possibly be set up for a test of last week’s lows and a rally from there. A number of indicators suggest there is some divergence at last week’s low. A re-test and bounce off of that low will confirm that.
In other markets, Treasury futures prices managed to rally a bit on Friday due to the weak economic data. The Dollar managed to hold relatively steady on Friday, as it was generally mixed against the major currencies. In the energy markets, the focus seems to be returning to global economic weakness as the driving force behind price direction. Crude oil closed down a bit over a dollar, while Natural Gas appears to be resuming its downtrend.
Gold and Silver prices were up modestly on Friday, but were up significantly for the week. These markets are in neutral after significant rallies off of their lows in the last couple of weeks due to this current financial crisis. A big bail out plan that suggests inflation is in our future down the road will move these markets higher.
In the grain markets, it appears that Corn, Soybeans and Wheat are all ready to resume their downtrends as it appears that the current crop situations, and supply and demand factors indicate that lower prices are in order. Most other commodity prices appear to be heading lower as well, with the exception of Cocoa and Sugar.
Stay flexible!
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
The U.S. Stock Market continued its downward slide today as Congress is not yet ready to sign off of Treasury Secretary Paulson’s $700 billion plan to shore up the U.S. financial system. It is no surprise that there is a bit of a rebellion against the plan due to the sheer cost. The debate is of course the lesser of two evils…take your chances and see how things end up, or spend the money and hope the plan works, knowing that it will cost the taxpayers dearly.
I don’t envy the position our politicians find themselves in, but the fact is, many of them are part of the problem. And now, we are watching them all point the finger at everyone else but themselves. Par for the course in Washington, D.C.
As I have stated over the last week, traders simply need to stay cautious until the markets settle down. You don’t need to trade! All of the rules in the playbook have been thrown out in recent weeks and months, so the best thing to do is wait for a return to normalcy. Even if you are simply a daytrader, the whipsaws in the market have been enough to cost you big time, so you at least need to scale back your trading size.
Sooner or later, the markets will settle down, and whichever trend emerges, be prepared to hop on. In spite of the volatility in the markets in recent days, and some big moves in commodities and currencies, I still see many of the underlying trends have remained in place. Keep that in mind when you decide to plunge back in!
Good Trading!
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
The U.S. Stock Market plunged about 4% across the board today as worries continue to mount regarding the crisis in the financial sector. Over the weekend, the government asked Congress for $700 billion for the bailout plan. That sent the Dollar into a tailspin as it is clear that U.S. government debt will rise at an unprecedented pace.
Whether or not this bailout plan is needed or not is not the issue. The financial markets are in a tailspin, and going forward, it is clear that the U.S. economy, and likely the global economy, will be weak in 2009. The next U.S. administration, whether it is Obama or McCain, will have its hands full, and you can pretty much forget about any kind of tax break next year.
As a result of the Dollar weakness, and the fact that the Treasury will be printing dollars at a fast pace in the near future, commodity prices took off to the upside today. The October Crude Oil contract, which expires this week, was up over $21 per barrel at one point. Gold rose back above $900 per ounce. Treasury yields jumped significantly. Can you say STAGFLATION!? With oil prices appearing set to test $150 again in the foreseeable future, there is no way the global economy has any expansion. A colder than normal winter will send heating costs soaring, and as a result, the holiday spending season will likely be weaker than normal.
I am not in the business of forecasting stock market prices or even direction. But, it doesn’t take a genius to figure out that with the current conditions in place, it will be difficult for the market to go up. Just last week I wrote that the underlying fundamentals suggested the economy and the stock market could get through this current crisis and set up a rally into the end of the year. However, with the Dollar pulling back sharply, Treasury yields rising and Oil prices ready to soar again, it looks like those positive fundamentals were fleeting.
Today is just one trading day, and you can’t really forecast direction with one day. But, alot of other negative things have occurred in the last few days that suggest this market has a lot to overcome.
For you daytraders, keep your trading size small during this period of extreme volatility! The intraday swings will wipe you out if you have not adjusted your trading size.
Stay Cautious!
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
The funny thing about the stock market this week is that it ended the week virtually unchanged. Of course, it happened to be an incredibly volatile week as well. Historically though, we have seen higher volatility, and we have seen worse down markets.
So what does this all mean going forward. Well, over the weekend, it was reported that the cost of this mortgage bailout is going to be at least $700 billion. Hmmm…do you think there are going to be any tax cuts next year, no matter who is president? If anything, we can probably expect a tax increase before any tax cuts.
Over the next few days and in coming weeks, the market will digest the impact of this past week’s events on the economy. Based upon the reported cost of cleaning up this mess, it is quite possible the impact will be deemed as somewhat negative. What we will need to see is a return to normal trading in terms of volatility and volume, and then ultimately, the market will show its hand in terms of which direction it wants to go.
Pay close attention to the performance of the Dollar and interest rates going forward. If the Dollar can stay within its current uptrend, while interest rates remain favorable, there may be a chance for the economy to still recover. Again, after the election, we enter a seasonably favorable period for the stock market. For now, caution should rule the day.
Good Trading!
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
The Federal Government has taken more steps to boost confidence in the financial markets, and this is sparking a huge rally in futures ahead of the open. The Dow futures are set to open up 400 points this morning on the back of this news, which includes banning short selling on some financial stocks. The government is also providing a back stop to the money market funds.
Investors are piling into the market as a result, however I still believe traders should use some caution here. An important bottom has likely been put in at yesterday’s lows, but it is important to let things shake out for a while. Once the markets have calmed down, traders and investors can resume using their normal methodologies for picking stocks.
Enjoy the weekend!
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
After charging lower early in the session, the U.S. Stock Market staged a late day rally that carried it to over 1% gains nearly across the board. The lone exception was the Russell 2000, which ended with a far more modest gain.
The main focus early in the session was the continued problems faced by Lehman Brothers, which lost another 40% in value today, and is now over 90% below its 2007 highs. Later in the day it was reported that top executives at the firm are considering the sale of the entire company, rather than just pieces. Wall Street seemed to like that news, and that allowed the market to rally.
It is worth noting that the major averages are in the process of testing significant lows. Today could be a short term bottom, but there still does not appear to be the type of capitulation we would like to see to market a longer term bottom. Although the Dow was down as much as 150 points earlier in the day, we probably need to see it down at least 300 points, and then see a reversal that carries it up a few hundred points of that session low. Another issue is that the VIX closed at under 25 today. This indicator needs to rise to over 35 in order to mark a significant bottom.
In the future markets, commodities were generally lower again, led downward by Gold and Silver. Crude Oil was also lower, but due to the impending impact of Hurricane Ike on the Houston area refineries, gasoline was up a bit today. Crude Oil is getting perilously close to the $100 level, trading as low as $100.10 on the October contract, before closing just under $101. This is in the face of OPEC indicating a 500,000 barrel per day cut in production. I guess those folks have no interest in maintaining a strong global economy! Fortunately for us, most of the producers have no other source of income so they will likely produce above the quota in order to maintain their cash flow.
The Dollar continued its rise against most major currencies today, and Treasuries were steady to higher today, as yields dropped modestly.
Although I continue to believe that the foundation is being laid for a new bull market, as I have said before, some sort of major capitulation is likely needed before we can see the beginning of a new bull move. However, it is possible that a meandering bottom can be put in without this capitulation, but the new bull move should begin with a violent move to the upside.
Stay with the trends!
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
The U.S. Stock Market enjoyed a sizable rally today, with the major averages up anywhere from 2.5% to over 3%. This should be the start of at least a short term move to the upside, and maybe something more significant. However, today’s rally occurred with a decline in volume compared to yesterday, not a good sign of conviction. If this is to turn into at least an intermediate term rally, we need to see a follow through day within the next week. This means a day with gains similar to today, but hopefully on higher volume.
The news of the day was that Wells Fargo reported better than expected earnings and that got the market started, in spite of a nasty CPI inflation report. Then, Crude Oil provided the boost for the rest of the day, as it plunged another $4 per barrell today. It broke initial support at $136, but $131 is the key level to watch, as many commodity funds will have sell orders triggered on a break below that level.
Good Trading!
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
Most traders were property just about sick to their stomachs by the close of trading today after a roller coaster ride of a day in the stock market! The market was set to open lower, and the Dow Jones was down about 100 points within a few minutes. Fed Chairman Bernanke’s comments then sent the market lower, but Treasury Secretary Paulson’s comments indicating that the Treasury should have unlimited funds to help support Fannie Mae and Freddie Mac, along with a plunging crude oil market, helped the stock market erase a 200 plus point loss in the Dow. The Dow was looking like it might end up with triple digit gains, but the rally evaporated in the last hour, and it ended down nearly 1%. The result was a mixed market, with the Nasdaq up slightly, and the S&P 500 and Dow Transports down over 1%.
On a positive contrarian note, the VIX pushed above 30 today, before closing at about 28.5. This indicates that there is beginning to be more fear in the market, which will need to set an intermediate type of bottom.
Crude Oil was off over $6.00 per barrel today, and nearby support for many trend followers is at about the $136 level on the August Contract, which will be expiring soon. Significant moving average support is at this level as well. A break below this level, and then below $130 could finally lead to a significant break in this market. On Wednesday, all eyes will be on the supply report at 10:30 AM.
The Dollar tested its multi-month lows, before rebounding to close nearly unchanged on the day. Treasury futures closed in positive territory, but a bit off their high prices for the day.
Good Trading!
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
As expected, the stock market got a boost from Sunday’s news that the government would take steps to aid ailing mortgage backers Fannie Mae and Freddie Mac. Unfortunately, the opening pop fizzled quickly and the market trended down the rest of the day. Pessimism is clearly the order of the day at present with the S&P 500 and Dow Jones Industrial Average continuing to extend its bear market lows on a daily basis it seems. Today, however, the Russell 2000 was the leader to the downside, down over 1.5%.
One good sign for the market is that there are very few bulls to be found, with sentiment very weak. The VIX is now starting to approach 30, closing over 28 today. The March high was over 35 and the January high was over 37, intraday. The higher the figure, the more likely a bottom is near.
There has also been a noticeable increase in daily volatility, but the average daily price range is still well below those seen at the March and January bottoms. Current volatility is nowhere near the levels seen at the bottom of the 2001-03, and not even at the levels seen at the 1998 bottom.
With all this in mind, the market is clearly due for a bounce, but it is apparent that there is no sign of a Bear Market Bottom yet. We may get a rally soon from the current lows, but it likely will not be the Bear Market bottom. Bear Markets rarely die with a whimper.
Some of the recent energy and agricultural related stocks such as ANR, WLT, MEE and others are starting to rally again, and may test their recent highs. Be careful with these stocks as their recent sell-offs indicated clear distribution. If you did not sell at or near the recent highs, this is likely your second and last opportunity to sell these stocks.
As far as daytrading is concerned, the best money is still being made on the short side, and the swing trades to the downside have been amazing. LEH comes to mind in this regard.
Good Trading!
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
The Dow Jones closed down for the sixth consecutive week, ending with another solid decline on Friday. The S&P 500 had the worst week among the major averages, due to its heavy weighting with financial stocks, which lead the market lower. Otherwise, the Nasdaq and ND100 had minor losses for the week, while the Russell 2000 and even the Dow Transports closed up for the week. There clearly appears to be cash flowing into some techs and small cap stocks.
Stocks were spooked primarily on Friday by rumors that Fannie Mae and Freddie Mac would be allowed by the Federal Reserve and Treasury to fail, which would worsen the residential real estate crisis. This sent the market into a tailspin. Later in the day, it was rumored that the Federal Reserve would open the discount window to both companies, but then that was denied after the markets closed. Stocks closed well off of the lows Friday. Sunday, it was officially announced that the discount window would indeed be open to both companies, and Treasury Secretary Paulson indicated that the government would extend its line of credit to both companies as well.
Further pressure was put on the stock market this week by a big two-day rally in Crude Oil, which pushed to new all time highs, before pulling back a bit on Friday. Dollar weakness all week also did not help the market. The Dollar pushed to new two-month lows on Friday, and is just over 1% above its 40 year lows seen in April. With all this turmoil in the markets on Friday, even Treasuries took a big hit, wiping out its rally of the previous four days. The 10 Year Note experienced its biggest one day decline in months.
Based on today’s news regarding Fannie Mae and Freddie Mac, it would be no surprise to some sort of rally early on Monday. Whether this leads to something more significant, only time will tell.
Good Trading!
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
The U.S. stock market opened significantly weaker today after weakness in global markets over night, only to rally in the last couple of hours after General Motors reported that sales in June were down only 8% vs. an expected decline of 19%. After the automaker reported sales, the stock market took off, lead by the tech stocks, particularly Apple, which closed up over $7 on the day.
The market was also aided by Crude Oil failing to hold its earlier gains. After testing new all time highs again today, Crude actually closed slightly lower. However, Wednesday is a new day, and the weekly supply report will be reported as usual at 10:30 am ET.
The market was certainly due for a bounce today and was looking for any excuse to rally. Furthermore, the beginning of the month and the beginning of a new quarter are typically seasonally favorable times for the market to rally due to new investment inflows to mutual funds. Also, the few days before a holiday also tend to be favorable to the market. With these conditions in place, and likely low volume, it would not be surprising to see a sizable move up in the next couple of days.
With this in mind, the likely bias over the next couple of days should be to the upside, so look for some stocks due for a nice bounce!
Good Trading!
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
The U.S. stock market closed out the week with the Dow making new Bear Market lows and the S&P 500 sitting less than 2% above its March lows. The Nasdaq and ND 100 have performed much better, and actually finished Friday’s trading in unchanged territory. Some are calling this a key reversal, particularly since volume was heavy on Friday. However, the trading range on the day was a bit narrow in my opinion for this to be any type of significant bottom. We may get a decent bounce from here, but the trend is still down.
The market suffered from a confluence of events this past week. Currency markets are now waiting for the Fed to indicate it is ready to raise interest rates to stave off further inflation worries in the U.S. The European Central Bank indicates it may be ready to do so, and this is pressuring the Dollar. That in turn has allowed Crude Oil prices to continue upward.
On top of all this is continued weakness in the financial sector and in the auto industry. Furthermore, a couple technology giants, Oracle and Research in Motion, gave weak guidance toward the later half of the year. As a result, the Nasdaq finally joined the Dow in the onslaught that occurred this week. Still, it is well above its March lows due to strong rallies in RIMM, AAPL and other tech stocks since the March lows. However, these appear to have rolled over.
One other ominous note is the continued relatively low readings in the VIX. The VIX is a sentiment indicator involving options trading, and high readings tend to coincide with bottoms in the market. The VIX closed at about 23 on Friday, which is well below the March highs in this indicator that coincided with the March lows in the market. This suggests that there is no panic selling in the market just yet, which is what we will need to put in a bottom.
Potential day trading candidates for the long side on Monday include JRCC, CLF, CLR, HP, STLD, SQM, X, and CHK.
Potential day trading candidates from the short side on Monday include SID, DRYS and EXM.
Good Trading!
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
The stock market was flat to down today, with the Nasdaq again leading the way to the downside, while the Dow and S&P were essentially flat. The big move in the markets today was Gold, which sold off early in the morning, before bouncing off of its lows. This was on the back of some Dollar strength overnight. Crude Oil rallied another dollar and change, and looks to be poised to test the upper limits of its recent trading range.
Based on recent market action, the market is due for a bit of a bounce, or at least some consolidation. As such, the directional bias is very modestly tilted to the upside.
Potential long day trades for Tuesday include CNX, ANSS, SQM, ACI, BEXP, and GTI, among others.
Potential short trades include WHR and COPA
Good trading!
Scott Cole
www.bestdaytradingstocks.com