Tuesday, January 5, 2010

State of the Market - 1/5/10

We had a choppy session today on Wall Street, as stocks fell slightly at the open, bounced back up to gains by 11:00, but fell from there through most of the afternoon. Losses were not large, however, and by 2:40 stocks began to bounce from support near the gap open yesterday, at least on the Nasdaq. The late bounce was impressive, taking stocks well off their lows and actually closing the S&P near its highs for the day. Volume was higher on the Nasdaq but I believe slightly lower on the S&P, although I don't have those final totals.

Technically, the market continues to appear quite strong as it was nice to see stocks bounce back from the afternoon selling. The S&P is right at the top of a rising channel and it would be great news if it could bust through it to the upside much like the Nasdaq did in December. Short-term, the market is slightly overbought but not extreme enough for me to think that there couldn't be more upside this week. Another day of strong gains may have me taking some profits, but right now there doesn't seem to be any reason to think the market can't move higher, besides many charts being a bit extended.

Sector-wise, oil and commodities continue to act well, even in the face of overbought conditions, which is usually a sign of excellent strength. Financials also acted well today and I will be watching closely how they fair with resistance around $15.

If you did not see the second post from yesterday or the comment section, I did get into RINO yesterday after-hours at an average price of $28.15. It wasn't a real big position, but I had a hunch it would move today and it did which was nice to see. I like the potential here as I think the current setup looks a lot like it did back in mid-September of 2009. That being said, I will likely lock some profits in if it climbs up near its highs around $35.

I also entered SEED this morning at $12.38 as I thought it could see some momentum as well. This did OK but didn't have the same push as the others - I wanted to see it close above $13.20. Oh well, maybe tomorrow it can get the real momentum going. My other two current positions (MTG and IMAX) did alright today but I didn't like the close in IMAX or the lower volume in MTG.

I did miss out on a few charts I have been watching that acted super today, namely UAUA, PDC, and CHINA (all of which were highlighted in the weekend video and/or in yesterday's post), but I accept that - as I get some confidence back, I will hopefully become more fully invested and trade more agressively. For now, I am still taking baby steps as I attempt to get completely back on track. Today however was a good start and I will probably look to lock some of those gains in tomorrow.

For tomorrow, I am mainly going to focus on managing the positions I have, but there are stocks I will have on my watchlist just in case. They include CDII, XRA, SMOD, SNIC, NLST, CMFO, VIT, AMKR, NANO, CHINA, DTG, CEU, CTFO, CPBY, PFWD, CAR, and UQM. Out of these, I would say SNIC, VIT, DTG, CEU, and CAR intrigue me the most. We'll just have to see if the market continues to be strong tomorrow. Take care and best of luck Wednesday.


Anonymous said...

Hi Mac:
Being rather new to swing trading and technical analysis, I am taking baby steps when jumping on explosive stocks. I held onto RDN today, but might unload tomorrow, not getting confident about holding it. RINO had a good run, but I unloaded half at 30.2 and then another half at 31.5. I know, in hindsight, it looks really premature selling, but am just locking in profits and don't want to see them go all the way down. RINO looks really strong after-hours but am not taking a fresh position until I get a sense of the overall market tomorrow morning -- might miss the bump, but I'd rather be safe than sorry.

If you have any advise on managing my positions with such stocks as you highlight, please do share the wisdom!


Anonymous said...

What will your entry be on NLST?

Mac said...

PA - I almost let go of MTG today as well and probably will tomorrow as I think it should have cleared resistance by now. We'll see. There is nothing wrong with taking profits - I think the idea of holding onto a stock through an entire four to five month run is unrealistic these days because of how volatile these are. I have a stop in place in RINO but won't be afraid to take profits tomorrow either. One of my goals was to take profits quicker and I will try to stick with that.

NLST - just watching, no entry point. This is an area it could bounce from and if shows any early strength, I perhaps would jump in.