U.S. Stocks tumbled as the spectre of a deepening recession returned to the economic forefront today, in the form of a weaker than expected ADP jobs report. This report, combined with bearish supply data, also sent the energy markets tumbling, as crude oil tumbled over 10% today. Commodity prices were also weak today, and the Dollar tailed off against the major currencies.
The markets are now worried about the government jobs report due out on Friday. Some economists suggest potential job losses of 750,000 or more for December. However, after today's trading, that figure may already be priced into the market. Any number under 500,000 may actually spark a decent rally.
Yesterday I mentioned that one stock that has the characteristics defined by our Ultimate Stock Trading System broke out to new highs yesterday. We also mentioned that this is a time to be very cautious, and today's market confirmed that. This particular stock sold off significantly today, and would have caused initial stop losses to be triggered.
This brings up an issue with timing when it comes to trading high momentum stocks. We are clearly entrenched in a market that still can be characterized as a bear market. With that in mind, the best time to buy a stock that may try to break out to new highs is AFTER the overall market has pulled back. In the last couple weeks, the market has had an upward bias, and was likely due for a pull back. This will then provide a better opportunity to purchase an Ultimate Stock.
Scott Cole
www.bestdaytradingstocks.com
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