Wednesday, July 30, 2008

Some Late-Night Thoughts

Well, I just got back and am going through my scans rather late tonight. I missed most of the final hour of trading but obviously stocks finished strong. I don't know how much of the strength in the Dow and S&P were related to strength in the commodities or just overall strong buying. I have to give the market props because I fully expected it to tank when oil bounced (which it did strongly today) and it did the exact opposite. It attempted to tank, but fought back and closed strong. We have two big news items this week with GDP and the jobs report so I'm sure the trading is going to continue to be volatile and difficult.

Technically, I have to lean more bullish after today. The Market Monitor's main ratio turned back to bullish today, but it keeps bouncing back and forth so I am waiting for it to get further into positive territory. The only problem I have right now is that there still aren't a ton of charts that I am excited with, and we are probably a little overbought here. This market is still choppy and volatile, and that makes things difficult to hold positions. I am still taking the attitude that I will be fine taking a long that is a really great setup, but I am not jumping on questionable plays here. I doubt I will be fully invested anytime soon.

Some other random thoughts after doing my scans:
  • Railroads look to be forming bases here - some have already broken out, and some are possibly rounding out the right side of cup patterns in most cases - see BNI as an example.
  • Biotechs have been leading for a while, but I am always hesitant to invest in them because I always have a fear of waking up one day to bad drug news that leads to a huge drop in the stock. Prime example - check out ELN today. Yikes.
  • I am actually back to looking at some commodity stocks - coals and ags namely. Oils are too beaten down from my perspective, but the other two might run a little. That being said, I can still see the ags forming right shoulders of H&S patterns here over the next few weeks, setting up big-time topping patterns.
  • If you check out my last few posts, you can get some individual stock ideas. A few more that I am looking at after today are NCOC, GWR, ARST, NIHD, WAB, and CF for possible swing trades.
  • For the time being, I am done looking for shorts. There is no point to fight this market and you must respect the action, even if it doesn't amount to a big rally.
Best of luck Thursday. It should be interesting as always.

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Anonymous said...

Once again appreciate the honesty of your blog - no doubt its difficult, one could look at my account to see that...


Mac said...

Thanks, Tom, and keep your head up. This market has been tough for everyone. The key in a tough market is to maintain as much of your capital as you can. I've done well shorting this year, but that is only after some misses and some lessons learned. The best game plan, especially if you are still learning, is still to remain in cash and wait until the market gets better, or at least make any trade you make very small. We may have to wait a while - I don't know for sure. A new day will come though and if you have most of your capital still intact, you will be able to attack a new bull market with full force. Best of luck.