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Best Stock To Day Trade

Travelzoo was today's best stock to day trade. At bestdaytradingstocks.com, we like to use an opening range breakout strategy after identifying potential stocks for day trading opportunities. Check out the chart below to see what we mean!

Scott Cole
www.bestdaytradingstocks.com

Stock Market Commentary

Yesterday was a true selling day for the market, with all of the averages down at least 1.5%. The reasons for the decline are of no matter. It is simply a warning shot that the market is due for a correction. I found it interesting that the futures pointed to a rebound early this morning, but slowly declined into the open, and now the market is down as I write this about 11 am. If there is follow through today, then yesterday's action suggests a correction is at hand. If another true selling day occurs within the next week, then the easier money will likely be made on the short side. For now, it is a good idea to consider both long and short trades when daytrading to hedge your bets.

Scott Cole
www.bestdaytradingstocks.com

Stock Market Commentary

Yesterday's trading action suggests a short term top may now be in place for the market. With the exception of the Dow Jones Industrials, all of the major averages were down at least 1%. Also, yesterday's close was below the previous four closes. When that occurs the day after a new high is made, odds are that a top is in place in the near term.

Daytraders should pay attention to a potential change in character for this market. While yesterday is just one trading day, if it's action is not reversed in the next few days, then the market is likely heading for a bit of a correction. As a result, the best opportunities will involve short positions or long positions within ETFs that short the market.

Scott Cole
www.bestdaytradingstocks.com

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

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

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

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

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

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

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

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