Monday, December 22, 2008

Tuesday Trading

The stock market traded lower Monday, but well off its lows, in quiet trading on Monday. I really like the set up I see on the charts, as most of the major averages appear to be gearing up for an upside breakout. Tuesday is a seasonally favored trading day, as it is the last full trading day before the Christmas holiday. With this in mind, an opening range breakout daytrading strategy should catch a nice pop to the upside. If you trade stock index futures, consider either the E-Mini S&P 500 or E-Mini ND100. Make sure the tape indicators are positive before taking any trades.

In regard to individual stocks, look for stocks that have similar patterns compared to the major indices for nice potential day trades on Tuesday.

Scott Cole
www.bestdaytradingstocks.com

Sunday, December 21, 2008

Monday Trading Thoughts for Stock Market

The few days preceding a major holiday have a tendency to be strong for the stock market, so pay close attention to any upside breakouts. Trading will likely be a bit thin this week as many traders are already on vacation. As a result, there could be a little extra volatility Monday or Tuesday, while trading on Wednesday and Friday will likely be very quiet with narrow ranges. Well, that is what history suggests at least!

I just had a chance to read a real estate report I receive annually from PricewaterhouseCoopers called "Emergin Trends in Real Estate." The mood among commercial real estate industry participants is that of doom and gloom, the 2009 forecast is for a sharp decline in commercial property values.

However, as I scan the stock market industry groups for the strongest performers over the last 30 days, the commercial real estate REITS, particularly the retail and hotel variety, are among the top 10 performing industry groups. These stocks have been beaten down considerably since they peaked in early 2007. In fact, at its November lows, the retail REIT sector was down about 80% from its highs. Will the decline in energy prices and interest rates help the commercial real estate market? Maybe not in the near term while jobs are still being lost, but judging from the performance of these stocks, a rebound may be imminent.

Other strong sectors over the last 30 days include residential construction, silver miners, semi-conductors, health care facilities, and casinos. These were also among the big movers on Friday.

Scott Cole
www.bestdaytradingstocks.com

Friday, December 19, 2008

Stocks Mixed on Bush Auto Bail Out

President Bush finally opened the Treasury to the auto industry today, essentially allowing the Democrats and Obama administration to deal with the problem next year. For lending Chrysler and GM $13.4 billion now, and potentially an additional $4 billion in February, the administration required some changes in the way these companies do business, and in particular how it pays its workers. The UAW as already cried foul and will undoubtedly pester the Democrats, whom it contributes millions to, to change this deal for the better of the union. Of course, this won't help the auto makers restructure in the long run, so the government essentially threw good money after bad, which was expected.

In spite of the Dow closing slightly lower today, all of the other major averages were up on the day, and there was good money flowing into those stocks that close up on the day. I really like the chart patterns I see on the Dow and S&P 500, expect some positive price action early next week. Pre-holiday trading tends to have an upward bias. Day traders should be aware of the upward seasonal bias for next week.

Scott Cole
www.bestdaytradingstocks.com

Wednesday, December 17, 2008

Stocks Consolidate in Light Trading

The stock market consolidated as traders re-assessed the Fed's announcement after the rate cut yesterday. Although the market averages were down today, most stocks actually closed up on the day, according to statistics provided by Worden Brothers (they produce the TC2000 software I use to scan my stocks).

Overall, it was an uneventful day, although I did not like the fact that Apple closed sharply lower after another downgrade this week. There remains concern regarding the health of CEO Steve Jobs, since he is not giving the keynote address at the upcoming Macworld conference. Furthermore, sales of Apple's desktop computers have been weaker than expected.

The top five performing industry groups today were Information Technology, Resorts and Casinos, Trucking, Semiconductors and Silver.

Below is a solid day trade occurring in EBS. Heading into the session, we notice a solid set upon the daily chart indicating potential direction for the stock today. The stock breaks out quickly and holds at higher levels before trailing off later in the morning. Early in the afternoon a buy the dip opportunity presents itself and the stock rallies for the rest of the day. These are the kinds of opportunities day traders should look for!

Scott Cole
www.bestdaytradingstocks.com

Tuesday, December 16, 2008

Stocks Rally on Fed Announcement

Stocks ended sharply higher today after the Fed announced it has lowered its Fed Funds Target to a range of 0-0.25% from 1.0% today. Accompanying this announcement was a statement that the fed will be actively providing capital and purchasing mortgages, among other things, to help spur economic growth.

Prior to the announcement, the Dow was up about 100 points, and it closed up nearly 360 points higher. The Dollar fell sharply against the Euro in Forex trading as the spread in U.S. and European interest rates widened. Late in the day, the 10 year Treasury Yield fell to 2.30%. In short order, we should see fixed rate mortgages drop below 5%. This will help spur some new home buying.

Before the markets opened today, new economic data on housing indicated the sharpest decline in new housing starts and building permits in nearly 25 years. The Consumer Price Index also fell by 1.7% in November.

More to come

Scott Cole
www.bestdaytradingstocks.com

Monday, December 15, 2008

Quiet Day for Stocks, Dollar Weakness Continues

The stock market closed modestly lower today in quiet trading at the start of the Fed's two day meeting. Most traders and investors expect another 50 basis point cut in interest rates Tuesday at the end of the meeting, which would bring the Fed Funds rate down to 0.5%. In the present environment, this likely will not have much of an impact.

At this point, the banks are not lending money, as they try to improve their balance sheets. In recent weeks I had noticed a flurry of potential lending activity by smaller banks in our real estate market here in Southcentral PA. This appears to have ceased for the time being.

Overall, I continue to like the chart pattern on the charts of the major indexes. The volatility is falling and the averages appear to be forming a nice base. The fact that the right shoulder in the existing head and shoulders pattern has not been broken to the downside allows me to believe that the general bias of the market will be sideways to up.

For Tuesday, expect a quiet market as traders wait for the Fed decision on interest rates. The cut in rates is already expected, but the Fed statement could move the market.

Treasury futures traded modestly higher today in spite of the weak Dollar. Initially, the dollar weakness helped Crude Oil rally a bit. However, late in the day, the energy markets sold off again and appear ready to test the recent lows again. Silver and Gold rallied a bit today, and Silver appears to be poised for a solid breakout to the upside that projects up to resistance at the 1400 level.

Scott Cole
www.bestdaytradingstocks.com

Sunday, December 14, 2008

Weekend Stock Market Commentary

The price action in the stock market was quite positive on Friday, considering the bad news regarding the auto bail-out and some weak economic data. Stocks still managed to close higher on Friday, with the Russell 2000 leading the major averages with a better than 3% gain. What we would now like to see is an upside breakout above 1603 on the Nasdaq, 919 on the S&P 500 and 492 on the Russell 2000. These levels represent 4 week highs in the averages.

It was interesting to note that the top five performing industry groups on Friday were REITS, as many of these groups surged at least 10% on Friday. Whether this was a reflection of lowering mortgage rates is yet to be determined. It still does not appear that big banks are willing to lend any money.

Other top performing groups were the casinos, office supplies, semiconductors, and airlines, among others.

For Monday, due to the improved tone in the market, consider an opening range breakout strategy to the long side in an Exchange Traded Fund that tracks the Nasdaq or the Russell 2000. QLD and IWM come to mind.

Scott Cole
www.bestdaytradingstocks.com

Thursday, December 11, 2008

Stocks Slide in Thursday Trading

The stock market fell today as the auto bailout continues to stall in the Senate. However, one reason the market may have fallen further late in the afternoon was JP Morgan CEO James Dimon's comments regarding 4th quarter profitability at the bank. He indicated that it has been a lousy quarter so far, and December has been particularly bad.

No matter the reason, traders and investors sold stocks today. We are now in a position where the market is in an area of support, and it is important that it holds at these levels and has a strong upside day either Friday or Monday.

All of the major averages now have an inverted head and shoulders pattern in place. This is actually a more ominous sign in that it can act as a powerful continuation pattern in the context of the existing trend if the right shoulder is broken to the downside on these charts. In the S&P 500, the 815 level is the low of the right shoulder. In the Nasdaq, this level is just below 1400.

In my view, this pattern as a continuation pattern is more powerful than at a bottoming pattern, so watch it!

Scott Cole
www.bestdaytradingstocks.com

Wednesday, December 10, 2008

Quiet Day in Stock Market

The U.S. Stock Market for once had a nice and quiet day today, trading within its narrowest range since the shortened post Thanksgiving Day session. Otherwise, this was the narrowest trading range since November 3rd. Overall, it was a choppy session, as traders focused on the potential automaker bail out bill. The House of Representatives is voting on one measure this evening. However, the bill may be stalled in the Senate where Republicans seemed to have been kept out of the loop.

The market seems to be digesting its gains of Friday and Monday rather nicely, and I would not be surprised by another surge upward in the next day or two.

Today's big directional move for daytraders was in CHK. The chart is below. This is a textbook example of buying an opening range breakout and holding until the close.

Tuesday, December 9, 2008

Stocks End Day With Modest Pullback

The U.S. Stock Market pulled back a bit on Tuesday. The economic news of the day involved some weak earnings reports and a Republican backlash against the automaker bailout bill presented to the White House by Democratic lawmakers. Politics as usual in Washington!

After two big up days in the stock market, it was no real surprise that the market pulled back a bit today. I pointed in yesterday's post that the market was likely due for a pullback today and that the best side to play the market today would likely be the short side. Tuesdays have a tendency to reverse the market after some decent gains in previous trading sessions. The market opened lower, tried to rally, but rolled over after 11 am. Volume was on the light side today, and the trading ranges were narrow. This is the kind of action we like to see on pullbacks if the market is to head higher longer term.

The chart below is the Proshares Ultra Short Russell 2000 (TWM), an ETF. This is a great vehicle for daytrading. TWM followed the direction of the overall market today, but gave daytraders twice the bang for the buck.

Scott Cole

Monday, December 8, 2008

Stock Market follows through on Friday Rally

The stock market followed through on Friday's rally today as Congress sent an automaker bail-out bill to the White House and President-Elect Obama outlined his economic stimulus package. Stocks and commodities appeared to like the news as nearly every commodity showed strength today. Among the top performing groups today were telecom, some tech, real estate and commodity based groups. I've also noticed some strength in home health care stocks, which are among the top performers of the year.

For the stock market, Tuesdays often bring a reversal of the previous trading day, or the previous couple of trading days. Today, the price range in the Stock Index Futures was fairly narrow, and they made multi-week highs for the first time in a while. With that in mind, these markets may be ripe for some good intraday shorting opportunities for day traders. If you have a good day trading methodology, consider that the bias for Tuesday's trading will be to the downside, based upon the price pattern on the daily charts. This will be confirmed on early day weakness and weak tape indicators.

The biggest price change of the day was in MELI. This was a classic opening range breakout trade that carried the stock in an upward trend all day. You can see the intraday chart of this stock below.

Scott Cole

Sunday, December 7, 2008

Day Trading Thoughts for Monday

Friday we finished the week on a positive note in spite of a substantially weak jobs report. Economic data last week was generally awful, and it was also reported that we've been in a recession for a year. The headlines are all negative, yet the market seemed to hold its own after Monday's sell-off. This suggests a change in character. I do not expect the market to shoot straight up from here due to the magnitude of the decline over the last year. The market needs time to make a base, but this base can be made with an upward bias.

A look at the charts of the major averages suggest that we could get a nice upside breakout, and there is no better time to do that than on a Monday. When the market has a bullish undertone, Monday's tend to be nice upside days. Considering the resistance levels lined up just over Friday's close, a lot of stops to cover short positions could be triggered on any strength in the market in the next couple of days. With that in mind, day traders should be aware of these factors heading into the trading week.

Scott Cole
www.bestdaytradingstocks.com

Friday, December 5, 2008

Stocks Manage Rally In Spite of Weak Jobs Report

The U.S. Stock Market ended with a nice rally on Friday, in spite of the weakest jobs report in thirty years. Today's rally recovered all of Thursday's losses, and the week ended with only modest losses in spite of the huge Monday sell-off.

The tone of the market is definitely quite a bit better than it has been over the past several months. However, it will need to breakout of the trading range that has been in place since the October lows in order to have a more sustainable rally.

More commentary over the weekend.

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Wednesday, November 12, 2008

Friday/Monday Crucial Juncture for Stock Market

We are now at a point where the market is revisting the October 10 lows, and this appears to be the test of significant importance. It will not really matter if the market blows through these lows tomorrow and closes below them. Of more significant importance will be how the market acts on Monday. No matter what the market does on Friday, we need the market to close higher on Monday, or at least set itself up for a strong Turnaround Tuesday. Nonetheless, if we trade through the October 10 lows on Friday, and we are still trading below them on Tuesday, this market will be heading lower for the foreseeable future.

Keep your fingers crossed!

Scott Cole
www.bestdaytradingstocks.com

Friday, November 7, 2008

Stocks Rally in Spite of Weak Jobs Data

In spite of a weak jobs report today, and further concern regarding the auto industry, stocks managed to rally today, ending the dismal decline that began on Wednesday. The government reported that a total of 240,000 jobs were lost in October, slightly above estimates, and September lost more jobs than first reported. The nation’s unemployment rate now stands at 6.5%. Apparently, this bad news was priced into the market over the previous two days, and the market actually may have been expecting worse news. Nonetheless, it was a bad number and a reminder of just how weak this economy is currently.

The market will now be turning its eyes to Washington to see what Congress and the Bush administration, along with input from the income Obama administration can do to stimulate this dismal economy. However, the primary issue is that banks refuse to lend money to anyone at decent terms, even to the most qualified of loan applicants. This is in spite of the fact that the credit markets have thawed dramatically over the last couple weeks as the 3 month LIBOR has dropped from its high of about 4.8% to about 2.3% today.

Until the banks begin to lend money for car loans and home loans, and other business loans, this economy has no chance of improving. The federal bailout has simply allowed the big strong banks a chance to consolidate and strengthen their positions by buying distressed banks. Yet, there does not seem to be any outrage at this in Washington.

More to come!

Scott Cole
www.bestdaytradingstocks.com

Thursday, November 6, 2008

Stock Sell-off Continues Ahead of October Jobs Report

More weak economic news drove the stock market down another 400+ points today, as stocks have now lost almost 1,000 points in two days. The culprit today was weak retail data out of the nation’s big retails, some posting double digit losses in same store sales for October. Furthermore, the Big 3 automakers are seeking more handouts from the Federal Government. Traders suspect that if Congress bails out the automakers, companies from other industries may try to get their hands in the cookie jar as well. This will result in a massive Federal Deficit, and little room for the income Obama administration to maneuver through this economic minefield.

On the bright side, the Oil complex continues its slide, nearly breaking through the $60 level to the downside. Oh, how times have changed since the days of $150 dollar per barrel just a few months ago. Remember this…a trend in motion tends to stay in motion! The trend to the upside was far more choppy than this downtrend. This downtrend is more dangerous as it has not allowed traders many opportunities to enter short positions on pullbacks. Watch for continued low prices on weak economic data.

The other big news of the day was that the Bank of England cut interest rates by 150 basis points, an unprecendented move. The European Central Bank cut rates by 50 basis points. Initially, this was welcome news prior to the U.S. stock market open. But, the weak economic data immediately put a damper on that. The Dollar ended the day a little stronger against the major currencies and interest rates were relatively unchanged. Commodity prices, again, lead by the energies, were generally lower again today.

In regard to tomorrow’s trading, watch for a volatile reaction to the jobs report. The general consensus calls for job losses of 150 to 175K.

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Wednesday, November 5, 2008

Economic Reality Sets In, Stocks Plunge

It looked like today was going to be an inverse mirror image of yesterday, as stocks opened lower, and hovered around the down 300 points on the Dow level for much of the afternoon. Then, once again, the last hour selling kicked in, and the market got clobbered, off nearly 500 points on the Dow and 100 points on the Nasdaq.

The primary culprit today was a week ADP jobs report, a precursor to the government’s own employment report due out Friday. The ADP report held that over 150,000 jobs were lost in the private sector. The market was already lower when this report came out, but trended lower the rest of the day.

Many other markets flip flopped from yesterday as well. The Oil complex, Grains, and Metals all sold off sharply today after nice gains yesterday. Obviously, this was in response to the weak economic data. It is notable that on many of the commodity charts, there are small consolidation patterns within their current downtrends. A break below recent lows will indicate a continuation of those downtrends. This would not surprise me as there are still many analysts on the financial news programs suggesting that energy and commodity stocks are the place to be going forward. Always be a contrarian!

On the other hand, the interest rate futures continued their rally today. It seems that Treasury traders may have been anticipating today’s data yesterday, as they rallied yesterday in the face of a weak dollar and strong commodities. In the Forex markets, the Dollar did not move much today.

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Tuesday, November 4, 2008

Stocks, Commodities Surge on Election Day

The U.S. Stock Market scored big gains as Americans headed to the polls today. Asian markets were up strongly overnight, and the European markets followed suit in the morning. A solid earnings report by Mastercard also buoyed stocks in the U.S. Some pundits, however, attribute the rally as a relief rally in response to polls suggesting a solid Obama victory, and a view toward the future.

Due to the big rallies in stocks around the world today, commodities responded with a big rally of their own, lead by the energies. Crude Oil was up over $6 today, and these gains were mirrored in Heating Oil, Unleaded Gas and Natural Gas. Such a strong day in these markets suggests a bottom of at least short-term magnitude is now in place. Gains in commodities were seen across the board, including the metals, grains and others.

One surprising trend today was the move up in Treasury prices, resulting in lower yields. This was quite odd in view of the strength in the commodity markets, and the weakness in the Dollar against most of the currencies today in the Forex market.

Tomorrow will be another day, and I suspect the markets will at least settle down tomorrow. Later in the week, we have a jobs report that could provide some significant bad news.

Stay Tuned!

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Monday, November 3, 2008

Stock Market Bides Its Time

The U.S. Stock Market traded within its narrowest range in weeks today, ahead of the all important Presidential Election on Tuesday. Volume was also extremely light, as the markets eked out a small gain for the day. The markets will be watching closely to see whether the Democrats are able to achieve a filibuster proof majority in the Senate. That will allow them to push through any agenda they wish, without any kind of consent from, or compromise with the Republicans. This includes increases in Capital Gains taxes and taxes on dividends, two policy issues Wall Street does not like.

With that in mind, I suspect that the market will sell off a bit if the Democrats achieve that majority in the Senate. Otherwise, I anticipate a bit of a relief rally after the election, no matter who is elected.

In other markets today, the Dollar rallied sharply against the Euro and the Pound again today, reversing the losses of late last week. Treasuries perked up on week auto sales data, as October looks to be the slowest month of sales in 25 years.

Commodity prices were mixed, with the energies sharply lower and grain markets up a bit today.

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Sunday, November 2, 2008

Weekly Market Re-cap

As we noticed on Friday, the stock market ended a terrible month on a nice up note. Now we are faced with a huge election on Tuesday, and at this point, it is anyone’s guess how the market will react to a likely Obama victory along with significant Democratic gains in the House and Senate. On the one hand, the financial markets generally do not like the rhetoric that comes out of the Democrats, and the markets generally prefer a government where checks and balances are in place, such as a Republican President and a Democrat controlled Congress. Therefore, an Obama victory could lead to a sell-off.

On the other hand, there could be a relief rally as we finally get past the election and can look forward to a new administration. The focus will then be on the economy and corporate earnings. We already know that the 4th quarter is likely to be weak, but I suspect it may not be quite as weak as expected. I would also venture to guess that the stock market has discounted a significant recession already, and so any economic data that is not as bad as expected will be greeted favorably by the market.

In other markets, Treasury Futures at the long end of the curve sold off sharply again Friday in response to the continued decline in short term interest rates. This week, there will also be a new monthly jobs report, and a weak report could help stem the tide. For now, the trend is down, which means higher long term interest rates. I noted in my newspaper today a significant jump in mortgage rates, with the average around 6.5%. These rates won’t do anything to help the housing market.

The Dollar enjoyed solid gains across the board on Friday, with most strength against the Euro and the Pound. It looks to me that the Yen has likely topped out against the Dollar for now, but it appears that the Euro and Pound may need to test their recent lows against the Dollar before consolidating at these lower levels.

In the commodity markets, Gold was sharply lower, while Crude Oil actually managed a solid gain of nearly $2 on the session. Agricultural markets were generally mixed, with no real big moves on the day.

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Monday, October 20, 2008

Best Daytrading Stocks back in business!

In the present market, consider the possibility of daytrading ETFs or even stock index futures. For Tuesday, we are looking at the possibility of a lower stock market. As such, consider QID and TWM for ETF daytrading opportunities. These are Proshares Ultrashort ETFs, so you will buy them, rather than sell them short.

In the Stock Index Futures, consider the Nasdaq 100 and Russell 2000 as shorting possibilities, as they have underperformed the Dow in recent sessions.

Good Trading!

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Thursday, October 9, 2008

Stock Market Slide Continues

The U.S. Stock Market is now trading like that of a developing country stock market, with another 7% down day in the Dow Jones Industrial Average. There is absolutely no confidence in the markets, and investors are pulling out in droves. Whenever there is a little sign of strength during the day, the selling hits hard. This is mainly due to the amount of redemptions in hedge funds and mutual funds, as investors in these vehicles want to sell out. These trading firms are also being forced to raise cash to cover losses in other markets. The end result is that nearly every stock is just getting hammered without prejudice. Even IBM, which reported good earnings overnight, closed down almost 2% on the day.

If you are invested in this market, this is a time to turn off the TV for six months and maybe have a look at your portfolio statement then. Markets that go up or down this fast tend to reverse and go back in the direction from whence they came just as fast, at least for a bit, until equilibrium is found, and the market can form a new base to work off of in the long run.

If the money you have invested in the market is not needed for at least a couple of years, stand pat. The market will come back eventually. If you have cash on the sidelines once the market has found its bottom, it will be when of the best buying opportunities of your lifetime.

So far this week, the Dow Jones Industrial Average is down over 18%. There have only been two other such occasions in the last 80 years….the week of the 1987 crash and the beginning of the 1929 crash. The difference this time around is that the market peaked a year ago, whereas in 1929, the crash was only 8 weeks removed from its top, and in 1987, the market crash was also only 8 weeks removed from its top.

In 1929, there was a couple more weeks of pain before the market rallied nearly 50% from its lows over the next few months. However, the government was slow to react to the economic issues of the day, and there were clearly valuation excesses in place.

In 1987, the Fed was very quick to react, adding liquidity instantly to the markets, resulting in a bottom for the market, which rallied 30% over the next six months, and within less than two years, was making new all time highs.

I think it is safe to say that governments around the world are not standing still, but are actively adding liquidity to the markets and attempting to solve the other issues troubling the financial markets. With that in mind, I would suggest that a bottom of significance will be in place in the near future.

In other markets, Treasury futures continued to sell-off today as the yield curve continues to steepen with all the liquidity being added to the market. This suggests that Treasury traders are convinced that inflation will be an issue to worry about next year, and is the main concern, rather than economic weakness.

The Dollar also strengthened a bit today, while crude oil futures dropped under $85 in after hours trading, and Gold pulled back $20 by the end of its trading session.

In the near future, Kungfutrader.com will begin a new newsletter that will cover the stock market as well as futures markets with trading ideas for all of these markets discussed in this blog.

Stay Tuned!

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Tuesday, October 7, 2008

Stock Market Slide Worsens

The U.S. Stock Market closed at session lows, as selling accelerated in the last hour, leaving the Dow Jones Industrial Average with a 500 point loss after trading higher earlier in the session. The market started to head lower shortly after the positive open, and selling began in earnest during and after Fed Chairman Bernanke’s speech. As I write this blog this evening, Asian stocks are plunging further.

There is not much else to add, except that it does appear that the markets are in the capitulation phase. The rate of descent is simply too fast to continue for much longer. However, there is the possibility of a very scary sell-off this week that could finally trigger the final capitulation.

Aggressive traders who are able to follow the markets intraday should pay close attention, because there is an opportunity at hand. When this market decides that enough is enough, the reaction to the upside will be violent. ETF’s may provide a decent vehicle to capitalize on this situation.

An ideal intraday setup will look like a double bottom after a steep drop early in the session. The market will make an intial low, off of which it will bounce a bit. The market will then test this low and bounce violently to the upside, and this is when aggressive traders can put on a position.

Another scenario may just involve a rubber band that is stretched way too far. In this instance, a huge sell-off will run out of steam, and the market will react violently to the upside. This scenario is more difficult to trade. In the case of the S&P 500, if there is a big sell-off early in the morning, and the market then proceeds to rally off of that low by 40 whole points (say from 950 to 990) by noon, then you have quite likely seen the bottom.

If you are a long term investor, and not a risk taker, these scenarios will offer good opportunities to add to long term positions at bargain prices.

Keep in mind that the markets are acting purely on emotion right now. Fundamental analysis has been thrown out the window. It has been quite painful for long term investors to watch their portfolios dwindle, but this should be viewed as one of those few major buying opportunities of a lifetime, similar to the recovery from the 1987 crash, and the end of the 2002 bear market. Still, traders and investors must continue to be careful in this environment.

In regard to any potential Ultimate Stocks, it will likely be at least six months after the low is in place until the candidates we seek will be trading in a manner that will allow us to capitalize on major new uptrends. This is why we should focus our attention on trading indexes, ETF’s and mutual funds to enhance portfolio profits.

Stay calm, stay cool…the opportunity will soon be at hand, and possibly as early as Wednesday!

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Friday, October 3, 2008

Stock Market Sinks on Economic Worries, Dollar Soars

The U.S. Stock Market shifted its focus to the actual economy today after the Senate passed its version of the financial bail-out plan Wednesday night. Weak employment and housing data over the last couple days has focused the market on actual economic data, which is likely to get worse before it gets better.

Surprisingly, the Dollar has been able to rally very strongly over the last couple of days, particularly against the Euro. Today, this strength spilled over into Gold weakness, as commodities continue to sink across the board. It was notable that many of the stocks that lead the market to its peak in 2007, the agricultural related stocks, coal stocks, and the dry bulk shipping stocks, continue to sink, and many actually made 52 week lows today.

Although the U.S. Government is ready to provide a huge bail-out plan that will include lots of new spending and the printing of more dollars, the markets are suggesting that inflation is not of concern in the foreseeable future. The air in the commodity balloon continues to be let out, and leading economic indicators such as the industrial metals, aluminum, platinum and copper, continue to drop. Oil is now ready to test its mid-September lows while gasoline and heating oil have already gone through those lows.

The bottom line is that these are positive developments, and once we get through this current credit crisis, and normalcy returns to the financial system, the stock market will begin to look forward. With commodity prices falling, the Dollar rising and interest rates remaining low, the platform will be in place for the market to begin a new bull market. UNLESS…the next administration decides to screw things up by raising any kind of taxes. If there are tax increases on business and the top income earners in the country, those that provide the jobs, the recovery will be slowed considerably. The financial bail-out will do nothing if jobs continue to be lost.

Stay tuned!

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Monday, September 29, 2008

Stock Market Set to Open Lower Monday

The U.S. Stock market is set to open much weaker Monday morning in spite of the fact that Congress appears set to pass the Bush/Paulson financial bail out plan, althought it may be a close vote in the House of Representatives. News that Wachovia is being bought out by Citigroup is pressuring the market, along with concern that the bail out package may not pass in its current form.

Nasdaq stocks are being pressured by some downgrades to Apple as consumer spending is likely to slow in the coming months.

In the face of the forecast economic weakness, Crude Oil is dropping sharply this morning, and the Dollar is rallying as a result.

Stay Tuned!

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Saturday, September 27, 2008

Weekly Stock Market Re-cap

The U.S. Stock Market ended a tumultuous week on an up note, in spite of the fact that Congress did not pass the Bush Administration’s financial bailout plan. The Dow finished with a triple digit gain, although the Nasdaq indexes finished modestly lower.

In consideration of the bad news that came out on Friday, the market’s performance was nothing short of miraculous. Overnight Thursday, the government forced a buyout of Washington Mutual, the largest bank failure in U.S. history. J.P. Morgan ended up buying the bank for a mere $1.9 billion. It was also reported the 2nd Quarter GDP was actually a bit weaker than the 3.3% growth originally reported. Also, housing data came in very weak for the month of August. And finally, Research in Motion (RIMM), came out with an earnings forecast well below market expectations, which sent the share tumbling nearly 30%, weighing down the tech sector.

Incredibly, the Dow Jones Industrial Average and S&P 500 managed to post decent gains on Friday, while the Nasdaq tried hard to claw its way back to breakeven, falling a little short. Does this mean we no longer need the Bush bailout plan? The public remains skeptical, and we continue to hear both sides of the argument. Credit markets have clearly frozen up, so some sort of plan is required. The question is, does it need to be this big government bailout, or is it something the private sector can fix with some creative solutions? And, does it really need to happen this quickly in order to avoid Armageddon in the financial markets on Monday?

The end result of the week is that the major averages closed lower than the previous week, but still well above last week’s lows. The trend is down, but we could possibly be set up for a test of last week’s lows and a rally from there. A number of indicators suggest there is some divergence at last week’s low. A re-test and bounce off of that low will confirm that.

In other markets, Treasury futures prices managed to rally a bit on Friday due to the weak economic data. The Dollar managed to hold relatively steady on Friday, as it was generally mixed against the major currencies. In the energy markets, the focus seems to be returning to global economic weakness as the driving force behind price direction. Crude oil closed down a bit over a dollar, while Natural Gas appears to be resuming its downtrend.

Gold and Silver prices were up modestly on Friday, but were up significantly for the week. These markets are in neutral after significant rallies off of their lows in the last couple of weeks due to this current financial crisis. A big bail out plan that suggests inflation is in our future down the road will move these markets higher.

In the grain markets, it appears that Corn, Soybeans and Wheat are all ready to resume their downtrends as it appears that the current crop situations, and supply and demand factors indicate that lower prices are in order. Most other commodity prices appear to be heading lower as well, with the exception of Cocoa and Sugar.

Stay flexible!

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Tuesday, September 23, 2008

Stock Market Slide Continues

The U.S. Stock Market continued its downward slide today as Congress is not yet ready to sign off of Treasury Secretary Paulson’s $700 billion plan to shore up the U.S. financial system. It is no surprise that there is a bit of a rebellion against the plan due to the sheer cost. The debate is of course the lesser of two evils…take your chances and see how things end up, or spend the money and hope the plan works, knowing that it will cost the taxpayers dearly.

I don’t envy the position our politicians find themselves in, but the fact is, many of them are part of the problem. And now, we are watching them all point the finger at everyone else but themselves. Par for the course in Washington, D.C.

As I have stated over the last week, traders simply need to stay cautious until the markets settle down. You don’t need to trade! All of the rules in the playbook have been thrown out in recent weeks and months, so the best thing to do is wait for a return to normalcy. Even if you are simply a daytrader, the whipsaws in the market have been enough to cost you big time, so you at least need to scale back your trading size.

Sooner or later, the markets will settle down, and whichever trend emerges, be prepared to hop on. In spite of the volatility in the markets in recent days, and some big moves in commodities and currencies, I still see many of the underlying trends have remained in place. Keep that in mind when you decide to plunge back in!

Good Trading!

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Monday, September 22, 2008

Monday Blues - Stock Market Tanks

The U.S. Stock Market plunged about 4% across the board today as worries continue to mount regarding the crisis in the financial sector. Over the weekend, the government asked Congress for $700 billion for the bailout plan. That sent the Dollar into a tailspin as it is clear that U.S. government debt will rise at an unprecedented pace.

Whether or not this bailout plan is needed or not is not the issue. The financial markets are in a tailspin, and going forward, it is clear that the U.S. economy, and likely the global economy, will be weak in 2009. The next U.S. administration, whether it is Obama or McCain, will have its hands full, and you can pretty much forget about any kind of tax break next year.

As a result of the Dollar weakness, and the fact that the Treasury will be printing dollars at a fast pace in the near future, commodity prices took off to the upside today. The October Crude Oil contract, which expires this week, was up over $21 per barrel at one point. Gold rose back above $900 per ounce. Treasury yields jumped significantly. Can you say STAGFLATION!? With oil prices appearing set to test $150 again in the foreseeable future, there is no way the global economy has any expansion. A colder than normal winter will send heating costs soaring, and as a result, the holiday spending season will likely be weaker than normal.

I am not in the business of forecasting stock market prices or even direction. But, it doesn’t take a genius to figure out that with the current conditions in place, it will be difficult for the market to go up. Just last week I wrote that the underlying fundamentals suggested the economy and the stock market could get through this current crisis and set up a rally into the end of the year. However, with the Dollar pulling back sharply, Treasury yields rising and Oil prices ready to soar again, it looks like those positive fundamentals were fleeting.

Today is just one trading day, and you can’t really forecast direction with one day. But, alot of other negative things have occurred in the last few days that suggest this market has a lot to overcome.

For you daytraders, keep your trading size small during this period of extreme volatility! The intraday swings will wipe you out if you have not adjusted your trading size.

Stay Cautious!

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Sunday, September 21, 2008

Weekly Stock Market Re-Cap

The funny thing about the stock market this week is that it ended the week virtually unchanged. Of course, it happened to be an incredibly volatile week as well. Historically though, we have seen higher volatility, and we have seen worse down markets.

So what does this all mean going forward. Well, over the weekend, it was reported that the cost of this mortgage bailout is going to be at least $700 billion. Hmmm…do you think there are going to be any tax cuts next year, no matter who is president? If anything, we can probably expect a tax increase before any tax cuts.

Over the next few days and in coming weeks, the market will digest the impact of this past week’s events on the economy. Based upon the reported cost of cleaning up this mess, it is quite possible the impact will be deemed as somewhat negative. What we will need to see is a return to normal trading in terms of volatility and volume, and then ultimately, the market will show its hand in terms of which direction it wants to go.

Pay close attention to the performance of the Dollar and interest rates going forward. If the Dollar can stay within its current uptrend, while interest rates remain favorable, there may be a chance for the economy to still recover. Again, after the election, we enter a seasonably favorable period for the stock market. For now, caution should rule the day.

Good Trading!

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Friday, September 19, 2008

Government Intervention to Boost Stocks

The Federal Government has taken more steps to boost confidence in the financial markets, and this is sparking a huge rally in futures ahead of the open. The Dow futures are set to open up 400 points this morning on the back of this news, which includes banning short selling on some financial stocks. The government is also providing a back stop to the money market funds.

Investors are piling into the market as a result, however I still believe traders should use some caution here. An important bottom has likely been put in at yesterday’s lows, but it is important to let things shake out for a while. Once the markets have calmed down, traders and investors can resume using their normal methodologies for picking stocks.

Enjoy the weekend!

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Thursday, September 11, 2008

Stocks Stage Late Day Rally

After charging lower early in the session, the U.S. Stock Market staged a late day rally that carried it to over 1% gains nearly across the board. The lone exception was the Russell 2000, which ended with a far more modest gain.

The main focus early in the session was the continued problems faced by Lehman Brothers, which lost another 40% in value today, and is now over 90% below its 2007 highs. Later in the day it was reported that top executives at the firm are considering the sale of the entire company, rather than just pieces. Wall Street seemed to like that news, and that allowed the market to rally.

It is worth noting that the major averages are in the process of testing significant lows. Today could be a short term bottom, but there still does not appear to be the type of capitulation we would like to see to market a longer term bottom. Although the Dow was down as much as 150 points earlier in the day, we probably need to see it down at least 300 points, and then see a reversal that carries it up a few hundred points of that session low. Another issue is that the VIX closed at under 25 today. This indicator needs to rise to over 35 in order to mark a significant bottom.

In the future markets, commodities were generally lower again, led downward by Gold and Silver. Crude Oil was also lower, but due to the impending impact of Hurricane Ike on the Houston area refineries, gasoline was up a bit today. Crude Oil is getting perilously close to the $100 level, trading as low as $100.10 on the October contract, before closing just under $101. This is in the face of OPEC indicating a 500,000 barrel per day cut in production. I guess those folks have no interest in maintaining a strong global economy! Fortunately for us, most of the producers have no other source of income so they will likely produce above the quota in order to maintain their cash flow.

The Dollar continued its rise against most major currencies today, and Treasuries were steady to higher today, as yields dropped modestly.

Although I continue to believe that the foundation is being laid for a new bull market, as I have said before, some sort of major capitulation is likely needed before we can see the beginning of a new bull move. However, it is possible that a meandering bottom can be put in without this capitulation, but the new bull move should begin with a violent move to the upside.

Stay with the trends!

Scott Cole

www.bestdaytradingstocks.com
www.kungfutrader.com

Wednesday, July 16, 2008

Big Rally in Stocks, but...

The U.S. Stock Market enjoyed a sizable rally today, with the major averages up anywhere from 2.5% to over 3%. This should be the start of at least a short term move to the upside, and maybe something more significant. However, today’s rally occurred with a decline in volume compared to yesterday, not a good sign of conviction. If this is to turn into at least an intermediate term rally, we need to see a follow through day within the next week. This means a day with gains similar to today, but hopefully on higher volume.

The news of the day was that Wells Fargo reported better than expected earnings and that got the market started, in spite of a nasty CPI inflation report. Then, Crude Oil provided the boost for the rest of the day, as it plunged another $4 per barrell today. It broke initial support at $136, but $131 is the key level to watch, as many commodity funds will have sell orders triggered on a break below that level.

Good Trading!

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Tuesday, July 15, 2008

Roller Coaster Day for Stocks

Most traders were property just about sick to their stomachs by the close of trading today after a roller coaster ride of a day in the stock market! The market was set to open lower, and the Dow Jones was down about 100 points within a few minutes. Fed Chairman Bernanke’s comments then sent the market lower, but Treasury Secretary Paulson’s comments indicating that the Treasury should have unlimited funds to help support Fannie Mae and Freddie Mac, along with a plunging crude oil market, helped the stock market erase a 200 plus point loss in the Dow. The Dow was looking like it might end up with triple digit gains, but the rally evaporated in the last hour, and it ended down nearly 1%. The result was a mixed market, with the Nasdaq up slightly, and the S&P 500 and Dow Transports down over 1%.

On a positive contrarian note, the VIX pushed above 30 today, before closing at about 28.5. This indicates that there is beginning to be more fear in the market, which will need to set an intermediate type of bottom.

Crude Oil was off over $6.00 per barrel today, and nearby support for many trend followers is at about the $136 level on the August Contract, which will be expiring soon. Significant moving average support is at this level as well. A break below this level, and then below $130 could finally lead to a significant break in this market. On Wednesday, all eyes will be on the supply report at 10:30 AM.

The Dollar tested its multi-month lows, before rebounding to close nearly unchanged on the day. Treasury futures closed in positive territory, but a bit off their high prices for the day.

Good Trading!

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Monday, July 14, 2008

Bear Market Rolls on, Pessimism on the Rise

As expected, the stock market got a boost from Sunday’s news that the government would take steps to aid ailing mortgage backers Fannie Mae and Freddie Mac. Unfortunately, the opening pop fizzled quickly and the market trended down the rest of the day. Pessimism is clearly the order of the day at present with the S&P 500 and Dow Jones Industrial Average continuing to extend its bear market lows on a daily basis it seems. Today, however, the Russell 2000 was the leader to the downside, down over 1.5%.

One good sign for the market is that there are very few bulls to be found, with sentiment very weak. The VIX is now starting to approach 30, closing over 28 today. The March high was over 35 and the January high was over 37, intraday. The higher the figure, the more likely a bottom is near.

There has also been a noticeable increase in daily volatility, but the average daily price range is still well below those seen at the March and January bottoms. Current volatility is nowhere near the levels seen at the bottom of the 2001-03, and not even at the levels seen at the 1998 bottom.

With all this in mind, the market is clearly due for a bounce, but it is apparent that there is no sign of a Bear Market Bottom yet. We may get a rally soon from the current lows, but it likely will not be the Bear Market bottom. Bear Markets rarely die with a whimper.

Some of the recent energy and agricultural related stocks such as ANR, WLT, MEE and others are starting to rally again, and may test their recent highs. Be careful with these stocks as their recent sell-offs indicated clear distribution. If you did not sell at or near the recent highs, this is likely your second and last opportunity to sell these stocks.

As far as daytrading is concerned, the best money is still being made on the short side, and the swing trades to the downside have been amazing. LEH comes to mind in this regard.

Good Trading!

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Sunday, July 13, 2008

Weekly Stock Market Recap

The Dow Jones closed down for the sixth consecutive week, ending with another solid decline on Friday. The S&P 500 had the worst week among the major averages, due to its heavy weighting with financial stocks, which lead the market lower. Otherwise, the Nasdaq and ND100 had minor losses for the week, while the Russell 2000 and even the Dow Transports closed up for the week. There clearly appears to be cash flowing into some techs and small cap stocks.

Stocks were spooked primarily on Friday by rumors that Fannie Mae and Freddie Mac would be allowed by the Federal Reserve and Treasury to fail, which would worsen the residential real estate crisis. This sent the market into a tailspin. Later in the day, it was rumored that the Federal Reserve would open the discount window to both companies, but then that was denied after the markets closed. Stocks closed well off of the lows Friday. Sunday, it was officially announced that the discount window would indeed be open to both companies, and Treasury Secretary Paulson indicated that the government would extend its line of credit to both companies as well.

Further pressure was put on the stock market this week by a big two-day rally in Crude Oil, which pushed to new all time highs, before pulling back a bit on Friday. Dollar weakness all week also did not help the market. The Dollar pushed to new two-month lows on Friday, and is just over 1% above its 40 year lows seen in April. With all this turmoil in the markets on Friday, even Treasuries took a big hit, wiping out its rally of the previous four days. The 10 Year Note experienced its biggest one day decline in months.

Based on today’s news regarding Fannie Mae and Freddie Mac, it would be no surprise to some sort of rally early on Monday. Whether this leads to something more significant, only time will tell.


Good Trading!

Scott Cole

www.bestdaytradingstocks.com
www.kungfutrader.com

Tuesday, July 1, 2008

Stocks Open Weak, Close Strong

The U.S. stock market opened significantly weaker today after weakness in global markets over night, only to rally in the last couple of hours after General Motors reported that sales in June were down only 8% vs. an expected decline of 19%. After the automaker reported sales, the stock market took off, lead by the tech stocks, particularly Apple, which closed up over $7 on the day.

The market was also aided by Crude Oil failing to hold its earlier gains. After testing new all time highs again today, Crude actually closed slightly lower. However, Wednesday is a new day, and the weekly supply report will be reported as usual at 10:30 am ET.

The market was certainly due for a bounce today and was looking for any excuse to rally. Furthermore, the beginning of the month and the beginning of a new quarter are typically seasonally favorable times for the market to rally due to new investment inflows to mutual funds. Also, the few days before a holiday also tend to be favorable to the market. With these conditions in place, and likely low volume, it would not be surprising to see a sizable move up in the next couple of days.

With this in mind, the likely bias over the next couple of days should be to the upside, so look for some stocks due for a nice bounce!

Good Trading!

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Sunday, June 29, 2008

Stock Market Re-Cap and Monday Daytrades

The U.S. stock market closed out the week with the Dow making new Bear Market lows and the S&P 500 sitting less than 2% above its March lows. The Nasdaq and ND 100 have performed much better, and actually finished Friday’s trading in unchanged territory. Some are calling this a key reversal, particularly since volume was heavy on Friday. However, the trading range on the day was a bit narrow in my opinion for this to be any type of significant bottom. We may get a decent bounce from here, but the trend is still down.

The market suffered from a confluence of events this past week. Currency markets are now waiting for the Fed to indicate it is ready to raise interest rates to stave off further inflation worries in the U.S. The European Central Bank indicates it may be ready to do so, and this is pressuring the Dollar. That in turn has allowed Crude Oil prices to continue upward.

On top of all this is continued weakness in the financial sector and in the auto industry. Furthermore, a couple technology giants, Oracle and Research in Motion, gave weak guidance toward the later half of the year. As a result, the Nasdaq finally joined the Dow in the onslaught that occurred this week. Still, it is well above its March lows due to strong rallies in RIMM, AAPL and other tech stocks since the March lows. However, these appear to have rolled over.

One other ominous note is the continued relatively low readings in the VIX. The VIX is a sentiment indicator involving options trading, and high readings tend to coincide with bottoms in the market. The VIX closed at about 23 on Friday, which is well below the March highs in this indicator that coincided with the March lows in the market. This suggests that there is no panic selling in the market just yet, which is what we will need to put in a bottom.

Potential day trading candidates for the long side on Monday include JRCC, CLF, CLR, HP, STLD, SQM, X, and CHK.

Potential day trading candidates from the short side on Monday include SID, DRYS and EXM.

Good Trading!

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Monday, June 23, 2008

Tuesday Daytrades

The stock market was flat to down today, with the Nasdaq again leading the way to the downside, while the Dow and S&P were essentially flat. The big move in the markets today was Gold, which sold off early in the morning, before bouncing off of its lows. This was on the back of some Dollar strength overnight. Crude Oil rallied another dollar and change, and looks to be poised to test the upper limits of its recent trading range.

Based on recent market action, the market is due for a bit of a bounce, or at least some consolidation. As such, the directional bias is very modestly tilted to the upside.

Potential long day trades for Tuesday include CNX, ANSS, SQM, ACI, BEXP, and GTI, among others.

Potential short trades include WHR and COPA

Good trading!

Scott Cole
www.bestdaytradingstocks.com

Sunday, June 22, 2008

Week in Review

U.S. stocks had another difficult week on the back of some weak economic reports, concerns with rising energy prices and some weak earnings. As a result, the Dow Jones continued the slide that started a few weeks ago, and it appears that the Dow and S&P 500 are set to test their lows set in March very shortly. However, on the bright side, the Nasdaq, ND100 and Russell 2000 remain well above their March lows, as the trend lower in the Dow and S&P is clearly a result of weak financial stocks. These stocks are not as prevalent in these other averages, which are more loaded with tech stocks.

Strength continues in the energy and agricultural related issues, which should be the focus of daytrading opportunities from the long side. On the short side, traders should focus on financials, gaming stocks and oil refiners.

Below are three of the very profitable daytrades in the past week that you could have traded utilizing the methodology from our e-book, How to Pick the Best Stocks for Daytrading.


Helmerich & Payne - HP
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Heading into Tuesday's trading, HP exhibited an inside day within a narrow range on Monday. Volume was up from Friday, on an up day, a positive sign. The stock opened at $67.01 and our entry level was $67.91. The stock trended up all day, closing at $70.50. It opened slightly weaker Wednesday, but rallied in the first 15 minutes, offering a good exit opportunity to traders holding over night.


Tenaris Sa - TS
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Going into Thursday's trading, TS exhibited the price pattern we look for in a daytrading candidate. It then opened strongly Thursday morning at $64.90. It began trading upward immediately, and an entry price of $65.83 was triggered. TS closed at $68.38, then opened up almost another $2.00 on Friday.


Garmin - GRMN
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Heading into Tuesday's trading, GRMN demonstrated one of the basic patterns we look for in a potential short sale. It then opened up on Thursday, then sold off sharply in the first 30 minutes. The trigger price was around $44.50 and the stock closed at $43.48. The next day it opened slightly lower, offering traders who held short overnight an opportunity to exit.

Remember, when looking for short selling prospects, check with your broker ahead of the open to see if those stocks that are showing up on your list can actually be shorted through your broker. This is not always the case.

Good Trading!

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Thursday, June 19, 2008

Techs lead market Rally, Crude plunges

Crude Oil failed to build on Wednesday’s gains and sold off sharply today, providing a boost to the stock market. Techs appear to be set to take over the leadership from commodity based stocks, which got hit hard today. Interestingly, bonds went the same direction as Crude Oil, as rates rose as bond prices reversed course today. In the face of this action, the Dollar held very steady.

Other commodities were generally mixed today, with a bias to the downside. I think we are at a tipping point here. Crude Oil fell on news that Saudi Arabia intends to boost production by 200,000 barrels, and China is reducing some of its gasoline subsidies to consumers there. It was also noted on CNBC today that the U.S. still has not tapped into any Iraqi oil. Four big oil companies will now be involved in bringing that oil to market. Nonetheless, the market still needs to prove that it wants to go down. The first psychological level to the downside is $130, and there is a sizable gap between about $128.20 and $131.86 that can be filled. Meanwhile, the 20 day moving average on the August contract is about $131. Still, primary support is all the way down at $122.50.

If Crude Oil can drop significantly, there could be a sizable rally in the stock market. But, in spite of today’s rally, it was nowhere near big enough to suggest the current downtrend is over. Still, it is clear that Tech stocks will start to take over leadership.

The market bias for Friday is slightly to the long side. Potential long trades include FLS, JOYG, CMI, FSLR and LDK.

Good Trading!

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Tuesday, June 17, 2008

Wednesday Daytrades

The stock market closed the day a bit lower, after opening higher on the back of an earnings report by Goldman Sachs. The opening rally was short lived, as the market did not like the bad inflation report, nor weaker housing starts. As a result, it looks like the market is ready to test last week’s lows.

So far, this week has been an exceptional week for daytrading, due mainly to energy related issues. Many of these stocks had nice set ups in place heading into Monday's trading, and have experienced nice moves in the last couple of days.

For Wednesday, we do not have many stocks providing good set ups from the long side, only CEDC and SWN made the cut. Potential short trading opportunities include ISRG, CENX, PTR, WYNN, TSL, LVS, ATI, MGM and WCG. Again, check with your broker to see if you can short any of these stocks, then pay close attention to the open!

I should note that our method of daytrading essentially involves the Opening Range Breakout. However, we are not just looking for big moves in a single day, but sizable multi-day moves starting with that initial breakout. Our ebook, "How to Pick the Best Stocks to Daytrade" describes this strategy in detail. Check it out!

Good Trading!

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Sunday, June 15, 2008

Monday Day Trades

The U.S. stock market closed out the week on a positive note Friday, and ended the week basically flat. The markets received positive economic news with better than expected inflation data. After a positive open, they rallied into the close. Still, this rally remains within the confines of a short term downtrend, which can only be broken with a close above 12,500 on the Dow Jones and about 1380 on the S&P 500.

The NASDAQ and ND-100 have much better stock charts. They can reverse their short-term trends just be closing up about 1% above Friday’s close.

What we would like to see in the next 4 to 7 trading days is a sizable rally in the averages, similar to today, but with at least a 2% gain in the Dow and S&P.

Monday's potential day trade list on the buy side includes SQM, WLL, WTI, GGB, SWN, ACI, and HK.

Potential short day trades include CSIQ, WYNN, SUN and VLO.

Good Trading!

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Thursday, June 12, 2008

Friday Daytrades

Stocks opened the day quite strong, recovering almost all of Wednesday’s losses, before pulling back in the afternoon, and closing in the lower half of the trading range on Thursday. The initial impetus to the upside was decent economic data in the morning, particularly the retail sales report, which came out stronger than expected. The market clearly was affected by the performance of Crude Oil on the day, which opened much lower, only to rally significantly from its lows to post a modest gain. The chart pattern for the last few days suggests that Crude Oil may be ready to try another move to the upside.

Thursday's list of daytrades did nothing, as they were essentially long picks. None rallied enough to initiate a trade, and some actually sold off sharply.

On Friday, the overall market bias is to the downside. Watch out for extra volatility as many traders take a long summer weekend, which will result in lower volume.

The list of potential long trades for Friday is relatively short...CNQ and SPW. On the short side, the possibilities include EWZ, FSLR, WYNN, CSIQ, GRMN.

As always, wait for the opening range breakout before entering any new positions!

Good Trading!

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Wednesday, June 11, 2008

Thursday Daytrades

Crude Oil posted another $5 gain today on the back of this morning’s oil supply report, which indicated a drawdown in supplies. Stocks were set to open down, and the oil report and the Fed’s beige book report helped exacerbate the losses to the downside. The dollar pulled back a little after making nice gains the last couple of days. It remains strongest against the Yen, and may finally be attempting a serious bottom against the Euro.

Although the bias in the stock market is currently to the downside, after a few days of weakness, it is due for a bit of stability. Most of the best set ups for Thursday are potential long trades. Here is a list of good potential candidates for the long side...CNX, CLR, SOHU, CNQ, ACI, FCL, UPL and BUCY.

Good Trading!

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Saturday, June 7, 2008

Another Leg Down in Bear Market?

Based on Friday's trading activity in the U.S. markets, it looks like a new leg down has started in this current bear market for equities. At the very least, a test of the January and March lows in the major averages should occur in coming weeks. The price action on Friday was awfully one-sided, but should not be construed as a panic bottom. When you have unusual price action in one direction like we did on Friday, that is usually the direction the market will take in the near future. It will take a similar type of day in the opposite direction, or a key reversal day to reverse this action. As the VIX is well off of its March highs, I don't expect a bottom very soon. With that in mind, daytraders might consider being biased to the short side for the time being!

Scott Cole
www.kungfutrader.com
www.bestdaytradingstocks.com

Thursday, June 5, 2008

Friday's Daytrades

The stock market enjoyed its strongest gains in several weeks on the back of better than expected economic data released this morning. Retail sales data was better than expected, and jobless claims fell. The market was also able to shake off a huge move up in Crude Oil prices, as well as downgrades to a couple mortgage insurers by rating agencies. Initially, these stocks plunged, but were up late in the trading session.

Here are Friday's potential daytrades: On the long side...LDK, BTU, FLS, MA, TECUA and SDA

On the short side, consider GNK, SPWR, SHLD and MTB

Good Trading!

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Monday, June 2, 2008

Daytrades for Tuesday

As somewhat anticipated, the overall stock market had a weak day today, due to some weak economic data. Our daytrading picks for the day did not do much, although a short trade of any of the indexes could have been modestly profitable on the session, despite the rally off the lows.

For Tuesday, our potential long trade setups include SID, EWZ, GGB, RIMM and CPE. Potential short trades are GOLD, GNK and PDX, if your broker will let you short sell these stocks.

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Sunday, June 1, 2008

Stocks quiet on Friday

The U.S. stock market was quiet on Friday, with the averages mixed on the day, trading within narrow ranges. The summer doldrums have arrived, as traders will be taking long weekends through Labor Day.

On Friday, our bias was to the short side, but our picks did not result in trades, based on our system. On Monday, the bias still appears to be tilted to the downside, but, after a weekend, that bias tends to be at least partially negated. As a result, it is a good idea to have a few picks for the long side as well as the short side.

Our picks for the long side on Monday are CEDC, XEX, and LEAP. On the short side, if your broker allows you to short them, consider FSLR and DRYS. A way to play the short side of the S&P 500 on Monday is by buying the Exchange Traded Fund (ETF) SDS, the ProShares UltraShort S&P 500 index.

Good Trading!

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Thursday, May 29, 2008

Stock Daytrading opportunities for Friday

The stock market gave up about half of its earlier gains today, and many high flying stocks also pulled back from the high levels of the day. It has been a good week for daytrading using our system, as many stocks have seen nice 1 to 3 day gains this week. With that in mind, most of the opportunities presenting themselves for Friday appear to be on the short side.

Our list of potential day trades for Friday all have the potential for decent short sales...watch MOS, TRA, DE, NVR, BIDU and LEH.

Our e-book "How to Pick the Best Stocks to Daytrade" is now available! Check it out on our website!

Good Trading!

Scott Cole
www.bestdaytradingstocks.com

Tuesday, May 27, 2008

Modest rally in stocks, lots of potential daytrades for Tuesday

Greetings! This is my first post in a few days, but I am back in gear!

The stock market posted a decent rally on Monday, with most strength in the techs as the Nasdaq lead the way. The market rose in spite of weak housing numbers reported at 10 am, which caused the market to turn negative for a while. However, Crude Oil was weak all day, crashing through $130 per barrel to the downside. This gave stocks enough reason for an oversold rally.

With that in mind, some stocks look ready to pop again. Potential day and swing trades for Tuesday include WLT, MEE, CNX, GGB and WLL. I did not see many decent candidates for shorting due to the weakness all last week.

Good Trading!

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Tuesday, May 20, 2008

Wednesday's Daytrading Stock Picks

The Dow Jones was down nearly 200 points today, but the decline was not as bad as it looked. Many of the leading stocks closed near their highs today, rather than near their lows. The market has been due for a bit of a pullback due to current complacency. Today, bad inflation data reported in the PPI index, along with continued higher oil prices resulted in a down open, but, once the oil futures market closed at 2:30, the stock market stabilized.

Tuesday offered no decent potential daytrades. However, Wednesday is a different story. The list includes FSLR, WLT, RIMM, LEAP and FWLT.

Any comments or questions are appreciated!

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Monday, May 19, 2008

Rough day for our daytrade picks

Today is a good example of a session that is tough on our daytrading methodology. The market had been strong throughout the day, only to tail off late in the day, erasing most of a triple digit gain in the Dow, and the NASDAQ turned negative by the end of the day. As a result, a lot of stocks started up, then fell back on the day. Many of the recent high flyers also pulled back. Volume has been shrinking as of late, and volatility is quite low. These are a couple signs that the market may be due for a pullback.

Yesterday's best pick, BG, had a little follow through early in the session, only to join the rest of the crowd and close lower on the day.

Two of our Monday picks did not offer trades, while the other ended in a small loss on the day.

Tuesday does not offer any reasonable candidates according to our system. Could be a day to keep an eye on a few of the ProShares Ultra Short ETF's for candidates to the long side. QID and TWM are the two I follow most often when considering on a bet against the market.

Good Trading!

Scott Cole
www.kungfutrader.com
www.bestdaytradingstocks.com

Sunday, May 18, 2008

Flat Day for Stocks, Daytrading stocks mixed

The stock market ended the week on a flat note Friday, with moderate losses across the major averages. Overall, it was a solid week for stocks, and the market leaders continue to head higher.

Our daytrading pics on Friday had a mixed day, but BG proved to be a big winner. The other picks were MA, RIMM, NUE and GOOG.

For Monday, the following three stocks look like good daytrading possibilities...MICC, BZP and FSLR. As always, our bias is to the long side. Pay attention to the overall market conditions early in the session before considering any long entries.

Good Trading!

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Friday, May 16, 2008

Quiet day for Daytrading Stock Picks

Our daytrading picks did not offer trades today, as all three traded lower from the open. As our directional bias in all three was to the upside (all of our picks are long trades), no trades would have been taken.

On Friday, our picks include AXYS, MA, BG, RIMM, NUE, and GOOG.

As it is a Friday, only consider holding a position over the weekend if Friday is a solid up day at the close in the overall market.

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Wednesday, May 14, 2008

Rough Day for Daytrading Stocks

The stock market rallied early, but tailed off in the last hour, making it a difficult day for daytraders seeking to hold gains through the close. It was a good day to exit positions that may have been held since Monday. DRYS was a perfect example of a 3 day cycle that is common to many markets. It had a decent rally on Monday, followed by a sizable move on Tuesday and a strong open today. However, it reversed course and closed near its lows for the day. A good day trader and short term swing trader would have many opportunities to exit the position throughout the day....at the open, after its early rally, or even at the close. CMI, another one of our Monday picks, continued upward today, but should have been exited at the close.

Our daytrading picks for today would have resulted in one trade. POT had a nice rally that faded at the end of the day, which had resulted in a small loss. MA and BRY did not offer trades to the long side, which was their directional bias for the day.

Thursday's picks are AXYS and USO.

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Tuesday, May 13, 2008

Stock Market Ends Mixed on Tuesday

The stock market ended mixed on Tuesday as the Dow and S&P finished modestly lower, while the NASDAQ and Russell 2000 finished modestly higher. High flying stocks continued their high flying ways, led today by the solar energy group. CSIQ reported strong earnings and finished up nearly 20%.

Monday's daytrading picks either followed through with an up open (DRYS and EWZ) or continued to trend higher today (CMI and CSX). Tuesday's daytrading picks were mixed. MA did not trigger a trade and closed modestly lower. AKS sold off a bit after the open, then trended higher the rest of the day into the close.

Wednesday's picks include MA again, BRY and POT.

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com

Stock Market Rallies Monday, Our Day Trades Perform Well

Our list of daytrades posted in last nights blog...DRYS, CMI, EWZ and CSX all offered excellent profit opportunities on the back of a nice rally in the market on Monday. DRYS rallied from the open, and trended higher all day. The other three stocks had brief sell-offs early in the morning, but rebounded with the market and trended upward for the rest of the day.

The stock market benefited from lower crude oil prices and a firming dollar. However, the trend in crude oil continues to point upward. Still, the stock market looks to be in pretty good shape, and techs are beginning to show some leadership. These stocks will need to take over leadership if the issues related to the continued rise in energy prices and agricultural issues falter.

Some nice daytrading opportunities for Tuesday appear to be MA and AKS.

Scott Cole
www.kungfutrader.com
www.bestdaytradingstocks.com

Sunday, May 11, 2008

Monday's Daytrading Candidates

The ideal candidates for daytrading on Monday include...DRYS, CMI, CSX, and an ETF, EWZ. These four candidates offer a directional bias that we look for, among other conditions.

Pay attention to the overall direction of the stock market, as a strong move in any direction by the major indexes WILL have an impact on individual stocks. In regard to the individual stocks, let them establish direction for the day.

Scott Cole

Thursday, May 8, 2008

Finding the Best Daytrading Stocks

In order to find the best stocks for daytrading, I highly recommend a program such as Worden Brothers' TC2000 platform. This program will allow you to set up numerous filters based upon technical studies, volume, capitalization, etc. so that you may screen for the best stocks to day trade, or just trade or invest in.

I am sure there are other programs out there, but I have found the TC2000 platform very easy to use, and I can set up all kinds of searches for stocks, depending upon what I am looking for. Check it out!