Wednesday, January 13, 2010

State of the Market - 1/13/10

Well, I didn't watch the market too carefully today, but from what I now see in my scans, it seems like it was quite the crazy day out there on Wall Street. The market opened just slightly higher this morning but quickly fell again for the first hour before finding a bottom around 10:30. From there, it was a straight and steady shot upward, as the Nasdaq gained 38 points off its lows before pulling back into the close with the S&P up 16 points off its lows before also pulling back. The final gains were nice but did not quite make up the losses from yesterday. Volume looks to be significantly lower as well.

Technically, the Nasdaq bounced off of some pretty important support around its 20 day moving average today (posted that last night on Twitter) and with the S&P bouncing back as well, it was a good day for the bulls. I would like to see some more strength from them however before giving the green light again to just buy anything. I am still somewhat cautious but you know what, earnings are likely to be the key anyway and who knows what they are going to be like. Technicals may not matter much here for a while.

Sector-wise, oil looks somewhat oversold now and bounced back a bit off its lows so a further bounce in the commodity sector wouldn't surprise. Financials look to be consolidating well but again, earnings will likely determine whether this group pushes to challenge its former highs or never gets that far. I do like the BKX chart however. Retail continues to do nothing.

I said earlier that it was a crazy day not only because of the reversal in the indices, but mainly because of the action in the momentum stocks I follow, particulary in the Chinese stocks. Day-traders had to have a field day because I see so many stocks in my scans that moved 10-15% off their morning lows (take a look at CAGC, NANO, IMAX, CBEH, CAAS, CTFO, CALI, NEP, JASO, CSKI, FSII, and PWER if you want some examples). To be honest, I don't know what to think of these charts now from a swing-trading perspective. I guess it is good that buyers came in to push these back up, but I never like charts that have wild, crazy bars on them like I see now on so many of these and I think the past few days shows that things are likely going to be very volatile in these names so be alert. I don't have a problem going long in some of these names but my profit targets will be very short-term oriented because of the swings we are likely to continue to see.

I didn't do anything today and am going into the final two days of the week with basically an open mind. After a quick look at my scans, I do see some setups that look nice (some new ones) so I'll have them on my watchlist tomorrow and play them if the opportunity presents itself. One of my goals this year was to pay less attention to the overall market and more to individual stocks and this is probably a perfect time to do that. With earnings season upon us, there will be stocks that move higher regardless of the overall market and lower regardless of the overall market. If you can just focus on those stocks moving higher, you'll be fine. I'll hopefully be back in a little bit to share some of the setups I am watching. Take care and good luck Thursday.

1 comment:

positiontrader said...

MDC looks real nice Mac! Thanks!