Wednesday, December 2, 2009

State of the Market - 12/2/09

A pretty slow day today on Wall Street, as stocks tried to move higher early on in the session but failed and just meandered their way sideways for most of the afternoon. Volume looks to be lower for the third straight session.

Technically, the S&P poked its head above key resistance around 1113 this morning, getting as high as 1115, but that move couldn't hold and the S&P closed only slightly positive and in the middle of its intraday range. Perhaps the S&P just needs a day of rest or two before blasting through this level to new highs for the year, but as of now, the resistance looks formidable. The Nasdaq got close to its 2009 highs around 2203 could not get through as well, rising as high as 2198 before reversing slightly lower. That remains the number to watch there. If the bulls can get through these levels, then another round of short covering would not surprise me, pushing the market even higher still. We have to wait for that breakout however.

Financials were flat all day and still remain below their 50 day moving average and a downtrend line. The same description works for the Russell 2000 today as well - it tried to get above its 50 day but finished right at it. It did however outperform the other indices with a 1% gain today, so perhaps that is encouraging. If the small caps can catch up, I would feel much more confident about a potential breakout here than I do now. Oil was down as the dollar was slightly higher.

I sold out of my TSTC position today at $15,65 for about a 14% gain today - I probably should have held on as it finished almost a dollar higher than where I sold it, but for now, I am going to take some gains when I get them as just getting gains have been such a struggle this year for me. When you are in a losing streak, just hitting some singles and doubles as opposed to swinging for the fences is not a bad idea - it lets you get your confidence back, and confidence is a huge part of trading. That's the way I look at it at least. I am back in cash but will continued to maintain my long watchlists for potential momentum plays like TSTC.

Not many stocks moved much on my watchlist from last night - EXLS was about it. Right now, XJT, CEU, LZB and CHINA all look like potential runners if buyers come in but am in no hurry to get into those stocks so I will wait for a little confirmation. With Friday being jobs report day, things could get a bit more volatile over the next few days, so I don't know how agressive I want to be going into that session. Hopefully it can be a market mover and we can get out of this range, but you just never know. Take care and good luck Thursday.


Anonymous said...

Hi Mac,
Could you shed some light on how you get the "confirmation" to enter a stock -- and where to let it go? Thanks much, I have become a recent reader of your blog, and like it .. am possibly gonna start putting in money in some of the stocks you highlight. Thanks for the blog!


jeremy said...

I totally agree with you. I have been on a losing streak as well. I traded TSTC and LIWA yesterday and as you said, those really were good recipe to my gain confidence back

Mac said...

PA - welcome to the blog and feel free to ask any questions you may have - I'll try to help out if I can. In terms of TSTC, it was forming a nice flag pattern and with the morning strength it was showing along with heavy volume in the first ten or so minutes of trading, I felt it was worth going into a bit before it officially broke out. That, along with China stocks being so hot recently, was all the confirmation I needed. My only worries were that it was a pattern that a lot of traders were talking about, so I thought a reversal or false breakout was possible.

Selling wise, it is always harder. As you can see, today I missed out on at least another dollar on TSTC. I thought with the S&P reversing and so many China stocks getting extended that it was ok to just take the gain instead of letting it run. A lot of it is feel, and for this one, my feel was off a bit. Hope this helps.

Jeremy - taking a profit is never a bad idea, especially when you have been on a bad streak. Nice trade in LWIA - did not see that one in my scans but looks like it had a super move today.