Thursday, May 23, 2013

Expecting Some Chop, But Opportunities in Individual Names Will Hopefully Continue

We had an interesting day today on Wall Street with the Nikkei closing down some 7% and our markets gapping down to start things off.   Given the action overseas, most people would have expected futures to be down more than they were, and it was the sort of open that has recently invited bounces.  That's indeed what we got, although looking at things objectively, it wasn't the strongest bounce I've ever seen.  The markets closed basically flat and there is still a lot of work to do to take back and recover from the selling we saw on Wednesday. 

Tomorrow is hard to call in my opinion due to where we closed and my guess is that we are due for some chop over the next week or so.  After having such a slow, smooth, steady (and I would say almost weird) climb from the beginning of this month, it makes sense that volatility picks up a bit and we move up and down without going much of anywhere for a few days.  It's very possible that this rally continues at some point soon and the recent highs are built upon, but for now, I suspect there will be a lot of false moves and headfakes over the next three to four days.  That's kind of what happened from February 20 to March 5, when the market finally broke down a bit after a slow and steady move for the first two months of the year and then proceeded to chop back and forth for the next week and a half. 

After being stopped on all longs yesterday, I did go back into a few names today although I still hold a large hedge in QID.  The past two weeks have been great for momentum stocks and have provided some wonderful opportunities to make good money fast.  I would not be surprised to see action in many of these names continue even if the market flops around for a week or so.  Some names of interest are below.

The gap up in many solars on Tuesday was a clear sign of exhaustion and the reversals put in over the past two sessions are not surprising, but some of these names have now pulled back into short-term support and could easily bounce hard intraday.  I am going to watch these names as potential day-trades, although they are very volatile so be careful.

I am also seeing quite a few names that have been strong over the past few weeks pull back a good bit but bounce back with reversal candles today.  I entered two names that would fit into this category today and will look at others if they show strength going forward.   These will be one or two day trades at max.

A few other names of interest are shown below with some annotations.  I am hopeful that the action in individual names can continue regardless of how the overall market trades and will be watching the names above (among others) closely.  Good luck going forward. 


All Charts from TC2000, Courtesy of Worden Brothers, Inc.

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