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The Daily Stock Report Long swing trades

The Daily Stock Report         www.TradeStocksAmerica.com
December 29, 2008, Monday Evening                                           

The stock market had low volume as expected and some wide swings in stocks such as ROH, Rohm & Haas.  ROH was scheduled to be bought out by DOW, Dow Chemical but DOW lost a big contract in Kuwait.  The speculation that DOW will not be able to finance the purchase of ROH at $78 a share offer made back in July because their credit rating was downgraded after the Kuwait deal fell through.  What is interesting is how easy it is for the business world to change so quickly even for the largest and most powerful companies in this environment.  But life has changed quickly for the Madoff investors too.

We have a couple more days of churning of stocks yet it is a time when we should be preparing to start buying long and commit a percentage of cash into intermediate long positions.  We should be in a ‘wait and prepare’ mode to see how the market acts next week as normal trading volume and behavior resumes.  Whatever direction the market takes next Monday should be noted because it often sets the tone for the direction of the stock market.

There is a lot of doom and gloom in the overall investor sentiment about the economy and but that is often mismatched with how stock prices actually act.  In general, the odds are starting to be on the side of the intermediate long positions as well as long swing trades and against the short sellers.  The goal now is to look for some excellent stocks on a fundamental basis (earnings, growth, PE, etc) and match them up with the technical indicators to consider buying long.  There is a lot of opportunity to make money in stocks this next year, especially in the next 6 months, both long and short.

Intermediate Trade Positions:   New ideas:  Take note that housing stocks are clearly on the downtrend and are likely to drift lower over the coming month.  In general, short selling is not advised right now but this may be a sector to consider a small short position as an intermediate term position.  This will take longer to mature than other stocks. (DHI, TOL, KBH, PHM, LEN).

FXI, Xinhua China 25 ETF, is ready and worth a small long position

PTR, PetroChina, is China’s largest oil company.  This is worth a long position long.

RMBS, Rambus is a semiconductor-memory chip developer but not a manufacturer.  They collect royalties from manufacturers they have agreements with until they steal the technology themselves and make their own chips.  This stock came from $5 in late November to $16.50 last week and looks like it is showing signs of turning over for a intermediate short position.  Potential profit at $10 target price is over 50%.  See video for more explanation.

Swing Trades:    BAC, Bank of America is on the watch list for a possible long trade.  Selling could accelerate with increased volume would be ideal buy entry point.
PLD, Prologis, real estate trust that has moved from $2.50 to $14.70 the last 4 weeks.  The first selling started today.  This is speculative swing short trade.  High risk tolerance traders could use $13.50 as a stop loss on this short.  Target price is $9 on a swing short but could become an intermediate term trade.

Day Traders/Intraday stock ideas:   Intraday trades should be put on hold until first week of January when all professional managers and traders move back into the market next week.

Concluding thoughts:  Should be a slow week in volume and volatility.  Reliability won’t be high in reading the market this week.  Market will be skewed as few people trade in stock market except small individual investors, traders, and speculators.

SWING: 2-7 days    INT: Intermediate term position 8 days to several months.    Open Price:  price paid on opening long position or price sold on short position.

NOTES:  The mortgage rates are likely to be at the lowest rates right now.  If anyone is considering refinancing or purchasing a new home, now is a good time as far as mortgage rates go and we are closer to a bottom on housing prices, especially in California, Nevada and Florida.  Equity percentages need to be 20% or higher and a FICO score of 700 to qualify.

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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Mitch King is the founder of TradeStocksAmerica.com.  All material presented herein is believed to be reliable but we cannot attest to its accuracy. All material represents the opinions of Mitch King. Investment recommendations may change without notice and readers are urged to check with their investment counselors before making any investment decisions. Opinions expressed in these reports may change without prior notice. Mitch King and/or the staff at TradeStocksAmerica.com may or may not have investments in any stocks cited above before or after this newsletter is prepared. Opinions expressed in these reports may change without prior notice.

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