Wednesday, March 19, 2008

Possible Shorts

Looking through my scans, I noticed a few things:

1) Commodity stocks look they are finally breaking down. Oils, metals, agriculture all had major breakdowns today and on higher volume. I have mentioned that I was uncomfortable buying these stocks the past few weeks and today confirmed my view. I don't know if they will continue much lower because the Fed doesn't exactly have what I would call a "strong dollar policy", but the stocks can go down before the actual commodities. The hot money is in these sectors because it was the only working, so if it stops working, the rush to the exits will be fast. Unfortunately, if you want to short here, you may be chasing a bit. You can also try DUG and SMN, both inverse ETF's. I have not had much luck with these two so far, so I am hesistant. I remember last week many of these stocks looking very similar to today, but nothing came of it. We shall see.

2) China stocks look absolutely terrible. Look at FMCN, NTES, MR, CMED - all look horrible. I am looking at both CMED and EDU as possible shorts over the next few days. EDU might be worth an entry right around here - just be careful because these stocks are very volatile.

3) There continues to be no leadership in this market. The stocks I mentioned as possible longs last night all look crappy today. If commodity stocks continue to fall, there is nothing I see left to hold this market up. That means we head lower.

Here are some shorts I am watching over the next few days. Without a rally today, these aren't necessarily in the best position to short, so be careful. Hopefully we will get a little more of this "rally" and get these up to lower-risk areas. Depending on how things go tomorrow, I may try starting a few positions at the end of the day. I would love to be able to get SKF in the $108 area. Others worth watching include VOCS, POT, MOS, TNH, GME, VOCS, and RIMM. Good luck tomorrow.

Charts from Telechart2007, Courtesy of Worden Brothers, Inc.

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