Thursday, January 5, 2012

Stock Market Video - Long Setups for Tomorrow, But Worried About A Few Things

Good evening traders.  We have a big jobs number tomorrow morning, but today was a pretty bullish one based on my scans of individual stocks, as I saw a good number of heavier volume breakouts and still am seeing a lot of potentially attractive long setups heading into Friday.  I made a video below going over the watchlist I will be carrying into tomorrow's session.   I still need to narrow the list down a bit and will focus more on the stocks that showed increases in volume during today's trading. 

I am hopeful we can get a nice breakout in this market soon and get a trend going, but the first three days of 2012 have unfortunately been very similar to 2011.   Intraday trade has been somewhat volatile and we haven't moved much since the opening gap on Tuesday.   Based on the charts I see, I am bullish here with currently two long positions and will look to add more tomorrow (if the market cooperates) but I have two main worries.

Worry #1 is sentiment.   I usually don't look at these numbers that closely but I noticed a tweet this morning that showed how much the % of bulls have increased and the % of bears have decreased over the past week.   If we had already broken out of this range and were in the middle of a nice rally, I may accept those numbers a bit more, but to me the worrisome part is that we haven't yet broken out and there are still so many bulls out there.  Are we setting up a major whipsaw here with the late bulls to the party chasing a breakout before getting burned in a major way?  That's a question in the back of my head that I don't have an answer for yet.

Worry #2 is throughout 2011, every time the evidence pointed strongly one way or the other (bullish vs. bearish), the market ended up doing the exact opposite thing just to screw with as many traders as possible.   When I would have tons of bullish setups in my scans and things seemed to be finally pointed upward, the rug would be pulled out from the feet of the bulls and the market would sell off.   When there were tons of breakdowns and short setups, the rug was then soon pulled from the bears.   I unfortunately have no evidence yet that 2012 is going to be any different from 2011, so in the back of my mind the fact that I see bullish setups here somewhat scares me.   Are we all about to have the rug pulled out from under us AGAIN by Mr. Market?  I sure hope not, but who knows?

Hopefully you can pull a few useful ideas from the video.  I will be looking for longs Friday but it will not shock me if the market is down 2% or so by the end of tomorrow session just because that's what we've had to deal with for far too long now.   Best of luck Friday - we all need it.

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