Tuesday, June 10, 2008

Steel Stocks Looking Weak, A Few Other Short Possibilities

This post will be short because I see very little on either side of the market right now. We're in an environment where limiting trades is probably a good idea and taking profits when you have them in probably a good idea as well.

These are the only two longs that I would even consider looking at. My long watchlist has gradually diminished for the past two or so weeks.

If you're looking for a possible day-trade, take a look at REXX. Cramer pumped HK on his show Monday night and it of course gapped up, but then sold right off for the rest of the day. I can't say for sure the same thing will happen to REXX, but it worth watching.


Steel stocks looked rather weak today along with most of the commodities and could be ready to breakdown. Some did today, while others are sitting right at important trendlines and support levels. IF they break down further, I may look at one or two for possible shorts.


Here are a few other short possibilities that I will watch. All of the shorts I see right now are in the commodity sector - I think the Nasdaq is getting oversold a bit and I would be hesitant to short tech right here.

All Charts From Telechart2007, Courtesy of Worden Brothers, Inc.

China stocks in particular are very beaten up and I would not even think about shorting them here. Look at the following stocks - SOHU, SINA, CTRP, FMCN, GU, CHNR, BIDU, EDU, CHL, TSL, and VISN. These are mostly broken stocks that are likely headed lower over the next few months, but right now they are quite extended to the downside and I wouldn't be surprised a bounce occurs in these soon, running in some late short-sellers.

Unfortunately, I have no clue what to expect tomorrow. Hopefully it will be a little more exciting than today. I do continue to get the feeling that this thing is bound to break open to the downside at some point soon, but as long as yesterday's lows hold, I wouldn't get overly aggressive until they break. The trend is down, though, and although the possibility of a bounce still exists, now is still the time to either sit on your hands and do nothing, or selectively short stocks. Best of luck Wednesday.

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