Wednesday, December 29, 2010

State of the Stock Market - 12/28/10 - "Holiday Trading - Focus on Momo Names"

This Sunday, I posted some charts that I felt would be worth watching this week as holiday trading environments are typically boring and slow from an overall market perspective, but not so boring from an individual stock perspective.   In thin environments, certain low-float names can quickly attract attention from momentum traders and make big moves in thin trading environments.   SHZ is a prime example of this type of situation.  

 Chart from Telechart, Courtesy of Worden Brothers, Inc.

Hopefully a few readers were able to get into this stock at some point this week and make some nice change.  If I was in it (still waiting from the transfer process from Scottrade to Think or Swim, so I am not), I would certainly be looking to take any profits that I had and would sell into any further pop tomorrow, but it was certainly a very powerful move.  Over 100% in three days??? - yeah, I'd take that.

Since I can't trade at this particular time, one thing I am doing this week is trying to fine tune my strategies for the upcoming year.  One problem I believe I have as a trader is that I have too many strategies, too many scans, etc, and therefore too many decisions to make.   I am in the process of eliminating a lot of the "fluff" that I have in Telechart and really getting down to one or two main ideas that I know can work as long as I execute them.   Finding potential winning stocks has never been a problem for me, but deciding which are best and entering them at the proper time has been, and I hope streamlining my "system" will help eliminate a lot of the problems. 

I am also working on streamlining my basic timing system for the overall market, combining breadth, accumulation/distribution, and moving averages into one system that I can use and actually trade from more often.   Because of the difficulties I have had adjusting to being an "end of day" trader instead of one who can watch the market intraday, I really would like to keep most of my main account and both of my IRA accounts in 2011 in ETFs based on this timing system.  

Good luck Thursday - as the year comes to an end, I would be surprised if the market moves much at all in either direction just due to the thin environment.   All signals that I follow remain bullish, and until we see signs of weakness, keep riding your longs if you have them.  You can probably day-trade some of the momo names with success if you're not invested, but I wouldn't do much else until the new year starts.   Take care.

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