Tuesday, July 15, 2008

Oil Stocks Hit Big Today, Could They Fall Further?

Here are the major indices. They are still in their channels, and as always, they could bounce from here, but every bounce continues to be sold for now(including today). As I have stated for the past several days, I will only start to look at longs when the market can muster enough strength to get over at least its short-term resistance levels.

Dow and S&P 500
Nasdaq and Russell 2000

Although we still haven't had any capitulation in my mind, nor has the VIX hit the mid 30's, nor has my Market Monitor ratio hit extreme levels, I still am looking for stocks that are shaping up bases and could long plays when we do eventually turn for a decent rally. Here are two more to add to the watchlist. I am not buying them here - simply keeping an eye on them. Just because the market is awful doesn't mean you should stop looking for strong stocks. Usually, the stocks that held up the best during a down move will be the first to run when the market turns to the upside for an extended period of time.

QCRO and VISN

The other stocks on my watchlist for longs when we do turn include RBCAA, FLIR, NNBR, AVAN, ABAT, ARST, EZPW, PARL, CRMT, VRUS, ORIT, VNUS, AVAV, EXAC, FCN, ENER, IPHS, VVUS, IXYS, OFI, CELG, AND CYBX. I posted some of these charts this weekend.

With oil selling off hard today, oil stocks did turn into good shorts. I mentioned last night that technically the charts were setting up bearishly, and the charts proved to be prophetic today. I took two shorts today in this sector. I may add more, but I don't know how much I want to press for the reasons I stated last night.

XEC, ROSE

As you may guess, there are a lot of oil stocks that look bad after today. Here are the four I think look best as possible shorts, but there are lots of others. I am still kicking myself for not buying DUG this morning - I still have no clue why.

EAC, PXD
REXX, WTI

Some of the coals broke down today as well, but some reversed and finished strong, so it is a hard group to trade. I tried FDG on a break of the 50 day MA but was stopped out when it reversed. Here are three charts that would have been better to short today because they finished below their 50 day MA. This group, just like the oils, is a tough call because they could sell off in a hurry, but dip buyers can push them back up in a hurry as well.

FDG, ACI, CNX, BTU

Here are a few other stocks I see setting up as possible shorts, but as always, be very careful and keep stops tight. You don't want to let one of these reversals run and give you a big loss. You just never know which of these "bounces" will actually amount to something meaningful. My attitude on shorts is I would rather be safe than sorry right now in terms of losses.

LAYN, BUCY, SPWR, SQM
All Charts from Telechart2007, Courtesy of Worden Brothers, Inc.

Things remain crazy and volatile, and because of that, trading is pretty difficult right now. In difficult times, make sure your risk control is very strong and you may want to take profits quicker than you normally would. Earnings reports are going to start flying at us now, so that will affect things drastically.

To end this post, I had to post this video of Sen. Jim Bunning questioning Big Ben before Congress today. Thanks to BearMountainBull for posting it first. I laughed outloud when I watched it. I also asked myself if this man could still run for president - it is too late for the Republicans to get him in there instead of McCain? Check it out - I though it was great. Best of luck trading Wednesday.

2 comments:

Gio said...

Hey Mac... I'm hosting a friendly Google Lotto Competition.

1) state your price target for GOOG after Thursday
2) state your strike price

... let's see who gets the closest, and who has the biggest gains!

GooG LoTTo!

Mac said...

Thanks, but I don't follow options at all and know nothing about them, and I really haven't been watching GOOG either. I'm sure there will be some volatility though come Friday.