Wednesday, January 14, 2009

Still Looking for a Quick Oversold Bounce

After going through my scans, I still stand by my earlier thoughts that we are due for a relief bounce soon, perhaps a strong one. Not the type that is going to change the longer-term trend, but just a typical bear-market one caused by massive short-covering. After going through my scans, I saw quite a few stocks that have pulled back rather nicely to support levels (either former breakout levels or important moving averages). At the same time, I continue to see a lack of huge, powerful breakdowns on volume in the shorts I have been watching, outside of the banks and some retail. It's possible we continue to just drip lower here on lighter volume, but I am expecting something to happen soon.

Someone asked earlier if I had made some money this year after calling for a pullback last week, and unfortunately I really haven't. Shorts just haven't been acting the way I expected - maybe I have just picked the wrong ones. I wish I would have given my FAZ position more room to move, but again, I was expecting more volume on the breakdown in XLF which never came, and that really messed up my analysis. Oh well.

Here are some of the stocks I will be watching over the next few days as possible plays on a one or two day bounce back up to around the 50 day moving averages. With the AAPL news along with earnings from JP Morgan in the morning, it is certainly possible we could have another rough open tomorrow. Timing an oversold bounce is always tough, but I will be watching carefully tomorrow and looking to possibly enter a few longs with tight stops. Good luck.

Longs to Watch: OI, IN, MYRG, USG, DRYS, LINE, FGXI, ULBI, SEA, MWA.B, GROW, ARST, XTXI, GNK, COGO, APWR, DIG, KWK, EAC, RGLD

2 comments:

Anonymous said...

dude do you think this market is going to tank hard and fast to 500-600 (S&P) like last October? coz I don't want to missing out again!! is there a reason for that sure...

First was sub prime ,now ALT -A and prime foreclosures.

GS said $1.6 Trillion writedowns are expected this year.

Anonymous said...

Mac, when you dealing with stock yes volume matters but if you dealing with etf like SPY volume is not that useful, look at the down volume of daily SPY prior October collapse, it's lite compare to the up volume but price still going down. Down volume climax at bottom.