Thursday, February 7, 2008

Possible Longs If We Hold Here

As I said earlier, after today's action I don't really have a good feel for where the market is going from here. I would like for us to continue lower, not only because I am short but also because it would give us a more powerful move when things finally do turn to the bullish side. Things rarely work the way we want in the markets so I am preparing for both a move up or a move down here. If we don't break the recent lows or just continue up from right here without even getting to them, then I have to change my thinking a bit and look for a longer rally than I originally thought. Volume wasn't high on the three down days this week, a fact that I must not ignore. If we rally, I still don't think this will be a great move or the start of a new bull, but it may be tradeable over a short time period if we hold this area. To prepare for this possibility, I am putting together a watchlist for longs. I think the following are ones to watch just in case we continue higher:

SMTS, INFA, CREE, AKS, XIDE, ISRG, MA, and BKE

I am really going to focus only on the first four, and that tells you something about the overall state of this market. There is still a lot of technical damage and the nice-looking charts that are usually found at the beginning of a powerful rally are very few and far between, at least for my trading style.

I am not covering my shorts yet, but am going to tighten my stops. There are a few shorts I am still looking at as well that could be possibilities(HIBB, BOOM, SCHN, OTEX, GIGM). Again, I just don't have a good feel right here so I have to be prepared for anything. I have been bearish since December, and continue to be puzzled at the market action, but the market doesn't really care what I think and I must not let my personal opinions affect my analysis of the market. Hopefully the next few days will bring some sort of clarity - probably not however. Good luck tomorrow.

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