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
Monday, October 20, 2008
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
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
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
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
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