Intraday charts showing “buy on the dips” strategy working
Sep0
It was another nice bull run today with intraday charts showing “buy on the dips” strategy working. We much less volatility although the VIX, Volatility Index dropped on 2.4% today. The SKF, the Ultrashort Financials ETF dropped 12.53% today and this could be a decent swing trade long soon, possibly a decent entry sometime tomorrow. (See tonight’s video). We clearly got more confirmation that sentiment is gradually shifting. An underlying feeling is building among mutual fund managers that they “can’t be left out of the market” for fear of their peers out-performing them if they have less cash on the sidelines. This could prop up the market further with more support going into the end of the year. The mutual funds want to show one good quarter and limit their big losses to the 3rd quarter of 2008. Although I would not count out the bears selling power, almost ready to pounce upon the longs at a moment’s notice.
The financial stocks were very strong today with the index up 5.73% today. WFC, Wells Fargo moved up 9.1%, JPM, JP Morgan Chase up 9.4%, BAC up 17.1%, MER up 17%, GS up 9.1%, AXP, American Express up 12.2%, BLK, Blackrock up 7.6% and STT, State Street Securities up 8.9%. It looks like we could see a slight pullback in the financials for a day or two and if the market is really strong, this group could resume upward to higher highs. This isn’t a tradable comment and isn’t the kind of high probability trade that suits my style so I can’t recommend you try this. Look at these charts of the financial stocks; most of them have moved up off the bottom 60-80% already and are closer to being shortable than being bought long.
Virtually all the sectors moved up today except the housing but they were getting over extended. Oil stocks, ag-chemical companies, heavy construction, solar, tech stocks, pharmaceuticals (pharma), and coal and steel stocks were really strong, moving up from 12-31% (PCX).
The insurance stocks, HIG, PRU, MET, LNC, PFG, were mixed with more pressure down. See notes on Intraday and swing trades below.
Oil prices moved up today 7% and started that technical bounce of some sort that I was looking for. Interesting that oil prices moving up continues to move stocks upward but eventually this relationship will change back to a normally inverse one, probably sometime in 2009.
Food and beverage stocks (PEP, K, KFT, GIS, KO) are just churning, with no real pattern. Note that MCD, MacDonald’s continues to get higher same store sales as cost conscious consumers are returning to the fast food chains. This pattern is likely to continue and this spike of $6 in the last 4 days (a lot for MCD) is a very bullish sign that usually precedes future direction of the stock.
Everyone is expecting the automakers to be bailed out and is now fully priced into the stock market. If there is any hiccup with the approval, or Congress requires a substantial change in the terms or causes a delay (as politicians usually do), this could cause some more power to any selling.
Intermediate Trade Positions: FXI, Xinhua 25 ETF got more buying today and continues to support the mildly bullish daily chart pattern. Any pullback with FXI is likely to be shallow and short-lived and could give people who were left out of the trade to go long on the next 2 or 3 day pullback. (REPEAT: The FXI etf has 40% financials, 20% telecomm, 25% energy stocks and this should be watched as a potential long purchase on an intermediate term (weeks to months). The technical indicators are and price chart are not very steep so the risk of a big sell off isn’t high. Conservative investors may wait for a pullback while aggressive traders could take a small long position immediately. PTR, Petro China also looks good using the same analysis as above.
Swing Trades: If you bought XTO, COG, EOG, or NBL, these independent oil and gas companies could be sold tomorrow to capture that nice 7-15% profit in two days that they are up. Still watching the housing stocks such as DHI, TOL, PHM, LEN, are eventually going to be good short candidates as they move up. All is not right with the world in this housing sector because it has had a nice run up in stock prices. The life insurance sector (HIG, PRU, MET, LNC, PFG) already started to correct into a swing short trade, especially the lower priced and lesser know companies like LNC, Lincoln National and PFG, Principal Financial Group. Keep position sizes small, especially if you are new to selling short.
Day Traders/Intraday stock ideas: Intraday trading pattern has changed to “no drop, and no obvious pop but just a steady climb upward.” The bullish sentiment covered over any drop and pops in the intraday chart but it is likely we see a drop and pop re-appear tomorrow morning but nothing close to the big drops we have seen in the past. We probably will see shallower drops followed by big pops and LONG is the smart way to use this technique now. We might see a slight sell-off tomorrow anyhow so the drop and pop could coincide well with the market. The insurance companies should be a group to watch for short scalps tomorrow followed by long scalps but give it a lot of time before going long. Notice how long PRU took to hit bottom at 10:42am Pacific time before bouncing 10% in the following 90 minutes. This is an excellent group of stocks (HIG, PRU, MET, LNC, PFG) to trade tomorrow using intraday trades short and long OR swing trades short for a 2 or 3 days.
Concluding thoughts: The market continues to show more and more bullish signs and could be establishing a new trend for the coming weeks or months, although that is still slightly premature to be sure. Hold your intermediate and swing trades longer than before
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
Contents: stock trading, trading strategies, stock picks, stock market education, stock market investing course and educational stock trading videos.
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.
Disclaimer – Stock investing or stock trading has large potential rewards, but also large potential risk. There is risk of loss as well as the opportunity for gain when buying or selling stocks, bonds, option contracts or engaging in any strategy listed in the Daily Stock Report, The Wizard Training Course, The Trading Room and our seminar or workshops. You must be aware of the risks and be willing to accept the risks when investing or trading in any financial markets. Don’t trade with money you can’t afford to lose. This website is neither a solicitation nor an offer to Buy/Sell stocks. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this website. The past performance of any trading system or methodology is not necessarily indicative of future results.
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The Daily Stock Report The stock market is always moving up
Sep0
The Daily Stock Report Mitch King
December 17, 2008, Wednesday Evening www.TradeStocksAmerica.com
Even though the Dow 30 was down about 100 points today, advancers beat decliners by 531 on the NYSE which is a bullish sign. That says to me that small caps are outperforming the large caps. And that is a good sign that small caps are in charge because that is usually a period when the market does well. Either way, today’s action doesn’t mean the bull run is broken yet. This period we appear to be going into is usually the most profitable in the stock market. We have clearly been adjusting in a radical way to the business and economic cycle that is showing a negative outlook but the stock market is always moving up before the economy starts improving.
It is going to be several months whether we actually know if the bear market ends and a bull run is starting and we don’t want to be out the market before we know for sure. There is plenty of money to made during this period don’t feel like you can’t make money because you didn’t get the last bottom in stocks 2 weeks ago. We are likely to get a couple of false starts in this uptrend that it looks like we might be starting now so be patient. I realize it is a difficult transition to be patient after making large profits quickly intraday trading or swing trading for 2 or 3 days but our mindset should shifting toward the intermediate term long positions that may last for months as opposed to hours. The intraday techniques will still be good but we are now back down to the 1-3% per trade than what we saw a few short weeks ago of 5-10% profits in hours or in some cases, minutes. “Buy on dips” strategy is going to start working more often now but we know markets will correct.
We just can’t ignore the massive amount of money the FED has put into the system. Plus we have had historic rise in Treasury prices and that is not a sustainable pattern. That money is likely to come out of the Treasuries and be put into equities (stocks) to some degree, helping propping up stock prices. On a short term basis, stocks are probably overbought but longer term we are getting intermediate term strength. Remember that T2108 chart on Worden Brothers Daily charts? It shows the percentage of stocks over the 40 day moving average which is 57.7% right now. In early October 9th it was just over 1%, so that was a low (as predicted by me) but November 21, 2008 was the Dow 30 low. Don’t forget about the auto bailout which is extremely likely to be enacted in some form. This should add a little more fuel to the bull run before that gets voted in.
Only 3 sectors are in a downtrend right now out of about 40. Those are Junk bonds, municipal bonds and commodities.
Intermediate Trade Positions: FXI, Xinhua 25 etf, PTR and SNP looks like they are resting and couple of indicators are showing that on a short term horizon, they could pull back slightly. SNP moving average line is leveling out as of today, which is normally a sell signal for me. I’m treating this as a “rest” and looking for a resumption of upward trend the next couple of days.
The steel sector, X, SCHN, and AKS (and 39 other steel stocks) continue to move up nicely, following the uptrend in the moving averages and other technical indicators. It is going to be harder to trade in and out of these intermediate term long positions. It is best to set trailing stop losses on them and move them tighter if the price charts turn parabolic upward (steeper and steeper curve up).
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.
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) are still acting quite well and this long position is still a hold until it breaks down and hits your trailing stop loss. This sector looks like it could continue for some time but maintain trailing stop losses of 5%. Make sure you don’t get too heavy in the sector. 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 some money to go long.
INTC, Intel corrected today and look for the upward trend to continue after a couple of slightly negative days . Consider this long as a swing or intermediate after a slight pullback.
HIGHLY SPECULATIVE: CPE, Callon Petroleum is still correcting and should continue. Target price of $2.00-$2.10 to cover any short.
Day Traders/Intraday stock ideas: There was a shallow drop and BIG pop in FSLR today with a $19 move up or 12% on the pop. Same with AMZN but only a 3% pop. RIMM had a good intraday trade on the second bottom, the first one was only a 1.2% and the second was over 3%. Try changing your intraday charts to 5 minutes to smoothen out the herky jerky motions the 1 and 3 minute charts still have. Tomorrow we should see a similar pattern but a bigger drop with a smaller pop.
Concluding thoughts: REPEAT: More and more sectors are turning up and developing an uptrend. This could be the move we are looking for that will be potentially large profits with intermediate term moves (weeks to months). We are not too late for intermediate trades and it is time to be more aggressive but not overly weighted in any specific stock position. This takes a lot more patience to detect and stay with an intermediate long position and is a very different discipline than what we have been working with in the last several months with mostly intraday trades, then swing trades that last a couple of days and now the hold periods are lasting longer. It is a lower maintenance type of trading technique but a trailing stop loss is absolutely necessary for intermediate positions.
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
Contents: stock trading, trading strategies, stock picks, stock market education, stock market investing course and educational stock trading videos.
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.
Disclaimer – Stock investing or stock trading has large potential rewards, but also large potential risk. There is risk of loss as well as the opportunity for gain when buying or selling stocks, bonds, option contracts or engaging in any strategy listed in the Daily Stock Report, The Wizard Training Course, The Trading Room and our seminar or workshops. You must be aware of the risks and be willing to accept the risks when investing or trading in any financial markets. Don’t trade with money you can’t afford to lose. This website is neither a solicitation nor an offer to Buy/Sell stocks. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this website. The past performance of any trading system or methodology is not necessarily indicative of future results.
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The Daily Stock Report The stock market is likely to get some selling
Sep0
The Daily Stock Report Mitch King
December 10, 2008, Wednesday Evening
Even though all eyes are on the auto bailout it looks like it’s going to be delayed and this is the few days that the stock market is likely to get some selling. The dollar amount has been lowered from the original $25 billion to $14 billion and it is very likely the market sells off even if or when the Senate gets the vote through successfully by Friday. The most likely sectors to sell down are financials, housing, insurance and ag-chemical stocks. For sure the odds go up that tomorrow is a down day and that should accelerate the selling we started seeing in financials and housing.
For the most part, I think we are past the stage where we saw forced selling caused by margin calls, redemptions and outright panic but it is still possible we get another dose of that. At the moment, the viewpoint is “buy on dips” will start working again for this countertrend rally that appears to have started. The odds are increasing that a mild rally could last for a couple of months into next year with interspersed periods of selling for shorter and shallower pullbacks (also known as selling).
Oil prices moved p 3.4% today, which basically means nothing. We have not seen enough consistency in the buying or any trend reversal to make anything of this sector except to reiterate we are in a steep downtrend. The long positions in the independent oil and gas stocks’ swing trade continued to move up, a pleasant surprise. Soon we should see this trend reverse. Don’t forget about this sector and that we need to have intermediate term LONG positions at some point. But let’s wait for the turn upward to begin first. Remember, don’t be a hero.
Intermediate Trade Positions: FXI, Xinhua 25 ETF is moving up with higher highs and the uptrend is well established with both this index etf and the Chinese stocks. This should be a shallow and short-lived correction already came and went and all indicators are still pointing upward for both FXI , PTR, Petro China and SNP, China Petroleum. Note that LFC, Life China is also moving up but that’s been a long forgotten stock from over a year ago that I was trading that long.
Swing Trades: The housing stocks such as DHI, CTX, TOL, PHM, LEN, are moving down nicely now. Hopefully you have established a short position or perhaps some of the more experienced investors or traders may have purchased put options. If there are no shares available to short, consider buying put options that expire well into 2009, February or March with close strike prices. . Look at the downtrend lines at the lower highs and lower lows on the daily chart shown in the video tonight.
It was successful trading the life insurance sector (HIG, PRU, MET, LNC, PFG) mostly on the short side with some excellent long scalps as well. PRU and MET acted the weakest and it was easier to trade these two vs. the lower priced stocks of HIG, LNC and PFG. This whole group of life insurance companies should be selling off for several more days.
The coal sector stocks (FCL, ACI, MEE, CNX) are likely to sell off in a mild manner these coming days. This group is worth a small swing short position.
FCX, Freeport McMoran should be good for a 15% swing short .
AMZN, Amazon.com is gradually turning over. This is a more difficult stock to trade short compared to other sectors like coal, ag-chemicals or housing stocks but this is worth a very small short position. This is a decent swing short to $44-$46.
JPM, JP Morgan Chase and GS also acted good as swing short positions. GS has been weaker than the whole financial stock group. WFC, Wells Fargo is also accelerating its drop as well. Ignore BAC either way.
SKF, Ultrashort Financials ETF moved up over $118 today from yesterday’s low of about $101. I’m still looking for SKF to get to $130 as financials continue to sell off the next few days. Keep position sizes small, especially if you are new to selling short. This allows you to have staying power with your positions and not create such high emotions for you.
Take note that the steel sector has been on a really strong run the last 3-4 days. It could be changing the trend with this sector but it is too late to buy this sector on this particular run. SCHN, X, AKS, RS, MT, NUE, STLD, AND IIIN are moving up hard. Watching and waiting.
Day Traders/Intraday stock ideas: Drop and pop is back in the financials and some tech stocks like AMZN and AAPL. Wait longer than normal for the drop in financials before going long.
Concluding thoughts: Don’t look for huge drops in stock prices as rapidly or sharply as we have seen in the past few months. This pullback should only be a shallow one so taking profits earlier than normal on swing shorts is a smart idea.
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
Contents: stock trading, trading strategies, stock picks, stock market education, stock market investing course and educational stock trading videos.
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.
Disclaimer – Stock investing or stock trading has large potential rewards, but also large potential risk. There is risk of loss as well as the opportunity for gain when buying or selling stocks, bonds, option contracts or engaging in any strategy listed in the Daily Stock Report, The Wizard Training Course, The Trading Room and our seminar or workshops. You must be aware of the risks and be willing to accept the risks when investing or trading in any financial markets. Don’t trade with money you can’t afford to lose. This website is neither a solicitation nor an offer to Buy/Sell stocks. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this website. The past performance of any trading system or methodology is not necessarily indicative of future results.
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The Greatness of Gold Bullion
Jun0
From the search of the Spanish conquistadors hundreds of years ago to the severe mining operations now being conducted around the globe at this time, gold has always been a precious metal that has been keenly sought out. The foundations of latter-day economics were based on the trading of bullion gold coin and gold coins, and we would not have the economic system we have today if not for these convenient tools for trading.
From gold to paper
Yet as time passed, people found it inconvenient to be carrying around a clunking pile of metal in their pockets and moneybags. The weight, the clumsiness, and the risk of carrying your own gold bullion coins had its problems and risks , and there needed to be something to replace the gold itself. So , the rise of financial institutions came about ; using paper cash or similar tools for facilitating easier trade.
But these fiscal uses of money results in dips and turns : stocks tumble, checks bounce and inflation makes a single greenback increasingly worthless each passing year. Marked gold coins and marked gold bullion, on the other hand, never ceases to be a steadfast investment for the sensible buyer.
From paper to gold
Granted, the numerous issues that plagued gold still exist today with their heavy mass and the danger of theft being chief among them. But buying gold bullion coins assures the financier a reliable source of revenue that avoids the fiscal instability that ‘money games’ are scandalous for:
Profit from price differences
Looking at the history of gold, you may find that it is very similar to stocks: to stocks: the prices rise and fall over a period. Unlike the market and similar financial institutions, though, gold isn’t only restricted to one market. The value of stocks is constant worldwide – a $50 stock will be its equivalent in Yen, Euro or any other currency around the world. The only way to profit would be to accurately forecast if that stock will rise or fall.
Gold, on the other hand, has it a bit more differently. Being internationally recognized as a medium of trade makes gold bullion coins a more secure and flexible resource to invest in. One part of the world may be selling gold inexpensive, while another part of the planet might be purchasing gold for a higher cost. Or you might just simply wait it out and get some profits from the rise and fall of gold costs in your locality.
Protection from crisis
Natural disasters, war, fiscal collapse and other similar crises can render your money worthless in the long game, like what happened to many ECU nations in the World Wars.
But transforming your financial assets into gold bullion coins can assure you that your assets will be safe and secure regardless of what occurs. World recognition of the cost of gold makes it infinitely more liquid and transferable than notes whenever a crisis comes about.
So if you would like to make some easy money or save for your retirement fund, consider purchasing gold bullion coins. It’s safer than buying stocks, but just as ( if not even more ) effective.
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