Thursday, February 3, 2011

State of the Stock Market - 2/2/10 - "Support Tested and Held"

A good day today on Wall Street - the gains were not large but after some early selling, the indices fought back and continue to give nothing away after Tuesday's big up session.   Important as well was that short-term support was tested early on and held, which is another feather in the bulls' cap today.   Volume does look like it will come in weaker.

I said yesterday that stocks were perhaps biding time until the employment report came out (although I had my days mixed up - thought yesterday was Thursday???) and today's action is consistent with that idea.   The past two days reek of consolidation and that is typically a positive.   I remain neutral overall but a breakout tomorrow would certainly lead me to believe the market wants to start another move higher and I will not fight it. 

I did enter one long position last night after-hours (GMCR at $37.48) based on its earnings release.   It acted well in the after-hours session, but saw very little follow-through today and I ended up being stopped out right at $37.48.   Maybe this one keeps moving higher, but I've stated this many times - the best earnings plays take off right from the get-go.   This one certainly did not do that. 

Besides GMCR, I still don't see much on the long side worth talking about.  I mentioned the rare earth stocks as being strong yesterday (REE, SHZ, XING) but as a group they don't look quite so hot after today.   No follow-through there at all.  BORN was one I continued to watch but it had a big breakdown today.  EXPR finally moved higher but it doesn't look like volume will come in even a little above average.  BSDM was another watchlist candidate for me but it finished very weak. 

All of that withstanding, a cursory look at my scans has given me a few candidates that I will be watching tomorrow in case this market wants to start another move higher.   I have to do a bit more research to see which ones are best, but maybe I'll share some later on Twitter.  Overall, I don't think I've missed much at all being in cash most of this week, but if the market starts to trend again, I'll be waiting to jump back on.   Good luck Friday.

1 comment:

Anonymous said...

mac

my systems show a buy signal on GS (goldmen sachs) yesterday. i think i will do a short run but with a small lot as weekend is coming. maybe buy more on monday

mini-me