U.S. Stocks closed with modest gains in light trade on Monday as trading shifts to earnings reports. With little economic news over the weekend and during trading today, stocks traded within a narrow trading range, and it appears the market may have tired out a bit after last week's big gains.
Among the big industry performers today were semiconductors, music and video stores, lumber and auto makers.
Low priced stocks were again among the big percentage movers of the day. The exception was Hewitt (HEW) which was up 32% on reports that Aon put in a bid to buy the company. Playboy stock was a big winner today as well. Otherwise, most stocks we look at for daytrading did not move much today. Given that the market has traded up for five consecutive sessions and that the overall trend is still down, we should see some decent daytrades involving short selling over the next couple days.
Scott Cole
www.bestdaytradingstocks.com
Monday, July 12, 2010
Wednesday, July 7, 2010
Stocks Explode to the Upside
U.S. Stocks posted very strong gains today, with no particular reason for the move. Volume was slightly ahead of yesterday, and therefore I give this move some credibility. Stocks rose about 3% across the board today in the major market averages.
Stock index futures were initially suggesting a lower open, but as the market progressed, leading up to the open, they picked up some steam, and the train seemed to gain significant momentum throughout the day. This is the kind of trading day that suggests the possibility of a change in character for the market.
A check of the leading industry groups today indicates that real estate was the big winner on the day. Five of the top twenty groups were real estate related. Other strong performers included banks, technology and casinos.
Going forward, the market still has a big hill to climb to negate the recent downside breakout completely. If the market can push to a close above 1131 on the S&P, then you have a head and shoulders continuation pattern, which is bullish. Ultimately though, I still see a trading range market, but the range just got a bit wider.
Retail sales will be reported tomorrow for June, and that could put a damper on the market. An upside surprise will add to today's momentum.
For daytraders, the pickins could not have been easier. Opening range breakout systems worked beautifully during this move to the upside, since there was not a major upside gap in the major averages. The single best stock from the standpoint of its move for the day, and its volume was Omnivision Technologies. It rose over 11% on the day, and is a nice liquid stock. Check out the chart below.
Scott Cole
www.bestdaytradingstocks.com
Stock index futures were initially suggesting a lower open, but as the market progressed, leading up to the open, they picked up some steam, and the train seemed to gain significant momentum throughout the day. This is the kind of trading day that suggests the possibility of a change in character for the market.
A check of the leading industry groups today indicates that real estate was the big winner on the day. Five of the top twenty groups were real estate related. Other strong performers included banks, technology and casinos.
Going forward, the market still has a big hill to climb to negate the recent downside breakout completely. If the market can push to a close above 1131 on the S&P, then you have a head and shoulders continuation pattern, which is bullish. Ultimately though, I still see a trading range market, but the range just got a bit wider.
Retail sales will be reported tomorrow for June, and that could put a damper on the market. An upside surprise will add to today's momentum.
For daytraders, the pickins could not have been easier. Opening range breakout systems worked beautifully during this move to the upside, since there was not a major upside gap in the major averages. The single best stock from the standpoint of its move for the day, and its volume was Omnivision Technologies. It rose over 11% on the day, and is a nice liquid stock. Check out the chart below.
Scott Cole
www.bestdaytradingstocks.com
Tuesday, June 29, 2010
Daytrading Stocks in a Bear Market
Since the stock market has traded significantly downward over the last month, it appears that another bear market may be underway. While the prevailing Wall Street definition of a bear market is a 20% drop below recent highs, the average bear market tends to drop quite a bit more than that. As of this writing, the S&P 500 has dropped over 14% below its April 23 closing high of 1217.
Daytrading stocks during market declines can prove to be quite the challenge for day traders no matter how much experience they have. This is due to the fact that market volatility has a tendency to increase during most market declines, whether they are short term corrections or the typical bear market. This increase in volatility can wipe out the trading capital of even the experienced trader if they do not adjust their trading.
Generally speaking, after large run-ups in stock prices, or in any market, there will be violent pull-backs. While this increase in volatility can produce some big directional moves, there may be sizable intraday swings that can catch a trader off guard.
So, how does a daytrader prepare for these conditions? Well, most daytraders are not in the business of forecasting market direction, but it can be very helpful to pay attention to some technical and psychological indicators that may provide a clue regarding market direction. Those indicators include price and volume, the TRIN, New 52 week highs and lows, the advance/decline line, the number of bullish vs. bearish investors, etc. A more detailed discussion regarding these indicators is more suitable for another article.
When a daytrader becomes aware that the market character has changed to a bearish tone, then it is time to adjust their thinking when it comes to managing trades. First of all, due to the usual increase in market volatility, the trader should scale back position size. While it may have been reasonable to trade 1,000 shares in a stock during a bull move, 500 shares might be more reasonable in a bear move. The novice trader will think that they are giving up a significant profit opportunity by trading smaller during these sharp down moves. The experienced trader realizes that it is more important to preserve capital for time periods when the market is more predictable and less volatile.
One other issue facing daytraders during these bear markets is that the market has a tendency to have sharp intraday reversals, and there tends to be more sizable opening gaps. As some daytraders actually do carry positions over night, it is a good idea to carry smaller positions over night due to the greater risk of a market reversal.
The daytrader should also be aware that the overall long term market tendency is for stocks to trade higher each day. Therefore, even when the market is in a downtrend, a great many trading days will actually have a tendency to close to the upside. During the current down move, nearly 40% of the trading days have closed to the upside. If a daytrader can recognize that even bear markets will pause for a breather, they will recognize significant opportunities to profit after these brief pauses when the market resumes its downtrend.
Daytraders should also consider trading other vehicles besides individual stocks during bear markets. This is due to the fact that it costs the trader extra to short a stock, since they must first borrow the shares from their broker, and pay interest on those shares, in order to sell the stock short. Therefore, daytraders should consider trading stock index futures, or ETFs that rise when the market falls. It is important that traders consider the cost of their trades, not just whether they make a profit or loss.
While it is definitely possible to trade profitably during bear markets, there are significant pitfalls. For many novice daytraders, it may just be a good idea to sit on the sidelines and observe the market action so that they are prepared for the next bear market downturn when it comes along.
Scott Cole
www.bestdaytradingstocks.com
Daytrading stocks during market declines can prove to be quite the challenge for day traders no matter how much experience they have. This is due to the fact that market volatility has a tendency to increase during most market declines, whether they are short term corrections or the typical bear market. This increase in volatility can wipe out the trading capital of even the experienced trader if they do not adjust their trading.
Generally speaking, after large run-ups in stock prices, or in any market, there will be violent pull-backs. While this increase in volatility can produce some big directional moves, there may be sizable intraday swings that can catch a trader off guard.
So, how does a daytrader prepare for these conditions? Well, most daytraders are not in the business of forecasting market direction, but it can be very helpful to pay attention to some technical and psychological indicators that may provide a clue regarding market direction. Those indicators include price and volume, the TRIN, New 52 week highs and lows, the advance/decline line, the number of bullish vs. bearish investors, etc. A more detailed discussion regarding these indicators is more suitable for another article.
When a daytrader becomes aware that the market character has changed to a bearish tone, then it is time to adjust their thinking when it comes to managing trades. First of all, due to the usual increase in market volatility, the trader should scale back position size. While it may have been reasonable to trade 1,000 shares in a stock during a bull move, 500 shares might be more reasonable in a bear move. The novice trader will think that they are giving up a significant profit opportunity by trading smaller during these sharp down moves. The experienced trader realizes that it is more important to preserve capital for time periods when the market is more predictable and less volatile.
One other issue facing daytraders during these bear markets is that the market has a tendency to have sharp intraday reversals, and there tends to be more sizable opening gaps. As some daytraders actually do carry positions over night, it is a good idea to carry smaller positions over night due to the greater risk of a market reversal.
The daytrader should also be aware that the overall long term market tendency is for stocks to trade higher each day. Therefore, even when the market is in a downtrend, a great many trading days will actually have a tendency to close to the upside. During the current down move, nearly 40% of the trading days have closed to the upside. If a daytrader can recognize that even bear markets will pause for a breather, they will recognize significant opportunities to profit after these brief pauses when the market resumes its downtrend.
Daytraders should also consider trading other vehicles besides individual stocks during bear markets. This is due to the fact that it costs the trader extra to short a stock, since they must first borrow the shares from their broker, and pay interest on those shares, in order to sell the stock short. Therefore, daytraders should consider trading stock index futures, or ETFs that rise when the market falls. It is important that traders consider the cost of their trades, not just whether they make a profit or loss.
While it is definitely possible to trade profitably during bear markets, there are significant pitfalls. For many novice daytraders, it may just be a good idea to sit on the sidelines and observe the market action so that they are prepared for the next bear market downturn when it comes along.
Scott Cole
www.bestdaytradingstocks.com
Stocks Get Hammered as Economic Worries Mount
U.S. Stocks fell sharply today as traders worried about the prospects of a double dip recession. The major averages closed anywhere from down 2.65% for the Dow Industrials to over 4% for the Dow Transports. Tech stocks really took it on the chin. The charts for the S&P 500 and Nasdaq averages look quite ominous, with large breakaway gaps appearing, and the lows of the day penetrating the June and February lows on the S&P 500. In fact, the S&P closed at its lowest level since last November.
This says to me that we have broken out to the downside. In all the other cases where the S&P tested the 1040 area this year, it actually closed above 1060 each time. Today, it closed at 1041 after trading as low as 1035. As such, the neckline is broken in my view, and the next major support area is 950. The only thing that can turn this around is a major upside surprise in the jobs data this week. If it comes in weak, look out below.
Scott Cole
www.bestdaytradingstocks.com
This says to me that we have broken out to the downside. In all the other cases where the S&P tested the 1040 area this year, it actually closed above 1060 each time. Today, it closed at 1041 after trading as low as 1035. As such, the neckline is broken in my view, and the next major support area is 950. The only thing that can turn this around is a major upside surprise in the jobs data this week. If it comes in weak, look out below.
Scott Cole
www.bestdaytradingstocks.com
Stocks To Open Sharply Lower Tuesday
U.S. Stocks are set to open significantly lower Tuesday morning after China reported slower economic growth than previously estimated. Dow Jones Industrial futures are lower by over 110 points as of 8:45 ET, while S&P 500 futures are lower by 14. This equates to 1% losses across the board.
China has been one of the bright spots in the global economy in the last year, but its stock market has plunged sharply, suggesting that the Chinese economy is set for a more significant slowdown. This would put a big dent in the global economic recovery prospects.
For daytraders, this lower open will signify a breakout from the trading range of the last two trading days. This could imply a significant move to the downside, so the easier money should be made on short positions.
Scott Cole
www.bestdaytradingstocks.com
China has been one of the bright spots in the global economy in the last year, but its stock market has plunged sharply, suggesting that the Chinese economy is set for a more significant slowdown. This would put a big dent in the global economic recovery prospects.
For daytraders, this lower open will signify a breakout from the trading range of the last two trading days. This could imply a significant move to the downside, so the easier money should be made on short positions.
Scott Cole
www.bestdaytradingstocks.com
Tuesday, June 22, 2010
Bad Day for Stocks
U.S. Stocks closed sharply lower today after a modest open to the upside. The culprit? Likely the existing home sales data that came out this morning, showing a 2.2% drop in sales in May. This was a bad number because there should have been a surge in sales from the contracts signed in March and April as the tax credit was set to expire. So, an actual drop in sales suggests that the real estate market is still soft. What a surprise! With no jobs being created, how would we expect a significant bounce in the market? The fact is, more declines are likely until this economy really starts to turn around.
Anyhow, the major averages lost anywhere from 0.8% in the case of the Nasdaq 100 to nearly 4% for the Dow Transports. Another culprit again was the Euro, which declined again, but not nearly as much as yesterday.
One big concern among technical analysts is that there is a big head and shoulders top forming on all of the major averages. Some technicians will try to forecast the move if the neck line is broken to the downside as the distance between the neck line and the top of the head. For the S&P 500, this would take the market down under 900. For the Dow Industrials, down to about 8,000.
You can bet that a decline of that magnitude will be forecasting higher unemployment and a double dip recession ahead. However, I am not convinced that we will see that kind of a drop in the market. While I remain cautious, if not bearish, I think the Democrats will do everything in their power to try and fend off a double dip recession to save their asses in November.
On another note, I mentioned yesterday that I did not generally like the overall action in Apple yesterday. Today, however, it bucked the overall market trend and closed higher, although it has formed an inside day on its chart. Keep an eye on Apple...if it fails up here, you can bet the overall market is in trouble.
Scott Cole
www.bestdaytradingstocks.com
Anyhow, the major averages lost anywhere from 0.8% in the case of the Nasdaq 100 to nearly 4% for the Dow Transports. Another culprit again was the Euro, which declined again, but not nearly as much as yesterday.
One big concern among technical analysts is that there is a big head and shoulders top forming on all of the major averages. Some technicians will try to forecast the move if the neck line is broken to the downside as the distance between the neck line and the top of the head. For the S&P 500, this would take the market down under 900. For the Dow Industrials, down to about 8,000.
You can bet that a decline of that magnitude will be forecasting higher unemployment and a double dip recession ahead. However, I am not convinced that we will see that kind of a drop in the market. While I remain cautious, if not bearish, I think the Democrats will do everything in their power to try and fend off a double dip recession to save their asses in November.
On another note, I mentioned yesterday that I did not generally like the overall action in Apple yesterday. Today, however, it bucked the overall market trend and closed higher, although it has formed an inside day on its chart. Keep an eye on Apple...if it fails up here, you can bet the overall market is in trouble.
Scott Cole
www.bestdaytradingstocks.com
Monday, June 21, 2010
So Goes the Euro, So Goes The Stock Market
Stocks opened strongly this morning on the back of news over the weekend that China was going to finally start letting the Yuan float a bit in the currency markets. This suggested that the Chinese government was confident about the global economy going forward. The Dow Industrials traded as high as up 150 points in early trading, but after noon, the Euro began its descent, and stocks followed. Financials lead the way down.
The chart pattern resulting from today's action is an outside day, and I would consider calling it a key reversal if the volume was higher. But, volume was actually very light compared to Friday. This suggests that the selling pressure was not all that significant.
Now, what I really did not like about the market today was how Apple traded. It made a new all time high over $279, but ended up making a three day low before closing at about $270. Again, the volume was a little bit light, but it looks like Apple may need to consolidate after a $30+ move in the last week or so. Since Apple is a leader of this market, it is worth paying attention to.
The bottom line is that stocks are still being held hostage by the movement in the Euro.
Scott Cole
www.bestdaytradingstocks.com
The chart pattern resulting from today's action is an outside day, and I would consider calling it a key reversal if the volume was higher. But, volume was actually very light compared to Friday. This suggests that the selling pressure was not all that significant.
Now, what I really did not like about the market today was how Apple traded. It made a new all time high over $279, but ended up making a three day low before closing at about $270. Again, the volume was a little bit light, but it looks like Apple may need to consolidate after a $30+ move in the last week or so. Since Apple is a leader of this market, it is worth paying attention to.
The bottom line is that stocks are still being held hostage by the movement in the Euro.
Scott Cole
www.bestdaytradingstocks.com
Sunday, June 20, 2010
Weekly Stock Market Review
U.S. stocks closed modestly higher on Friday, but up nicely for the week overall. The major averages posted gains on the week ranging from about 2.3% to over 3% for the Nasdaq Composite. This was in spite of some weak economic data, particulary in housing. It is clear though that stocks are trading in line with the performance of the Euro, which was higher on the week. The Euro futures ended the week just under 1.24, after trading last week under 1.20. For now, the correlation is very strong, so be aware of any major weakness in the Euro.
Due to the strong performance of stocks over the last two weeks, many stocks have broken out to new highs. In fact, my list of high momentum stocks, based upon my current filters, has expanded quite a bit. This is an indication of a market that has some strength.
In the week ahead, we'll see some more important economic data, but the bottom line is that stocks will be most impacted by issues in Europe and the performance of the Euro.
As the market has generally been to the upside for a few days, the best daytrading opportunities are likely to the short side over the next couple of days.
Scott Cole
www.bestdaytradingstocks.com
Due to the strong performance of stocks over the last two weeks, many stocks have broken out to new highs. In fact, my list of high momentum stocks, based upon my current filters, has expanded quite a bit. This is an indication of a market that has some strength.
In the week ahead, we'll see some more important economic data, but the bottom line is that stocks will be most impacted by issues in Europe and the performance of the Euro.
As the market has generally been to the upside for a few days, the best daytrading opportunities are likely to the short side over the next couple of days.
Scott Cole
www.bestdaytradingstocks.com
Monday, June 14, 2010
Stocks end Monday Mixed
U.S. stocks closed mixed on Monday after trading higher early in the morning. The S&P 500 ran into resistance at about 1105, and subsequently pulled back to close modestly lower. Financial stocks apparently started heading lower midway through the trading day, and they ultimately lead the market off of its highs. While Dow Industrials and S&P 500 closed modestly lower, the Russell 2000 and Dow Transports managed decent gains on the session. The Nasdaq brothers were essentially flat on the session.
One issue affecting financials may have been another downgrade for Greek debt, which is now viewed as junk status.
Today's top industry groups included consumer services, textiles, sporting goods stores, music and video stores and recreational vehicles. I would say those are primarily economically sensitive groups, so more money is being bet on a recovery.
Important economic data such as new home sales, PPI and CPI are due out this week, and this is options and futures expiration this week, so watch for volatility.
Scott Cole
www.bestdaytradingstocks.com
One issue affecting financials may have been another downgrade for Greek debt, which is now viewed as junk status.
Today's top industry groups included consumer services, textiles, sporting goods stores, music and video stores and recreational vehicles. I would say those are primarily economically sensitive groups, so more money is being bet on a recovery.
Important economic data such as new home sales, PPI and CPI are due out this week, and this is options and futures expiration this week, so watch for volatility.
Scott Cole
www.bestdaytradingstocks.com
Sunday, June 13, 2010
Weekly Market Review
U.S. Stocks managed to close with modest gains on Friday, which allowed the market to have a positive close for the week. Among the major averages, the Dow Transports lead the way with a weekly gain of almost 4%. This compares to a gain of only 1.1% for the Nasdaq Composite. The Dow Industrials and S&P 500 were both up over 2% for the week.
Among the best performing industry groups for the week were the REITs as well as copper and silver mining stocks. All of these groups are a pure bet on economic recovery. With that in mind, it is a good idea to pay attention to these groups going forward.
This week we have a few important economic reports such as new home sales and the inflation data. This is also options and futures expiration week, so be aware of the potential for volatility.
Scott Cole
www.bestdaytradingstocks.com
Among the best performing industry groups for the week were the REITs as well as copper and silver mining stocks. All of these groups are a pure bet on economic recovery. With that in mind, it is a good idea to pay attention to these groups going forward.
This week we have a few important economic reports such as new home sales and the inflation data. This is also options and futures expiration week, so be aware of the potential for volatility.
Scott Cole
www.bestdaytradingstocks.com
Tuesday, June 1, 2010
Stock Market Commentary
U.S. Stocks closed lower on Tuesday after a volatile session that involved a 200 point range in the Dow. In actuality, the Dow Jones was the best performer of the major averages, which is not usually a good sign. While the Dow Jones sold off by a mere 1.1%, the Russell 2000 was down over 3%. Tech stocks helped the bigger averages, as Apple closed higher by $3.95 per share.
Energy stocks were the big losers of the day, especially the oil and gas drillers. Anything to do with energy that is pulled from the earth took it on the chin today, due to the news that BP's top kill strategy failed to slow the oil leak in the Gulf over the weekend. As a result, the oil and gas drillers as well as mining stocks were taken out to the woodshed. Many of these stocks have lost nearly 50% of their value since the oil rig explosion over a month ago. For day traders that look for short selling opportunities, these stocks and related ETFs have provided big gains in recent days.
Based upon today's action, it looks like the market will likely test the May 25 lows. This may take another week, but a less than stellar employment report on Friday could be the catalyst.
I noted on CNBC today that Art Cashin indicated that mutual fund cash levels are extremely low. As such, any mutual fund redemptions by investors will result in more stock selling.
Scott Cole
www.bestdaytradingstocks.com
Energy stocks were the big losers of the day, especially the oil and gas drillers. Anything to do with energy that is pulled from the earth took it on the chin today, due to the news that BP's top kill strategy failed to slow the oil leak in the Gulf over the weekend. As a result, the oil and gas drillers as well as mining stocks were taken out to the woodshed. Many of these stocks have lost nearly 50% of their value since the oil rig explosion over a month ago. For day traders that look for short selling opportunities, these stocks and related ETFs have provided big gains in recent days.
Based upon today's action, it looks like the market will likely test the May 25 lows. This may take another week, but a less than stellar employment report on Friday could be the catalyst.
I noted on CNBC today that Art Cashin indicated that mutual fund cash levels are extremely low. As such, any mutual fund redemptions by investors will result in more stock selling.
Scott Cole
www.bestdaytradingstocks.com
Tuesday, May 25, 2010
U.S. Stocks Set to Plunge at Open
U.S. stock markets are indicated over 2% lower this morning on concerns that North Korea is flexing its muscles in the east and fears that Europe is not getting its financial house in order. While North Korea is likely just playing games again, the 3-month LIBOR has been spiking higher in the last couple weeks, and is presently trading at 13 month highs. The S&P 500 looks to be breaking through more important levels on the downside this morning, which suggests there is more downside to come.
So, is this a correction in a new bull market dating to last year, or the resumption of a secular Bear Market that began in 2000? I believe it is the latter, which does not bode well for the economy.
Scott Cole
bestdaytradingstocks.com
So, is this a correction in a new bull market dating to last year, or the resumption of a secular Bear Market that began in 2000? I believe it is the latter, which does not bode well for the economy.
Scott Cole
bestdaytradingstocks.com
Thursday, May 20, 2010
Stocks to Open Sharply Lower
Stocks are set to open sharply lower this morning...more confusion out of Europe initiated the selling and now a weekly jobless claims number that rose 25,000 to 471,000 claims.
Scott Cole
Best Daytrading Stocks
Scott Cole
Best Daytrading Stocks
Wednesday, May 19, 2010
Shorts Still in Charge
Short sellers are still in charge of this stock market, but we may be due for a modest bounce here, before we test that freak low from two weeks ago. If you have to trade, be very careful with your long trades at this point. When the market is in a downtrend, it is best to take profits at the close in long positions.
Scott Cole
www.bestdaytradingstocks.com
Scott Cole
www.bestdaytradingstocks.com
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