Tuesday, June 17, 2008

Oil Stocks Continue Higher, Low Float Momo Plays Popping as Well

You can see on the charts below that the Dow, S&P, and Small Caps all fell today from resistance levels they approached on Monday. Volume was not very strong today, so who knows for sure if this is the start of another leg lower. It may be - I am still leaning bearish and will only get bullish with a follow-through day sometime this week. A close above the highs of today would be a good start for the bulls. I am sure options expiration will throw several curveballs at traders the next three days.

Major Indices

Oil stocks kept chugging along today, even though crude was slightly lower again today. Sure, this sector could reverse at any moment, but there is no reason to fight the momentum right now. The USO chart went green today which is a good sign for oil bulls. Many of the low-float, momentum names started making moves today as well. I am on the lookout for these stocks because they can make huge moves in short periods of time, even though they are very volatile. I actually entered PDO after hours at $25.30 in hopes of catching a continuation of today's move higher. Right now, it is being pushed a bit higher in the after hours session.

ZBB, FPP, PDO, NGAS

Here are some other momo stocks to keep an eye on - they are very difficult to play but if you have a high tolerance for risk and good discipline, they might be worth a shot. SU is not a momo play, just a longer-term oil play that is at a very low-risk buy point.

ROYL, MXC, LEI, SU

Here are the two shorts I took today (I bought SKF). If financials stay weak and head lower, these both have a chance of doing very well. I will trail them with a stop to hopefully avoid any short-squeezes, as this sector still has a lot of short interest. MS has earnings tomorrow so that will likely affect this sector - GS couldn't do a whole lot to get the financials going.

SKF, CMO

There are still some short opportunities out there - I am finding many more of them than I am new potential longs in my scans. I didn't put the charts of FSLR and SOL on here, but I will be watching them as well. I still think they head lower.

AKS, WFR, WBD, SOHU
Charts from Telechart2007, Courtesy of Worden Brothers, Inc.

Other shorts to check out include CDS, HITT, CTRP, CRDN, TEX, CHL, SINA, and UFPT. I have put most of these charts up before so I am not putting them up tonight. These ones are shorter-term plays - possible breakdowns from bear flag patterns.

That's it for tonight. We'll see if the market messes with our minds more tomorrow or if the bears can build on today and push the market back down towards its lows. Best of luck Wednesday.


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