Thursday, January 6, 2011

State of the Stock Market - 1/6/10 - "Choppy"

We saw a choppy and rather boring session today on Wall Street, as stocks started the day slightly higher but moved slightly lower from there.   The Nasdaq outperformed with small gains, while the S&P ended up with small losses.   The only real negative that I see from today's action is that the Russell 2000 led to the downside with a loss of 0.7%.   The small cap index has been very volatile this week as a whole - hopefully that doesn't mean anything bad.   As of now, volume looks like it will come in heavier on the Nasdaq but lower on the S&P. 

Technically, not much changed today - the indices continue to hold support and all signals remain on "buy".   I have no idea how much longer this move lasts, but if I learned anything from 2010, it's that moves can last much longer than you think, so until we get some clear signs that the bears are ready to take charge, I will be simply riding the move higher.   When my signals change, I will tell you, but for now, there is nothing else to do but be patient.  

The dollar put in another strong session today and appears to be breaking out here.  This has obviously affected commodities.   Various "caution" (XLE, SLV, GLD) or "sell" signals (USO, OIH) have occurred in the past three days so be alert if you have longs in this area.   Commodities suffering is one point of worry for the overall market, but I guess it's possible money will rotate to other areas.  We'll have to see.

Chart from Telechart, Courtesy of Worden Brothers, Inc.

I did not add any new long positions today - I remain in three positions, all of which acted well for me today with gains of 3-4% each.  I shared REDF as a setup to watch last night and it was up a quick 8.5% today, although it didn't close as nicely as I would like to see.   For now, I passed on that one.   I also passed on YOKU due to a difficult entry yesterday (gap and fade), but this has also moved about 15% this week.   That was mentioned in the "Top 11 Stocks for 2011" video this past weekend. 

I believe the new jobs report comes out tomorrow and that could drive trading.  Overall, I get the feeling that a lot of traders are like me right now - kind of expecting a pullback soon - but until it happens, there isn't much to do other than try to be patient and ride the longs higher.  Good luck Friday. 


Anonymous said...

Hi, what are your 3 positions? Thanks.

Mac said...

I'll disclose my positions when I close them out, gain or loss. I am not sharing what I enter in terms of specific positions anymore. Most of my positions however are stocks I have shown in my videos or on Twitter at some point.