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
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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
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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
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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