Dollar Falls, Stocks Up, Again

Our favorite trade showed up again today as a weak Dollar led to solid gains in the U.S. Stock market. As usual, Gold was up sharply as well. All of the major averages posted nice gains today. However, most of the gains occurred in the first 30 minutes of trading, and the market was essentially range bound there after. Nonetheless, there were plenty of opportunities for day traders today. There were plenty of gap openings, plus, with Gold up, there were obvious opportunities in the gold stocks.

One interesting divergence in the marke though... Apple was down today. After opening up with the market, it closed much lower, and formed an outside trading day, a somewhat bearish configuration. It appears now that AMZN has clearly taken over the leadership of the Nasdaq.

Scott Cole www.bestdaytradingstocks.com

Weekly Stock Market Review

Well, last week proved to be quite an interesting week for stocks. Normally, since it is a holiday week, there is seasonal favorability. The market got off to a good start on Monday, but failed to build on its gains over the next two sessions. Then, while we were enjoying the Thanksgiving holiday, turmoil erupted in the Middle East, as news out of Dubai suggested there may still be some hangover from the global real estate problems. Global stock markets were down sharply on Thursday, and opened lower on Friday. In the U.S., our markets needed to play a little catch up, and we opened down significantly, trading over 200 points to the down side on the Dow. But, it was a holiday shortened session with light volume, and the markets closed a bit off the lows.

We have a big week ahead. Early in the week we will see if there is any further fallout to the Dubai situation. Retailers will report how the official start to the holiday shopping season went. Then on Friday, there will be a new unemployment report, ahead of which President Obama is convening a jobs summit in an act of desperation to help out Democrats heading into the 2010 election cycle.

As usual, pay close attention to the Dollar. The strong correlation between Dollar weakness and stock market strength is still in place.

Scott Cole www.bestdaytradingstocks.com

Dollar Plunges, Stocks Barely Move

U.S. stocks ended the day barely to the upside, even as the Dollar was routed in Forex trading. The Dollar closed at 14 year lows against the Yen. The so called Yen carry trade has been fueling the rise in stocks since March, but they barely moved today. Commodities, on the other hand, enjoyed big gains...particularly in energies and precious metals. Gold was up $25 on the day at last check, trading at $1,191 in the cash market.

Sooner or later, stocks will start to not like such a weak dollar. It is also noted that there is tremendous correlation among most markets. As the dollar falls, stocks, bonds and gold have risen. Just imagine what will happen if there is any sort of spike in the Dollar caused by a potential geopolitical crisis, or if the Fed suddenly sees that it is time to start raising rates.

In my view, this is just another asset bubble. Even when stocks rise off of bear market lows, they never move as high, and as quickly as this market has.

Happy Thanksgiving!

Scott Cole www.bestdaytradingstocks.com

Dollar Falls, Stocks Rally, As Usual

U.S. Stocks opened strongly to the upside this morning, and held up all day, as the Dollar declined in Forex trading. Someone keeps on forgetting to turn off this broken record!

Another "as usual" though; volume was light. In fact, considering the size of the price move, volume was downright abysmal. Less money is going into these up days, and that can't be good. Volume will continue to lighten up the rest of this holiday week, and that can lead to increased volatility. As usual, pay attention to the Dollar.

The day proved to not be easy for daytraders, except very short term scalpers. Most of the big moves in individual stocks occurred in the first 30 minutes. After that, many stocks that traded nicely to the upside in the first half hour simply flattened out the rest of the day.

Scott Cole www.bestdaytradingstocks.com

Weekly Stock Market Review

As mentioned in my previous post this weekend, the U.S. stock market ended a quiet week on a quiet note on Friday. However, as we head into the holidays, we enter a pretty strong time frame for the stock market on a seasonal basis. Since we have had such as strong rally from the March lows, the market is actually significantly higher on the year. As a result, many fund managers have been left on the sidelines, missing much of this rally. You can bet that these fund managers will try to pile into stocks that have been leading the rally.

I suspect that many of the trends that have been in place during the bulk of this rally, such as a declining Dollar and rising commodity prices, will continue into the rest of the year. The leading industry groups continue to be Silver, Gold, metals/mining, and catalog businesses.

Heading into the Thanksgiving week, the market looks poised to make a move higher after a modest pullback over the last several trading days. I like the patterns I see on the major averages and many stocks in terms of setting up for a decent two or three day rally in the coming week. When you add to this that this is a seasonally favorable week, daytraders and short term swing traders should consider that the odds are likely in favor of the long side over the next several trading days.

There is one caveat to this little forecast, if you could call it that. If there is any significant weakness on Monday that carries the S&P 500 down below 1080, then I would anticipate further weakness.

Scott Cole www.bestdaytradingstocks.com

Stocks End Week With Modest Losses

U.S. Stocks closed very modestly lower on Friday in very dull trading, to end a very dull week of trading. As a result, the week ended mixed, with the Dow Industrials posting a modest gain, and most other averages posting modest losses on the week.

However, the daily trading pattern looks promising for a decent move to the upside next week, which is also a seasonally favorable week for the market.

More to come over the weekend!

Scott Cole www.bestdaytradingstocks.com

Stocks End Day Lower, Dollar Up Modestly

U.S. Stocks finished they lower, but well off session lows on Thursday, but remain up solidly on the week. Stocks opened lower on the back of Dollar strength, but that strength evaporated late in the day, and allowed the market to bounce a bit off its lows. Overall though, it was a pretty weak market. One thing I definitely did not like about the price action was the weakness in Apple. Apple was down over $5 on the day, on rising volume. The overall market volume was also higher today.

In other markets, Gold eked out a small gain, while Crude Oil was lower by over $2. Otherwise, it was a fairly quiet day.

Keep an eye on the Dollar on Friday!

Scott Cole www.bestdaytradingstocks.com

Like a broken record, U.S. stocks enjoyed a nice Monday rally, as did many commodities, as the Dollar traded at its lowest level since August 2008. The Yen was the largest benefactor of the Dollar decline today, as the carry trade continues. The Dollar also fell against the Euro and British Pound.

Also benefiting from the Dollar decline was Gold, Silver, Crude Oil, and Copper, among other markets. Interestingly, in spite of a big rise in commodity prices and stocks, the 10 Year Treasury Note also rallied sharply, lower yields to their lowest levels since early October.

The question is, how long can we have a declining Dollar, low interest rates, a fast rising stock market, and higher commodity prices before something gives? I suspect we continue to see these trends through the end of the year. However, when the trend following commodity traders and hedge fund managers decide to head for the exits, they all tend to do so at the same time. You can definitely expect very sharp corrections to occur when that happens.

I suggest that the trends continue through the end of the year since fund managers will want to show strong yearly performance results to show their investors. Once that occurs, they will have no problem liquidating positions at the first sign of any kind of trouble for the markets. or when it becomes obvious that central banks have started to hit the liquidity breaks.

Stay tuned!

Scott Cole www.bestdaytradingstocks.com

Weekly Stock Market Review

U.S. Stocks ended the week with a positive note, and finished with a two week winning streak. A weak Dollar again provided the prescription for the rally, as the market shrugged off a weak consumer sentiment survey. The Russell 2000 actually lead with a gain over 1% on the session, followed closely by the Nasdaq and Nasdaq 100.

This coming week could prove to be an important juncture in the markets. The Dow Industrials have already broken out to new highs for this bull move. The S&P 500 and Nasdaq indexes are sitting just below their highs, while the Russell 2000 and Dow Transports are well below their highs. If the Nasdaq and S&P 500 can move decisively above their highs, that will confirm that this bull move has more legs.

As always, I believe there are significant headwinds out there for the market. However, you can bet that if the averages continue higher, fund managers will have to plunge in and buy. They need to do their best to beat the averages for the year, and since the long side has been the place to be for the last eight months, they must be long, and they must be in the hot stocks.

Most of the headwinds facing the market are longer term issues. As such, since this is also a seasonally favorable time of year for the market, it is best to just stay on the long side, but I do not recommend the use of leverage.

Heading into Monday, we have a two week winning streak for Mondays as well. Don't be surprised by any strength in the market on Monday.

As always, since Friday was a positive day for the stock market, there were some nice daytrades. Check out the chart of CSIQ below. This stock was set up nicely by one of the patterns I like to see for a stock ready to make a big move to the upside. After opening slightly higher on the session, the stock did not disappoint, showing a 10% gain on the day.

Have a good week!

Scott Cole www.bestdaytradingstocks.com

Dollar Weak, Stocks Rise, As Usual

U.S. Stocks were up again Friday, resulting in a two week winning streak. Earnings and a weak Dollar were the primary drivers, as stocks shrugged off a weak Consumer Sentiment report that suggests holiday spending may not be very strong.

The Dollar weakness resulted in more strength in Gold and commodities although crude oil broke down through some recent support before closing just over $76.

Again, volume was light on an up day. Volume was markedly lower than on yesterday's sell off.

More to come over the weekend.

Scott Cole www.bestdaytradingstocks.com

Stocks Decline on Dollar Strength

U.S. Stocks declined on Thursday as the Dollar managed a decent rally, after making new lows for the current downtrend this week. Same old story here. As the Dollar falls, stocks rise, as it is seen as a boost to companies that compete in overseas markets. The falling Dollar also has provided a boost to Oil prices, and therefore Oil related stocks. Today, these stocks took a bit hit.

At some point this particular relationship will change, a falling Dollar will result in inflationary pressures. Inflation perceptions will ultimate result in higher interest rates, irregardless of what the Fed does. Higher interest rates are never a good thing for stocks.

Nonetheless, this is the market we are in. It is notable that the stock market appears to be struggling at these levels, and volume on down days continues to be higher than on up days. It is also clear that the stock market leadership has narrowed significantly. The Dow Industrials are the only average to make new highs for the move in the past week. None of the other major averages has made a new high. In fact, the Russell 2000 remains about 6% below its October highs.

In a recent post, due to the Dow breaking out to new highs, I mentioned that intermediate term traders needed to get back into the market with high momentum stocks breaking to new highs. However, I added, that this should be done with caution, and today's action bears that out. All traders and investors should be very cautious at this point due mainly to the policies that the powers that be in Washington are trying to push through, and the extremely high government debt.

Going forward, I expect that the daytrading opportunities will be just as plentiful on the short side as they will be on the upside.

Stay Tuned!

Scott Cole www.bestdaytradingstocks.com

Ho Hum Day For Stocks

U.S. stocks ended the day mixed, with the Dow Jones and Nasdaq 100 posting modest gains on light volume while the other major averages traded lower. The Dollar traded within a choppy and narrow trading range, and the stock market essentially followed suit.

The big news of the day for stocks was Priceline posted earnings that tripled in the 3rd quarter. The stock closed up over 17%. Surprisingly, the Nasdaq Composite failed to have a positive close as a result.

The bottom line was that this was a boring trading day, and day traders would have been smart to call it a day early and go play some golf!

Scott Cole www.bestdaytradingstocks.com

Stocks Rally on G-20 news

U.S. Stocks followed up on a rally that started overseas on the back of news out of a G-20 meeting of finance ministers indicating that they are not ready to start pulling back on the liquidity they have been injecting in support of the global economy. The Dollar plunged and is testing its most recent lows again, after making a multi-week high just last week.

The result was a big rally across the board, which carried the Dow Jones Industrial Average to new bull market highs, over 10,200. Volume was moderately higher than the last couple of trading sessions.

Commodity prices rallied on the news, with oil prices up $2 and Gold rallying to new all time highs over $1,100.

Not surprisingly, we had some big individual stock moves, resulting in some nice day trades! The trade of the day was TRW. Along with the overall market, it gapped to the upside, and then followed through on its opening strength with continued strength in the first part of the trading day. Traders applying any type of opening range breakout strategy could just hop on board and ride the trend to a gain of at least $1.00 per share depending upon the entry price.



For intermediate term traders, you pretty much have to hop back on the train again on a session like today if you had gone to cash during the recent pullback. The market appears to be re-establishing its upside momentum, although there appears to be a narrowing of leadership, as smaller stocks are nowhere near the recent highs as gauged by the Russell 2000. However, now is not a time to apply much leverage.

Stay tuned!

Scott Cole www.bestdaytradingstocks.com

Weekly Stock Market Review

U.S. Stocks closed the week of trading essentially unchanged on Friday, but in the process, ended a two week losing streak. The S&P 500 traded the last three sessions to the upside, but on each successive day, volume shrunk. While it is certainly possible for a rally to occur on Monday, since Friday's trading range was quite narrow on low volume, the odds suggest some difficulty for the market trading to higher levels in the next couple of days.

As usual, the leading groups during the rally this week were commodity based industries, with Silver miners leading the way. Drug related industries were a close second behind Silver, while the Metals & Mining, Copper, and Steel & Iron groups rounded out the top five industries.

In other markets, Gold was the headline mover among commodities, as it broke out to new all time highs, and tested the $1,100 per ounce level. This helped pull Silver higher, which is again testing $18 per ounce.

After rallying to 4 week highs, the Dollar Index sold off late in the week and closed lower for the week. In spite of the Dollar pullback late in the week, 10 Year Treasury Notes managed to rally on word of the 10.2% unemployment figure reported in Friday's release of government employment figures. This is the highest level since the 1981-82 recession.

Over the weekend, the U.S. House of Representatives passed its version of a healthcare reform bill, with a $1.2 trillion price tag. While many view this version of the bill to be dead on arrival as debate moves to the Senate, it still does suggest that some form of healthcare reform will be passed in the foreseeable future, probably early next year. While there does appear to be some burden on business, the stock market has shrugged this off so far. It will be interesting to see how the market reacts as the bill moves closer to passage.

As earnings season is nearly over, all focus will return to economic data. With the holidays ahead, you can bet there will be a lot of attention paid to retail sales.

Stay Tuned!

Scott Cole www.bestdaytradingstocks.com

Stocks Enjoy Broad Rally

U.S. Stocks rallied across the board on Thursday on the back of a variety of news items. Some retailers are reporting better than expected sales in October, suggesting the holiday season may give a lift to the economy. Weekly jobless claims dropped significantly, and it was reported that 3rd quarter productivity was up over 9%, higher than the previously reported 6.6%. Finally, the European and UK central banks held interest rates steady, but suggested they will be pulling back on debt purchases.

All of the major averages were up significantly, and closed at the highs of the day. Once again though, volume was low, although the Nasdaq averages had similar volume to yesterday.

The market had been oversold to the downside, and had pulled back to, and in some averages, below major support. The Dow Jones Industrial Average is still trading within an uptrend that really has not been broken. The other averages clearly have broken technical support levels and will find it more difficult to make new highs. More significant positive news on the economy will be required to keep the market going higher.

With all that in mind, it was a good day for day traders playing the long side. Yesterday I mentioned that the overall technical pattern of the markets on a short term basis was not favorable. However, that was over ridden with a strong trending move to the upside. The market started higher and never looked back all day. These are the kinds of days where daytraders can make spectacular gains. Check out the chart of AWI below. This stock brought day traders 10% on the day by trading a standard opening range breakout. This is the type of trade that can make your month!

Scott Cole www.bestdaytradingstocks.com

Stocks End Day Mixed After Fed Meeting

U.S. Stocks closed mixed after trading much higher in the afternoon following the Fed's announcement to keep interest rates unchanged. The Dow Jones rose to up as much as 140 points, before stocks sold off in the last hour.

The daily trading pattern suggests we may test the recent lows in the next couple of days. The Friday employment report will hold the key. Today's ADP report indicated another loss of 200,000 jobs. I still see CNBC analysts suggesting jobs are ready to turnaround, based upon recent productivity figures.

The Dollar was hit hard today, which is interesting, because the stock market did not go anywhere. Gold flirted with $1,100 before settling back down with a gain of a couple bucks. 10 Year Treasury yields were about 3.55% the last I saw, and that is a bit of a pop from around 3.41% earlier in the week.

I have no clue what the market will do in the next couple of days, but the pattern suggest a re-test of the recent lows should occur soon. The European and UK central banks meet tomorrow to discuss policy, but keep an eye on jobless claims here in the U.S. They have been quite steady as of late, and a lack of improvement may start an early sell-off before Friday's employment report.

Scott Cole www.bestdaytradingstocks.com

Weekly Stock Market Re-Cap

U.S. Stocks closed the week with significant losses on Friday, which sent the Nasdaq Composite, and a few other averages, to their first monthly losses since this bull run began in March. Based upon the market action of the past couple of weeks, it is clear we have entered correction mode. The character of the stock market has clearly changed. For instance, early morning gains have turned into late day losses. That is not characteristic of a market that will be trading higher. Also, individual stocks have taken hits AFTER reporting earnings above expectations.

I would add that it has seemed to me that most of the commentators on CNBC have been quite bullish heading into the last couple of weeks. They all point to a continued recovery in business inventories and continued stimulus spending as keys to an economic recovery, which should continue to boost the stock market. I continue to ask where the consumer spending will come from considering the fact that the residential real estate market is still weak, and with an unemployment rate that likely will head above 10% in the foreseeable future.

I have noted economist after economist suggesting that there is indeed a recovery going on in residential real estate. As such, this past week's report that new home sales were down in the latest month was a shocker to them. In my own neighborhood, I have seen one home sit on the market for over a year. Indeed, it is a flawed home, but now is priced well below its purchase price by the current owner four years ago. I have seen other homes in the neighborhood sit on the market for several months, much longer than normal.

I have been a commercial real estate appraiser for over 20 years. One recent study I conducted in my own area here in Harrisburg, Pennsylvania indicates that commercial real estate transactions are down about 40% since 2007. Capitalization rates have risen dramatically. Vacancy rates have been on the rise, and this is pressuring rental rates. It is clear that many properties purchased in the 2006-2008 period are under water in many locations around the country. Therefore, there will be another shoe to drop for this economy.

I believe this stock market rally has been quite bogus. I am sure that in March, we hit a significant low, and the market sold off more than it should have. But, a rally of nearly 60% since then seems unwarranted considering the headwinds we still face. Huge government deficits and an administration that seems to want to add more to them in spite of their words. An extremely weak Dollar. Oil prices back over $75 heading into Winter. A healthcare bill likely to add more of a burden to businesses, along with a push for a cap and trade bill on energy.

In any event, the market is getting quite volatile again. I think there is more room to the downside, but short sellers need to be very careful and nimble.

Scott Cole www.bestdaytradingstocks.com

Stock Market Sells Off, Again

U.S. Stocks sold off sharply on Friday on the back of some more weak economic news suggesting that the 3rd Quarter GDP is being followed by disappointment in the 4th Quarter. The Nasdaq closed below its October 1st close. The Russell 2000 and Dow Transports accomplished that feat on Wednesday. Volume was heavy. This market looks like it has further to go on the downside.

More to come on the weekend.

Scott Cole
www.bestdaytradingstocks.com

Stocks Rally on GDP Report

U.S. Stocks rallied after the government reported GDP growth in the 3rd Quarter of 3.5%. Combined with the old weak dollar trade, and an oversold market, the stock market had plenty of reason to rally today and squeeze some shorts in the process. This may carry through for a couple days, but it is notable that volume today was lighter than yesterday.

If you are a daytrader, you should have been ready for a decent bounce to the upside. The market was clearly oversold after a relatively sharp pull back in the last week. Then, all you had to do was look for some stocks that were gapping higher on the open, or had decent trading set ups suggesting a bias to the upside.

Medifast (MED) was one of those stocks poised for an upside move. After a sharp pullback in the last week, it seemed to find support yesterday and traded within a narrow range, its narrowest in four sessions. It then opened strongly this morning and traded up sharply in the first half hour. This was a tough trade to take due to the fact that the stock moved well over a dollar in the first half hour. It then broke out of its early range and traded up over another dollar above its breakout price, before settling into a trading range for the rest of the day. See the chart below.



Scott Cole
www.bestdaytradingstocks.com

Stock Market Continues Sell-Off

U.S. Stocks closed at their lows of the day today, with their worst losses since October 1st. The worst performer among the major averages was the Russell 2000, down over 20 points on the session. This took the average below its October lows, suggesting a significant double top is in place.

The Dow Jones Industrial Average continues to hold up a bit better than the rest of the averages, down only 1.21% today. By contrast, the Nasdaq Composite was off over 2.6%.

The culprits today were a stronger Dollar, which rallied for a 5th day in a row, and a weaker than expected report on new home sales, which were reported to be down over 3% in September.

For intermediate term traders who trade high momentum stocks, today's activity should have you 100% in cash if you aren't there already. Daytraders should find the going easier on the short side than on the long side until we see a move to the upside that is at least as strong as today's move was to the downside.

Stay Tuned!

Scott Cole
www.bestdaytradingstocks.com

Mixed but Weak Day for Stocks

The Dow Jones Industrial Average finished with marginal gains today. You would have thought the rest of the market was close to unchanged as well. Not the case! Most of the other major averages were down at least 1%, and once again market breadth was weak! At the moment, day traders can definitely make money on the short side! Follow the weak stocks and look for good set ups or major breakouts!

The chart of SNDA below is a good example of an opening range breakout that resulted in an all day trending move.



Scott Cole
www.bestdaytradingstocks.com

Stock Market Weak Again

U.S. Stocks closed lower on Monday, following through on Friday's losses. We have not seen the Monday follow through to the downside very often in this bull market that began in March. This suggests there is more room to the downside. On the S&P 500, this is major trend line support from the March and July lows at around the 1050 to 1055 level. A breach of that on significant volume should result in a test of the October lows at around 1020.

As mentioned in my earlier post, the main culprit was a strong Dollar. This resulted in an unwinding of the commodity trade, as Gold and Crude Oil were both weak today. The stock market has been propped up by the liquidity injected by the Fed and Treasury since last year. Some better than expected earnings reports added some more fuel to the rally, but it looks like it may be running out of steam. Some companies are now getting hit even when they meet expectations or slightly out perform.

Another issue facing the market, which is propping up the Dollar, is higher interest rates. The yield on the 10 Year Treasury Note settled at around 3.55% today. A further rise in yields will result in multi-month highs. There is a great deal of supply of treasuries coming this week, which could pressure prices further.

The bottom line is that you simply can not have a falling Dollar with rising stocks and rising commodities for very long. Something eventually has to give. One commentator brought to mind the 1987 crash today. That event was preceded by a weak dollar with low interest rates that eventually had to start going up. When interest rates spiked, the stock market collapsed.

Earlier this year, the 10 Year Note approached 4% yields and I believe went above those levels briefly. If you see that again, and they stay above that level for an extended period of time, watch for a big drop in stocks.

As I've mentioned, day traders need to be aware of shorting opportunities in the market now, rather than just focus on the long side.

Scott Cole
www.bestdaytradingstocks.com

Weekly Stock Market Review

U.S. stocks ended last week on a down note, with the major averages losing anywhere from 0.5% to over 2.0% for the Russell 2000. The Nasdaq averages held up better on Friday with the help of Amazon, which finished the session up over 26% on bullish earnings. That stock was also the daytrading star of the day as all you had to do was enter long at some point in the first 45 minutes and you had a 3 to 4 point gain by the close.



Back in 2007, before the bull market ended, the Nasdaq was dominated by the "4 horseman" stocks, namely, Apple, Google, Research in Motion and Amazon. Once the bear market ended in March, all four stocks began to rise again. However, RIMM over the last couple months has rolled over and appears to have fallen out of favor, possibly due to the Apple I-Phone.

Copper stocks remain the hottest industry group over the last month, followed by farm and construction machinery, catalogs, recreational vehicles and silver stocks.

10 Year Treasury Notes broke through initial support levels, leaving yields at around 3.5%, the highest levels in over a month. The Dollar managed a small rally on Friday, but still closed the week with a loss. Gold and Crude Oil closed with minor losses on Friday.

Scott Cole
bestdaytradingstocks.com

Stocks Manage Mixed Gains

The headline number, the Dow Jones Industrial Average, up 131 points, or 1.33%, suggested a big up day for the market. But, the Nasdaq Composite was up barely .5% and the Dow Transports barely eked out a gain at all. Additionally, today's gains were on declining volume compared to yesterday.

Generally speaking, the price trend in the market is still up, but there are warning signs that this market is getting tired. As I mentioned yesterday, day traders should start considering the short side, especially if the tape indicators are weak during the day.

Today's chart of the day is HNI. The stock gapped up strongly at the open, and held steady for the next hour, before resuming its upward strength. Patient day traders could have traded the opening range breakout, or a pull back into support after the breakout. The stock trended higher for the rest of the session. Have a look at the chart below.

Scott Cole
www.bestdaytradingstocks.com

Stocks Closer Lower on Higher Volume

U.S. Stocks traded higher in the early going, only to reverse and close lower for the day, with losses accelerating in the last hour. Volume was somewhat heavy, suggesting another bout of distribution. The market has been making a habit of trading higher on light volume days and lower on heavier volume days. This is a clear sign of the market struggling at these levels, suggesting it is due for a correction.

Due to continued strength in the shares of Apple, the Nasdaq Composite and Nasdaq 100 did not sell off nearly as much as the Dow and S&P 500. The more economically sensitive Dow Transports were the hardest hit, dropping nearly 1.3% on the session.

The interesting thing to note about today's trading is that the Dollar got hammered in the Forex markets, and crude oil jumped above $81 per barrel. Over the summer, this would have been a recipe for a big rally in stocks. Not today. So, we will see whether today's activity turns into a trend.

I will say this though, seeing crude oil jump to over $81 per barrel is not a good sign. Remember it was only 7 months ago that crude bottomed at around $35. That huge drop in energy prices from last year had the effect of a tax cut. I suspect that the lower energy prices over the summer, plus a rallying stock market helped consumer confidence. That was certainly reflected in the consumr sentiment surveys over the summer. The more recent consumer sentiment surveys are indicating a more downbeat public now. If crude oil gets anywhere near $100 per barrel in the near future, you can bet the stock market will drop significantly. $100 crude oil will do more to stifle the economy than anything else, with the home heating season starting in another month.

Daytraders in the stock market should start considering shorting opportunities going forward. The easy money has been made on the long side for the last six months. Now, at the least, you need to consider both sides of the equation.

Scott Cole

www.bestdaytradingstocks.com

Stocks Make New Bull Market Highs

U.S. Stocks continued their seven month bull market, as S&P 500 nudged up against 1,100, before closing at 1,097 and change. Stocks were set to open trading to the upside today on continued positive earnings reports, and held up nicely for the day.

Many high momentum stocks broke out of small consolidations to new highs today. One big one, Apple, will do so on Tuesday morning after it blew away Wall Street earnings estimates after the close of trading. Apple has traded after hours over the $200 level to new all time highs.

With a nice move to the upside, there were some more big intraday moves in day trading stocks. The biggest high flyer of the year, Deidrich Coffee (DDRX), which is up 14,000% from its lows (yes, you read that correctly!), surged another 20% today. This was a classic opening range breakout trade that carried momentum all day into the close. The stock broke out of its early trading range just below $26 and closed at $29.33 on its heaviest volume of trading ever. Have a look at the chart below.



In other markets, like a broken record, the Dollar made new lows and Crude Oil moved higher. Gold also pushed higher to close at $1,058 and change on the December contract. 10 Year Treasury Notes managed to close modestly higher on the session.

Good Trading!

Scott Cole
www.bestdaytradingstocks.com

Weekly Stock Market Commentary

U.S. Stocks ended the week with some losses on Friday, but closed the week out with gains compared to the previous week. Earnings were the primarily driver of stock prices to the upside throughout the week, but the market reacted negatively to IBM's earnings report on Friday. As a result, the week ended with modest gains within a very narrow trading range.

It is notable that the Nasdaq, Nasdaq 100 and Russell 2000 are finding some resistance at the September highs, while the Dow and S&P 500 have blown through there highs relatively easily. I also noted higher weekly volume compared to the previous week in the Dow and S&P 500, while this was not the case for the Nasdaq. This suggests that much of the recent strength has been in the financials.

Among the top industry groups, the oil and gas equipment services industry appears to be making a solid move, closing strongly to the upside this week, while many leading industry groups simply consolidated gains.

In other markets, the Dollar continued its slide, with another down week, but held steady on Friday. Crude oil broke out of a four month basis and surged to close over $78 for the week. $80 crude oil seems to be a foregone conclusion. If there is one lesson we need to remember from 2008 is that $100 crude oil definitely has a negative economic impact. A continued surge in crude oil will only result in more pressure on businesses and families already struggling to pay bills.

Gold closed a bit lower on Friday and finished somewhat unchanged on the week, but is still a bit above nearby support levels at around $1,020. Expect to see another leg up after some consolidation.

For the next week, expect earnings reports to continue to drive stock prices. Many of the important economic reports are out of the way for October. As such, the focus will be on earnings, unless there is a more significant drop in the Dollar, or a big surge in oil prices. Keep in mind that the S&P 500 is somewhat heavily weighted with oil stocks, so higher prices may continue to help with that average. On the other hand, you might see more erratic stock price behavior in the Nasdaq and Russell 2000.

With all this in mind, I would continue to exercise caution due to economic headwinds that face the market in the longer run. This rally has priced in a good bit of stability of the next 12 months, but until we see significant improvement in job creation, I don't see how the consumer based U.S. economy performs very well. Traders and investors might do a lot better to continue focusing on overseas businesses.

Scott Cole www.bestdaytradingstocks.com

Back to Dow 10,000

The Dow Jones Industrial Average closed above 10,000 for the first time in over a year today on the back of stronger than expected retail sales data, and a better than expected earnings report from Intel. All of the major averages closed at new closing highs for the current bull move in stocks.

In other news today, the Federal Reserve in its minutes released from its latest meeting suggested that there are no near term inflation pressures and this gave a boost to stocks late in the day. The released minutes suggested that the Fed will hold its target interest rates at low levels for the foreseeable future.

On the flip side of the bullish day for stocks was drop in the Dollar Index and a rather sharp move up in yields on 10 Year Treasury Notes. The Dollar Index closed at 75.51, a new low for the year. Crude Oil closed over $75 per barrel today. So, we still see the inverse correlation between the Dollar and Crude Oil and between the Dollar and Stocks.

As a result of today's solid move in the stock market, we noted a number of nice daily price moves in stocks. At the top of the list were WATG and ASIA. These stocks demonstrated classic early breakout moves that translated into day long trending moves, providing daytraders very nice profits. The ASIA trade was particularly strong, as its intraday breakout occurred fairly close to its lows at around $21.50. The stock closed at $23.77, or about 10% above its breakout price. That is a super nice day trade!

Check out www.bestdaytradingstocks.com to learn more about capitalizing on these kinds of moves!

Scott Cole

Dow Rallies to New Closing Highs

The Dow Jones Industrial Average closed at a new high price for this bull market rally on Friday, while the S&P 500 came within a whisker of matching the Dow's achievement. The Nasdaq Composite and Nasdaq 100 have a bit more work to do yet.

While prices are still going higher, volume continues to shrink. Last week's rally occurred with much less volume than the previous week's decline. As such, I would remain a bit cautious as to whether the market can truly push much higher from here. It may need a little more time to consolidate last week's gains. Overall, it seems that the market still wants to head higher. Keep an eye on the Dollar though. At this point, there is still a strong inverse correlation between the Dollar and stocks. Any reversal in the Dollar's downtrend may hurt U.S. stocks.

The leading industry groups continue to be dominated by commodity based industries, and a couple tech related groups as well as the casinos. Leading indicator groups such as home furnishing stores, recreational vehicles and retail REITs are also among the best performers.

Enjoy the week!

Scott Cole

Stocks follow through on Monday rally

U.S. stocks followed through on yesterday's gains to post another 100+ point performance in the Dow. Most of the other major averages made larger percentage gains. It appears that the major averages will be re-testing the September and bull market highs in the near future. However, they are doing so after a larger downside move than the pullbacks seen in August and early September. With that in mind, this re-test could end up as a classic double top, or it will require a bit more consolidation to move significantly above these highs.

The downside to all this is that there is a very high inverse correlation between stocks and the dollar. The dollar was hit today as it was rumored that the oil sheiks are getting a little antsy about pricing oil in dollars. This caused a big spike up in Gold, which closed at all time highs. Gold is a traditional inflation hedge, and it is widely felt that the Chinese are hedging their investments in U.S. Treasuries with the yellow metal.

Gold and Oil stocks provided some solid daytrading opportunities and some high momentum stocks broke out of their recent consolidation patterns to post new highs. A number of others are poised to make new breakouts as well, but as this rally is getting a bit long in the tooth, I suggest that traders should remain cautious and not have all of their cards on the table. While today's volume was a bit better than yesterday, it remains relatively light. Any new high in the major averages over the next week or so will result in some divergences in several price/volume indicators.

Stay tuned!

Scott Cole

Directional Bias

One significant way a day trader can outperform his/her peers is by learning how to trade only in the direction of the overall stock market on any given day. In other words, if the market is up, the day trader should only focus on long positions. If the market is down, the day trader should only focus on short positions.

The obvious difficulty is in being on the right side of the market! However, a little chart analysis is all the trader needs to stay on the right side of the market most of the time.

First of all, identify the current intermediate term trend. I define this trend with a 13 day and 34 day moving average. When the 13 day average is above the 34 day average, the market is in an uptrend, and the market is in a downtrend if the 13 day is below the 34 day.

Next, I look at the trading pattern over the last 3 to 5 days. If these days are up, I will have a bullish bias, unless I see any kind of a reversal pattern, such as declining volume and a narrowing trading range as the market trades higher.

The best patterns are those where the market has traded against the trend for a few days, and on the last day, drops into a strong support area on the charts, or trades in a very narrow trading range. Once I see a pattern like that, I look for any kind of intraday strength to initiate long positions.

The key to all this is that if the market is up solidly, the majority of stocks will also trade higher. Therefore, it makes no sense to try and trade against the underlying trends.

If you trade in the direction of the underlying market, I KNOW you will be more profitable!

Scott Cole
http://www.bestdaytradingstocks.com

Big Moves for Daytraders

Tuesday's stock market price action provided great opportunities for daytraders to capitalize on significant price moves. Daytraders who look to capture big directional moves could see this type of day coming just by looking at the daily charts of the stock indexes and some of the most widely traded big cap stocks. The stock market was set up nicely for a rally once a catalyst was provided. That catalyst proved to be the monthly consumer confidence report. Whether you believe consumers are ready to start spending does not matter. That report provided a boost to the stock market, which was already exhibiting some nice strength early in the session. The end result was numerous individual stocks making 10% moves to the upside, and some big cap stocks making 5% moves or more.

I hope you were one of those traders that made some big money on Tuesday!

Scott Cole
www.bestdaytradingstocks.com

Stocks make gains after lower open

U.S. stocks managed a nice rally on Wednesday, suggesting the current move from the lows may still be intact. We'll know more later in the week after the Friday jobs report is released by the government.

Stocks were set to open lower today after the release of the ADP private sector jobs report showed a loss of 742,000 jobs in March. Later in the morning, subsequent economic data showed some improvement in the housing market and manufacturing, and the market rallied on that news. I should indicate this data showed a SLIGHT improvement, but the market is looking for any excuse to rally, so it is best to go along for the ride!

As a result of the rally, we had some good moves in several of our stock picks in out Best Daytrading Stocks newsletter. For more info, check it out here!

In other markets, the Dollar was generally flat on the day, and traded within a narrow range, ahead of the G-20 summit in London. I don't expect much to come out of this meeting except some posturing rather than any strong policy. There was not much movement in Treasuries or commodities today either. Most of these markets are trading within consolidation patterns as we wait to see if and when the economy may recover.

Scott Cole
www.bestdaytradingstocks.com

A Weak Monday

Just a weak day, not much can be said about today's action. The best place to be was on the short side, and one of our picks, Schnitzer Steel, was off 11%. Unfortunately, most of this move occurred in the first five minutes, so it was not a good trade for our basic opening range breakout strategy. However, it did provide some good scapling opportunities for traders who like to be more active.

Unless we get some big news over night, I expect Tuesday to be a bit more quiet. We often get a bit of a turnaround on Tuesdays, particularly after a couple down days in a row. And, considering the size of today's move to the downside, there will be more opportunities on the long side for the next couple of days.

Good Trading!

Scott Cole

Stocks end week on down note

U.S. Stocks opened lower and never recovered, but traded in a narrow range today. This was a classic case of profit taking after a big up week for the major averages. Volume was very light today, and the averages generally closed near Thursday's lows.

Due to the narrow trading range in the averages today, there were not many big directional moves in individual stocks. However, many are now set up for some big moves early next week.

With all this in mind, I suspect we will see some more selling next week. We will be getting another look at the jobs market next week, which will likely have a significant impact. Any sign of improvement could help the market rally. It is all about perception, however, so pay attention to Wall Street estimates to get a feel for what direction the market will head, based upon the number reported.

Scott Cole
www.bestdaytradingstocks.com

Stocks Give Back Some of Monday's Gains

Well, considering that I was traveling both last Tuesday and yesterday while the market was making big gains, many people might wish that I had stayed on a plane today! After yesterday's nearly 500 point advance in the Dow, it gave back over 100 points today, and the other major averages were distinctly weaker. As Don Worden mentions in his TC2000 notes yesterday, the market rise actually occurred on volume that was lighter than last Friday. That is an indication that there was no major accumulation in yesterday's big rise.

Another ominous sign today was that the market sold off in the last hour. After opening lower, and staying down for the first half of the day, the Dow clawed its way back into positive territory. At about 3 pm, it was down only marginally, and Maria Bartiromo arrived with her pom poms on CNBC, ecstatic about the positive vibes on the floor at the NYSE.

I had no doubt a couple weeks ago that we were due for a nice rally, and we have already gotten it. Unfortunately, these are pretty common within Bear Markets. The 2000-2003 market shows many of these rallies, more so than the current Bear. But, there are far too many analysts willing to call this month's bottom THE BOTTOM, which suggests to me we may still have some pain to deal with. We may not make a new low, but we certainly will not be surpassing the 2007 highs any time soon.

Let's look at some long range issues. Our interest rates are being MANIPULATED by the Federal Reserve now at artificially low levels, while our government adds to our national debt at an alarming rate. Ultimately, this WILL result in significant inflationary problems as the Dollar will get pounded, and we will no doubt see higher personal and corporate taxes to pay for all this largesse.

Generally speaking, the current time period is more similar to the 1966-1982 period that involved an unpopular war, energy troubles, and rising debt. Until the Dow broke out above 1000 for good in 1982, it traded in a sideways pattern with several Bear markets in between. Unfortunately, our issues now seem to be worse.

Yes, we will likely see some recovery down the road, maybe even later this year. But, don't expect a raging bull market to be the result. What is going on in Washington right now will hamstring American business and the economy for years to come.

Naturally, as daytraders, we love this volatility. We've seen a good number of 5% to 10% daily swings in a number of stocks as of late. As long as we have this volatility, we will have great daytrading opportunities, no matter what the overall market is doing, and we will keep you posted!

Scott Cole
www.bestdaytradingstocks.com

The Week Ahead

At the end of last week we had a modest pullback in the U.S. stock market after a couple weeks worth of big gains that saw the major averages rise over 15% from their recent lows. We saw the big follow through day we wanted to see that confirmed the recent rally may have some legs. This is no guarantee that the rally is sustainable, but major rallies do not start without that follow through day.

Now, we will see if the rally can hold. I suspect we will have a bit more pullback early this week, and then we'll if the market can break through last week's highs. A lot depends upon what comes out of Washington, as Congress begins debate on the Obama budget. Friday's release of the Congressional Budget Office's forecast of economic growth and budget deficits suggests that Obama's grand plans may need to be scaled back quite a bit, as moderate Democrats, particularly those elected in more conservative districts, worry about their re-election prospects in 2010. With that in mind, keep an eye on the rhetoric out of Washington, as it may have an impact on the markets.

The bottom line is that the markets were deeply oversold, and the market was way overdue for some kind of a rally. Short covering was clearly the primary driver in the market's rally over the last couple weeks, as there really has not been any very positive economic news. However, I think it is interesting that, since the Fed announced its plan to start buying hundreds of billions of dollars worth of Treasury securities in an effort to but a ceiling on interest rates, the market has traded lower. In my view, this is an artificial propping up of the Treasury markets, that, when combined with the incredible amount of fiscal spending and other Treasury spending in the last six months, can only lead to inflation down the road.

Scott Cole
www.bestdaytradingstocks.com

Fed Plan Boosts Stocks

Ben Bernanke and the Federal Reserve announced a more aggressive plan to buy Treasury securities and mortgages, sending stock prices up yesterday afternoon, and putting a short-term top in interest rates. This announcement came after a solid up day in stocks the day before, which was the follow through day we had been looking for, signifying this could be a sizable Bear Market rally at the least.

While stocks and Treasuries rallied on the news, the U.S. Dollar plunged, as it is clear the Fed will be running the printing presses at high capacity to pay for its Treasury purchases. Combined with the Obama administrations aggressive budget plans, the long term outlook for U.S. assets may be shaky. For now however, the direction in stocks appears to be to the upside. As such, daytraders should be wary of the short side, although we are overdue for a pullback.

In other markets, commodity prices were mixed on the session. It was notable that Gold prices dropped substantially yesterday after the Fed announcement. Gold closed at its lowest price since late January. A head and shoulders top pattern was broken to the downside, and targets a price of under $800 for the precious metal in the next few weeks.

Scott Cole

How To Start Your Day Trading Business

In the current economic environment, many of us are looking for new ways to make a living. Many of us are sick and tired of the daily grind and are searching for ways to work at home. That is why many people turn to day trading stocks, currencies and futures markets.

Unfortunately, the vast majority of people who enter the world of day trading are unsuccessful. Trading is an extremely difficult profession, and most people are not psychologically prepared for the pitfalls. They read one or two trading books and feel that they are armed and ready for the challenge. However, most of these books contain conventional wisdom, and a regurgitation of old ideas that rarely work.

Also, most people are not prepared to accept that most trades will turn out to be losing trades, breakeven trades, or very small winners. Most people want to be right the majority of the time, but trading is not about being right, it is about making money.

With all this in mind, here are a few basic ideas on how to start your day trading business.

1. First you must determine how much capital you can trade with. This must be purely risk capital, money you can afford to lose without hurting your lifestyle. You can start day trading futures indexes with as little as $5,000, but you need $25,000 to day trade stocks.

2. Be sure you have ANOTHER means of income to pay your basic bills. It is extremely difficult for a new trader to live of income from day trading. If you’ve recently lost your job, find a part time job elsewhere that still allows you the time to day trade, if day trading is the direction you want to try.

3. Develop a specific strategy for day trading whatever market you intend to trade. For instance, if you plan on day trading E-Mini S&P 500 futures, you must first determine whether you want to be an intraday scalper or whether you want to profit from large directional moves. Remember, if you intend to be a scalper, you must be glued to the computer screen for hours each day. That can be tough for most people.

4. Determine what your basic profit goal will be, and DO NOT make this a monetary figure! Gary Smith, who wrote “How I Trade For a Living” simply had the goal of being profitable every month. It didn’t matter whether he made $200 or $2,000 in a month, he simply wanted to make a profit. Adjust your goal for how you will trade. If you intend to scalp, you probably want to be profitable each week, if not every day.

5. Determine which market, or markets you intend to day trade, and then learn all you can about what makes those markets work, and what influences their prices. In the stock market, it is very difficult to learn all there is about how the market works, but if you learn the basics, you will gain a better understanding.

6. Paper trade first, then trade with very little leverage once you are ready to start using real money. You want to get a feel for whether your strategy will work or not. Confidence is a key to success. Also, even if your strategy is working while you paper trade, things change when real money is on the line! You must maintain the discipline to follow your strategy, if you are confident it will work in the long run!

7. Keep detailed records of your trades! This will help you identify your skills and faults as a trader, and will benefit you in the long run!


These are just some basic thoughts on starting a day trading business. There is an awful lot to learn in this business, and the fact is, most people fail. Trading is just like any other skill profession…it requires education and experience to become successful, otherwise, we would all be doing it!

Scott Cole
www.bestdaytradingstocks.com

Stocks end week on positive note

U.S. stocks closed modestly higher on Friday, ending with weekly gains not seen since last November. In all of the major averages, we managed to close above last week's high as well, a very positive sign. Another very positive sign is the formation I see on the weekly charts of the Nasdaq and Nasdaq 100 indexes, which suggest a successful test of the November lows may have occurred. We won't know if that is the case until the January highs are taken out, but the price pattern is very attractive. The only problem I see is that volume tailed off this week compared to last week. Therefore, if prices are to go higher, we need to see more volume.

More to come!

Scott Cole
www.bestdaytradingstocks.com

Positive Economic and Market News Boosts Stocks

U.S. stocks rallied nicely today on the back of retail sales data for February was not as bad as expected; GE's credit rating was cut less than expected; Bank of America indicates it has been profitable so far this year; and GM said it does not need an extra $2 billion loan it thought it may need in March. The result was a big rally on volume that was greater than Wednesday's but less than Tuesday's.

We are now sitting right at some resistance levels in the S&P 500, and it will not surprise me to see the market trade lower on Friday ahead of the weekend, as traders look to book some nice profits for the week. However, it is nice to see some follow through, which suggests this rally has at least some short-term legs. To convince me that this will be a stronger Bear Market rally, we'll need to see another big up day next week.

Because the market had rallied for a couple days prior to today, we did not have many low risk stock picks for day trades to the long side. However, one of those pics scored big, and was yet another example of a great directional trade that ran into the close...Netflix. The chart is below.

Good Trading!

Scott Cole
www.bestdaytradingstocks.com

Best Stock to Day Trade

I've been sending out my daily list of best stocks to day trade for a couple weeks now, and my subscribers have had the opportunity to nail some nice moves. I wanted to highlight one trade in particular that had all of the characteristics we look for in identifying a potential day trading opportunity.

If you will recall, Tuesday was a huge up day in the stock market, and most stocks exhibited nice gains. However, we are looking for the lowest risk opportunities, so in the case of potential long trades, we tend to look for stocks that are actually already trading in an uptrend of intermediate term duration. These are the stock market leaders.

Heading into Tuesday, SNDA was among those stocks that had been trading higher for a few months, and was threatening to break out again. Furthermore, even while the market had declined sharply in the previous few days, SNDA was holding its own. Its trading range contracted sharply on Monday and its volume was light. All we needed for this stock to make a sharp move to the upside was a solid up day in the overall market, which was long over due for such a day. The chart below is a daily chart of SNDA going back a month.




As you can see on the daily chart, on Tuesday, SNDA headed much higher. This was a classic directional move, that lasted a couple days, and exhibits many of the characteristics we look for in our day trades. See the intraday chart below.



As you can see, you could have applied any type of opening range breakout strategy to capture this one directional move for the day.

Scott Cole
www.bestdaytradingstocks.com

Stocks manage modest follow through

U.S. stocks made modest gains today, after Tuesday's huge run up. The market now sits within close proximity to overhead resistance in the form of a moving average I utilize as part of my analyses. With today's narrow range, and the fact that the averages closed near where they opened, the trading pattern suggests that Thursday or Friday could be a sizable day to the downside. But, since the market was so oversold before yesterday's rally, I am not sure we will get a huge move to the downside. What would be a clear sign of strength is if the market can rally on Thursday, and ultimate close above today's highs. If we could then close above last week's highs, then we might be on to something!

With all this in mind, be careful trading the next couple days!

Scott Cole
www.bestdaytradingstocks.com

We Were Due!

We finally got that overdue stock rally we've been looking for! The question now is, will it last? I can tell you with some confidence that Friday's low will hold for a while. Whether this turns out to be just a Bear Market rally, or the beginning of a new Bull Market, only time will tell. In either case, for a significant rally to occur from here, we need to see a nice follow through day in the next week or so. And, we certainly do not want to see a 100+ point down day tomorrow.

Today's rally was sparked by a memo sent out to Citigroup employees that indicated the bank is on pace to make a profit in the current quarter, for the first time since 2007. The market viewed that very positively, as the financials opened strongly to the upside. Later in the day Barney Frank suggested that the uptick rule may be back in place in the near future. I really don't know if that will have much impact or not, but the market seemed to take it as an extra positive.

In any event, the S&P 500 closed up well over 700 today, which was a supposed magic number on the downside. The first area of resistance is in the 740-745 range, which marks the November low. Beyond that, 775-800 will provide significant resistance.

Heading into today, we had a number of stock picks that were set up nicely for a day trade to the upside, that were presented in our daily newsletter. Take the time to receive a two week free trial at www.bestdaytradingstocks.com.

Today's rally in stocks essentially marked the end of the recent uptrend in Gold and Silver, and I am not sure these markets will test their February highs any time soon. Elsewhere, commodities were mixed, with some in agriculture and copper, but crude oil was lower, which was a bit surprising. The Dollar was flat, while Treasuries were a little lower.

Scott Cole

Stocks Continue Slide Downward

U.S. Stocks chopped around for most of the session, before late in the day they once again decided that the path of least resistance was to the downside. Except for the $41 billion merger between Merck and Schering Plough, there was no other news able to support the market.

One disturbing trend I have noticed in recent trading sessions is that the Nasdaq stocks are selling off harder than the Dow and S&P 500. I guess this just could be due to the fact that the financials have gone about as low as they can go. The big bellweather tech stocks, ie, GOOG, AAPL and RIMM are leading the way down, especially Google.

As I mentioned yesterday, I think we are due for a solid bounce, or at least a couple months where the averages trend sideways. With today's down market, the readings on the ADX climbed again, and it will continue to do so, even if the market heads a little higher from here over the next few days. Furthermore, the sentiment is overwhelmingly negative, as another pundit suggested that 600 is the next target level for the S&P 500 and beyond that, 500. 500? Wow, I can remember the first time it broke above that level in 1995! Well, we have quite a ways to go to get down there, although at the rate we are going, and with the continued blundering in Washington, maybe it won't be long until we get down there.

Still, even though we are over due for a bounce, don't run out and buy any stocks yet! You don't have to pick tops and bottoms to make good money. It is the meat in the middle of a trend that will line your pockets, and the trend remains down until further notice.

As for daytraders, since we are due for an upside move, be a little cautious. Today was a topsy turvy day that resolved itself to the downside, but the choppiness was brutal for daytraders looking to capitalize on big directional moves. These may be coming to the upside soon.

Scott Cole
www.bestdaytradingstocks.com

Daytrading Thoughts for Monday

Due to the significant declines in the market over the last couple of weeks, our pool of reasonable stocks to daytrade from the long side has evaporated substantially. I had to expand my normal stock screens just to come up with a list of potential trades for Monday, otherwise, I was faced with no candidates based on my normal screens.

On the other hand, with the averages in such a steady downtrend, we need some sort of rally to present some better shorting opportunities as well.

This may suggest that we are due for some kind of a rally, so watch out for that. This rally will come as a result of sheer exhaustion on the part of the sellers, rather than from any demand for stocks. However, even if that is the case, there is the chance of a decent rally, as the oversold tensions get tighter and tighter.

The bottom line is you need to be very cautious with your trading in the coming days! This is not the time to swing for the fences!

Scott Cole
www.bestdaytradingstocks.com

Stocks end brutal week with mixed day

U.S. Stocks closed on a mixed note Friday, ending a tumultuous week that saw the major averages close at 12 year lows. This type of downswing will likely end when the sellers are exhausted, rather than with any significant economic or political catalyst. The bottom line is that investors are not willing to step in and buy stocks when there is so much uncertainty coming out of Washington, and economic data continues to be weak.

Today, the government reported that the U.S. economy shed another 652,000 jobs in February, and the January and December reports were revised downward sharply. No real surprise there. The fact that the report was not worse allowed the market to rally initially, before selling off. Late in the session, the shorts covered and squared their positions for the weekend.

More to come!

Scott Cole
www.bestdaytradingstocks.com

Stocks drop again as Bear Market roars back

Well, Wednesday was a one hit wonder, as the Bear returned with a vengeance on Thursday, wiping out of Wednesday's gains, as the Nasdaq finally closed below its November closing low. I felt like today would be a quiet day, but news that GM can not continue to operate as a going concern if its viability plan does not work. Can we rally from here? Yes, we can, but it will take some sort of big surprise or catalyst.

Hopefully, if you had any long positions yesterday, you closed them out at the close. The market opened sharply lower today, then continued lower. Not a good idea to hold short term long positions over night in this type of market.

You will notice that there are not many picks for Friday's trading. The market is deeply oversold, so it is possible for a quick turnaround, especially on an intraday basis. However, there are not many stocks offering decent buy setups either, since few are showing much strength in the face of this huge down turn.

Friday we have the release of the February employment report watch for that and see how the market reacts!

Good Trading!

Scott Cole
www.bestdaytradingstocks.com

Stock Index Futures Pointing To Lower Open

U.S. Stock index futures are trading sharply lower ahead of the open on Thursday, as Europe and the UK cut interest rates. This is helping to boost the Dollar Index to three year highs, but its overall gains have been somewhat muted as it is still trading within its recent ranges against the British Pound and the Euro.

No real surprises in jobless claims data out this morning, but productivity figures contracted.

The main news out is that GM's auditors suggest its viability as a going concern is very questionable. Without continuing help from the government, GM will need to start liquidating assets. That is what is pressuring futures prices this morning.

Obviously, many stocks will open to the downside today, but I am not sure there will be much follow through considering that the employment report is due out tomorrow. With that in mind, day traders can likely expect a choppy session with a downward bias. However, if Tuesday's lows are violated, watch for more weakness.

I will say that at this point, sentiment is quite bearish and the mood is bleak. Watch out for any upside surprises that could potentially spark a sharp rally, as a lot of short sellers will get caught with their pants down. Until then, however, the trend is down, and rallies will be viewed as shorting opportunities until we finally get a follow through rally.

More to come!

Scott Cole

Stocks Finally Manage Some Gains

Dear Trader,

Finally, the losing streak for the market is over! But, unfortunately, stocks closed well off their highs for the session. Obviously, the general bias of the market was to the upside. The news out of China indicating some signs of a recovering economy helped boost some of our long choices at the open. This resulted in some big gaps for a couple of our picks, but the pullback in the last 30 minutes of trading resulted in muted gains.

Since we are in a down market, it is generally not a good idea to maintain long positions overnight, until the market proves it can sustain a rally for more than a few days on occasion.

Watch for a quiet session on Thursday ahead of Friday's employment report.

Good Trading!

Scott Cole

Stocks decline in less volatile trade

U.S. stocks closed lower again Tuesday, but in less volatile and quieter trade, as Treasury Secretary Geithner finally made another appearance, this time in front of the House Banking committee. Fed Chairman Bernanke spoke in front of a Senate panel as well. The overall reaction in the financial markets was muted. Geithner was making the case for the Obama budget, but he was mainly preaching to the choir.

In other markets, the Dollar continued a bit higher, while the precious metals sold off sharply, as traders in Gold and Silver are all trying to exit through the same door. Gold has pulled back nearly $100 in just over a week. With the Dollar trading higher, there is no real reason for most to own Gold at this point. Whether this is a pullback within a long term uptrend has yet to be determined. A significant breakout above $1,000 is likely what is needed for that market to go much higher.

Watch out for the ADP employment survey on Wednesday.

Scott Cole

Stocks Sink on Continued Global Economic Worries

The bear market in global equities sank to new lows on Monday, as the Dow Jones closed at its lowest level since Spring 1997. Yep, if you began investing in 1998, you are in the red, dividends not withstanding.

As a result of today's significant drop, our daytrading picks showed some significant profits. These included UPL, OIH, RIMM and CPO. For Tuesday, the best set ups are to the long side. For more info, go to our website below to see how you can sign up for a free 2 week trial.

Scott Cole

Stocks down sharply at Mid-day on Monday

It is near mid-day in U.S. trading, and stocks are considerably weaker once again, as it was announced over the weekend that the government needed to invest another $30 billion in AIG. U.S. stocks opened lower, and are trading at their lows on the session, down about 25 points on the S&P 500 to around 710. The Dollar is rallying strongly as a result of the global meltdown, particularly against the British Pound. Commodities are getting pounded in mid-day trading, with crude oil down about 10% on the session.

As I mentioned yesterday, I started a new daily newsletter covering the best stocks to daytrade. You can find out more information at the link below!

Scott Cole

Daytrading Newsletter

We have just started our daily daytrading newsletter that will identify the best stocks to daytrade, and provide subscribers with a system for trading them. For more details, go to

Scott Cole

Tips to Improve Your Day Trading Profits

In the current financial climate, it has paid virtually no one to hold sizable positions in the markets for more than a few days. Therefore, traders have continually focused on capitalizing on the volatility in the markets through holding shorter term positions. With that in mind, day trading is fast becoming the weapon of choice to profiting in the markets.

Unfortunately, most new traders continue to use old ideas and techniques in an effort to grab profits quickly. In this article, I will provide a few trading tips that professionals use to find the maximize their day trading profits.

First of all, it is important that you determine how you want to trade, and what markets you want to trade. Due to its excellent liquidity, E-Mini S&P futures are a popular trading vehicle for many day traders. The Forex markets are another popular vehicle, as the major currencies provide excellent liquidity, and can be traded around the clock. Some traders like to be diversified and trade stocks, currencies and futures. The key though is to focus only on those markets and stocks that allow sufficient liquidity and volatility. You want to trade a market that moves, but one that allows you to get in and out of your positions with minimal slippage.

Next, you must determine whether you want to be a scalper, making multiple trades throughout the day in an attempt to capture small profits within a few minutes, or more of a position trader looking to capitalize on sizable directional moves. Generally speaking, I think that latter idea is an easier concept, as it does not force you to sit in front of the computer all day long. Once you enter a position, you can adjust your orders on an hourly basis, then decide whether you want to exit at the close or hold overnight.

No matter what style of trading you decide on, it is critical that you pay close attention to the market action leading up to each trading day. You must view the market from multiple time frames to detect any underlying trends. Ultimately, a market will revert to its underlying trend at some point. Therefore, even if you are trading off of a 5 minute chart, you will want to view daily charts and 60 minute charts and even 15 to 30 minute charts, to have a good feel for the trends that may impact market direction for the day.

Once the trading day begins, it really makes no sense to start trading right after the market opens. You want to monitor the price action for a while to determine whether the market will trade in a choppy trading range, or whether it will trade in one direction. For individual stocks and stock index futures, I prefer to let the market trade for at least 30 minutes to get an idea of how the market will trade, and maybe even up to 45 minutes. I want to monitor how a market reacts when it breaks out to new highs or lows for the session, and I want to monitor the volatility of the market during that time frame. If the market trades within a few wild swings during that time frame, it likely will be a range bound day. If it seems to creep higher or lower with little retracement, then it may be a one direction trading day.

For stock index futures and individual stocks, I like to pay close attention to tape indicators such as the Tick, Trin, other market indexes and advances versus declines to get a feel for what the underlying market is doing. For instance, if the tape indicators are weak while the S&P futures are making new highs, I may want to consider taking a short position once the futures start to weaken. If they are strong, I will use an opening range breakout and try to hold the position the entire trading day.

As I mentioned, the Forex markets are very popular for day traders. However, you must remember to trade when these markets are most liquid. For instance, the Japanese Yen will be most liquid when it is evening here in the U.S. Economic news coming out of Japan will greatly influence the direction of that currency, and that news will come out after U.S. trading hours.

I can’t emphasize enough the need to use stop orders in your trading to protect yourself from steep losses. No matter what style of trading you use, you must know when you will exit if the position goes against you. With that in mind, it is a good idea to develop an overall trading plan before you start to trade, rather than just trade by the seat of your pants.

These are just a few common sense tips that you should employ in your day trading. By applying these tips, you will avoid many of the common pitfalls in day trading.

Scott Cole

Classic Day Trading Opportunities

As the stock market rallied on the back of Fed Chairman Bernanke's optimistic comments, today's trading provided a number of excellent day trading opportunities utilizing an Opening Range Breakout Strategy. Check out the chart of Morgan Stanley (MS), below.

At about 10:30 this morning, MS broke out from its early trading range just below $20. The stock trended higher all session and closed just over $22. This provided a huge 10% move on the day, after the breakout. These opportunities to the upside have been rare as of late, but you likely could have found some good opportuntities to the short side. MS meets most of our qualifications for daytrading opportunities, so check it out!

Scott Cole

Stocks End Week on Down Note, Gold Surges

U.S. stocks closed lower on Friday in a relatively volatile session as traders expressed little confidence in the Obama administrations current plans to turn around the economy, financial system and real estate market. In the afternoon, the Dow was down over 200 points shortly after Senator Dodd suggested that some banks may face nationalization. A while later, the administration indicated that this is not on the table presently, and this sparked a rally that allowed the Dow to crawl all the way back to breakeven. However, the weight of the market fell on itself in the last hour, and the Dow closed lower by 100 points.

The Dow and the Russell 2000 were the weakest of the major averages I follow. The Nasdaq 100, lead by big cap tech stocks, actually finished higher. In the face of recent leg down, I've been impressed by the ability of Google and a few other tech stocks to hold up during the current downtrend.

So far, it is clear that traders and investors are not convinced that the Obama stimulus plan, the Obama housing plan, and the Geithner TARP plan will lead to a rebound in the economy anytime soon. Most traders, particularly those in the bond pits, revile the current plans as hints of socialism. No one is confident in the governments ability to run a bank, since our government (and most for that matter) is incapable of balancing its own check book. Traders also do not like the idea of limited pay for executives in banks that receive TARP money. The premise there being that such a bank will be unable to attract top talent, talent needed to turn around a bank in financial difficulty.

So, we head into another week with Main Street sentiment quite low, and Wall Street sentiment still anticipating that a sharp rally is imminent. As such, it is my view that until we start seeing some positive news, or less negative news, the market will continue to leak oil, SLOWLY. The trend is down, so if you are short the market, stay that way until the market tells you that the path of least resistance is no longer to the downside.

In other markets, Gold and Silver once again surged to new highs, as these are basically the two new world currencies. These markets are both extended, and a few people are calling for much higher prices down the road, but these views are balanced out by those that feel the stock market is due for a rally. Most other commodities were flat to lower on Friday. Treasuries managed to rally in the face of a weak stock market. There was some volatility in the Forex markets in the afternoon, reflecting the Dodd comments and the White House comments. Overall, the Dollar was lower on the day.

Look for more announcements out of Washington over the weekend or early next week as the government attempts to calm fears. At the moment though, unless something big comes out of DC, the market will continue to head lower.

Scott Cole

New Bear Market Lows for Dow 30 Stocks

Well, the market did not have a wild ride today. There were no sirens going off when the Dow penetrated the November lows, and closed at a new closing low for this Bear Market. This is not the kind of successful test you typically see when a market wants to reverse a downtrend. The analysts on CNBC are convinced you should be buying stocks at these levels (except for Art Cashin). They all talk about dollar cost averaging, and that missing the first big rally of a new bull market will cost you 30%. Utter nonsense. Most people don't invest in the averages and such. Successful traders and investors will trade individual stocks, and they know it is smart to stay patient.

The stock market is leaking oil, slowly. These are the kind of trends that tend to persist a while, and they will kill those traders that keep trying to pick a bottom, even when prices seem low. Richard Dennis once said he lost more money trying to buy Sugar when it was trading under 5 cents than he did on lots of other trades.

A long time ago, in my first foray into futures trading, utilizing the Turtle system, I had shorted cattle and hogs. Normally, these are not the best trending markets. But, I got lucky, and shorted a couple downside breakouts in these markets. After they had gone my way for a week or so, my broker called me up, since I was basically a newbie, and said I should cover, and go long, since both were now cheap. Fortunately, I didn't listen, and those markets kept declining. Finally, they accelerated to the downside, then spiked up and that was the end of the downtrend. I made $6,000 on those positions with a $10,000 account.

The point is, the market is still in a downtrend, and volatility has shrunk quite a bit. Until it tells me otherwise, the direction will continue to be down. The first sign that the market will stop going down and try to turn higher is when we have a big day to the upside on heavy volume, or a big key reversal day. Within a week after that day, we will need to see a big follow through day to the upside. The market has attempted this scenario, and failed, but a new bull market will not start without this occurring.

Scott Cole
www.bestdaytradingstocks.com

Stock Market Vote on Stimulus Package is NO!

U.S. Stock market traders voiced their opinion on the stimulus package signed by President Obama today, and that answer was a resounding NO! The major averages dropped about 4% today, and it was notable that the Dow Jones Transports broke through their November lows. The Dow Industrials barely closed above its November closing low, and it hovers just over 1% above its intraday lows. The other major averages, due to the outperformance of tech and biotech stocks in the last couple months, remain a bit above their November lows, but have broken through support levels that should at least carry them down to the November lows.

As stocks continued to trend lower, their was a flight to quality into Gold, Treasuries and the Dollar. 10 Year Treasury yields were down to 2.65%, down about 30 basis points from their recent highs. I have also noted that the spread between the 10 Year Note and 30 Year Mortgage rates has narrowed to about 200 basis points. This may help to put a floor under real estate prices. However, we still need to end the job losses if we want to see a recovery in real estate.

Aside from Gold and Silver, commodities were sharply lower today, as economic weakness becomes the focus of trading again. Energy prices lead the way lower, and Copper and agricultural commodities were also quite weak.

Tomorrow, Obama is set to unveil is plan to deal with the mortgage issue, and Thursday, Tim Geithner will apparently provide more details regarding the TARP and the banks.

Stay Tuned!

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

You Call This Stimulus?

We now have a few more details regarding the stimulus package that passed through the House and Senate on Friday. After reading some of the general details regarding the package, I am left scratching my head. Where is the stimulus?

Let's start from the top...tax cuts. Whoopdedo! $400 tax credit for individuals and $800 for couples. Wow, that will get me to go right out and buy a new...um, mini-cam? In 2010, it looks like this tax credit may be spread out through the entire year. That will be $7.70 per week. Yay, I can buy a few more beers each week!

The $1,000 child tax credit will be extended to folks that pay no income taxes. In other words, have some free money! First time home buyers get an $8,000 tax credit, and people buying new cars can write off the sales taxes. Ummmm...when we are losing 500,000 jobs each month, who is going to be buying a new house or car?

A good bit of the stimulus will be going to schools and education. Ok, that will help some teachers keep their jobs, and help some students go to college. How exactly does that stimulate the economy and create NEW jobs?

About $38 billion will go to improving our infrastructure. Here in PA, we could probably use that entire figure to fix our crappy highways. Nonetheless, this is the first item that helps create some jobs, but it is a drop in the bucket. Consider this....when you lose 500,000 jobs each month, and each of those jobs pays an average of $30,000, that is a loss of $15 billion in annual income. Unfortunately, most of the jobs being lost are paying a lot more than $30,000!

$42 billion in energy related investments....some of this goes to creating new energy sources, such as wind turbines and next generation batteries. Alot goes to providing a 30% tax credit to homeowners who will upgrade their energy systems at home, up to $1,500. Ok, the problem is, most homeowners are leaking red ink all over the place, and simply can not afford more improvements to their home.

Elsewhere, the bill helps the unemployed and poor pay for health insurance and more food stamps.

What I did not see in the bill was any incentives for businesses or individuals who want to create new businesses. And, the bottom line is that there will be tax INCREASES in the years ahead to pay for this spending bill. We also still need to deal with the real estate and financial system issues. Yet, we have a Treasury Secretary that has not offered up a clear cut plan to spend the remaining $350 billion in the TARP to deal with these issues.

The bottom line is that I do not see how this plan provides any renewed confidence that will lead us out of this deep recession. I suspect that the stock market will weigh in with its vote fairly shortly.

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