U.S. stocks experienced sharp losses on Wednesday on the back of weak December retail sales data, which suggests that corporate earnings will continue to be downgraded. The major averages all broke through their December lows, and appear to be on their way back down to the November lows. Since it has been a couple of months since those lows were made, the market could be setting up for a more reasonable attempt at a successful re-test. However, that is if the re-test occurs relatively soon. If it takes time to get down to those lows, there would likely be a dead cat bounce, and then a new leg down would surely unfold. At this point, all we can do is wait and see.
Another result of today's release of weak economic data was a rally in the Treasury markets. Five year notes actually made new highs today, while the 10 year notes and 30 year bonds also rallied nicely.
Surprisingly, the Dollar held its own today in spite of the weak data. Commodities also managed to hold their own as well.
Next week may be the day of reckoning for this market as Obama takes office. No matter what though, it will take an awful lot to get this economy headed in the other direction. A lot of money has been lost by both individuals and corporations, and it will take a long time to restructure. In the meantime, it will be the government that needs to step in and provide new jobs, as the corporations and small businesses scale back.
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
Wednesday, January 14, 2009
Tuesday, January 13, 2009
Stocks Modestly Higher in Quiet Trade
U.S. Stocks closed modestly higher Tuesday in a quiet trading day as traders found little reason to push the market very far in either direction. REIT's were the leaders to the upside today, showing 4% plus gains in this industry group.
The Dollar traded higher across the board today, with most strength against the British Pound, due to some weak economic reports in the UK. The Dollar is attracting more capital as traders continue to bet that economic recovery will come to the U.S. more quickly than elsewhere. The Yen, however, has been the strongest currency due to the higher savings rate in Japan.
Commodity prices were mixed today. Crude oil recovered from weak trading overnight, as gasoline and heating oil traded strongly upward today. Traders are betting that the weekly supply statistics will show drawdowns in these products, particularly in heating oil due to the cold weather hitting the Midwest, and set to hit the east later this week.
If you are a daytrader, the odds are that the market should trade a bit to the upside on Wednesday based upon the 3 to 5 day cycle. However, don't be surprised if the recent weakness reasserts itself after a pause today. With that in mind, use tape indicators to support your trading decision no matter which direction you favor.
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
The Dollar traded higher across the board today, with most strength against the British Pound, due to some weak economic reports in the UK. The Dollar is attracting more capital as traders continue to bet that economic recovery will come to the U.S. more quickly than elsewhere. The Yen, however, has been the strongest currency due to the higher savings rate in Japan.
Commodity prices were mixed today. Crude oil recovered from weak trading overnight, as gasoline and heating oil traded strongly upward today. Traders are betting that the weekly supply statistics will show drawdowns in these products, particularly in heating oil due to the cold weather hitting the Midwest, and set to hit the east later this week.
If you are a daytrader, the odds are that the market should trade a bit to the upside on Wednesday based upon the 3 to 5 day cycle. However, don't be surprised if the recent weakness reasserts itself after a pause today. With that in mind, use tape indicators to support your trading decision no matter which direction you favor.
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
Monday, January 12, 2009
Stocks, Commodities Slide, Dollar rallies
U.S. stocks continued their early 2009 weakness as prospects for an economic recovery in the first half of the year remain bleak. Traders continued to place bets to the downside as commodities were weak, Treasuries were strong, and the Yen continues to be the strongest currency. It appears as if the markets are setting up for a new leg in the direction of the trends that occurred from September to December.
With this in mind, traders should be very cautious in considering any new long positions in stocks at this point. The market may be due for a slight rally in the next couple of days. After that, watch for a test of the December lows, as it appears that the breakout above the December highs has failed. A break below the December lows will likely result in a new test of the November lows.
In the currency markets, all of the major currencies are within trading ranges against the Dollar. However, a little bit more consolidation should likely be followed by a new breakout to the downside for the Euro, Pound and Swiss Franc. The Yen should test its recent highs against the Dollar, but likely needs more consolidation before a new leg up can begin in earnest.
Commodity markets seem to be renewing their downtrends, lead lower once again by Crude Oil. Not one major commodity posted a worthwhile gain today and many were down sharply.
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
With this in mind, traders should be very cautious in considering any new long positions in stocks at this point. The market may be due for a slight rally in the next couple of days. After that, watch for a test of the December lows, as it appears that the breakout above the December highs has failed. A break below the December lows will likely result in a new test of the November lows.
In the currency markets, all of the major currencies are within trading ranges against the Dollar. However, a little bit more consolidation should likely be followed by a new breakout to the downside for the Euro, Pound and Swiss Franc. The Yen should test its recent highs against the Dollar, but likely needs more consolidation before a new leg up can begin in earnest.
Commodity markets seem to be renewing their downtrends, lead lower once again by Crude Oil. Not one major commodity posted a worthwhile gain today and many were down sharply.
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
Wednesday, January 7, 2009
Stocks Plunge on Weak ADP Jobs Report
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
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
Tuesday, January 6, 2009
Stocks Stage Modest Rally
U.S. stocks managed solid gains today, lead higher by the Nasdaq as far as the major averages are concerned. In regard to industry groups, the REITS and commodities showed significant strength today.
We also had our first breakout in months in a legitimate Ultimate Stock, but there are no other stocks that have the characteristics required by our Ultimate Stock Trading System at this time. At this time, followers of our system are advised to trade very cautiously, as we still must characterize this existing rally as a bear market rally.
For those traders that are seeking daytrades to the long side, the market is presenting much better opportunities to trade strategies that capitalize on large daily directional moves. Our daytrading system trades an opening range breakout type of strategy. A couple of today's big winners included WBD and WDC.
In other markets, the Dollar continued to make gains against the Euro and Yen, while the Pound seems to be putting in a solid bottom against most currencies. The Aussie$ and Canadian $ also showed more strength today.
Most commodities showed strength today as well. This likely explains the strength in the Canadian$ and Aussie$ today, and in the last month. It is interesting to see commodities and the Dollar rally in tandem, along with the stock market. Although many analysts appearing on CNBC do not see immediate economic recovery, the markets seem to be indicating a recovery appearing earlier in 2009.
Stay tuned!
Scott Cole
www.bestdaytradingstocks.com
We also had our first breakout in months in a legitimate Ultimate Stock, but there are no other stocks that have the characteristics required by our Ultimate Stock Trading System at this time. At this time, followers of our system are advised to trade very cautiously, as we still must characterize this existing rally as a bear market rally.
For those traders that are seeking daytrades to the long side, the market is presenting much better opportunities to trade strategies that capitalize on large daily directional moves. Our daytrading system trades an opening range breakout type of strategy. A couple of today's big winners included WBD and WDC.
In other markets, the Dollar continued to make gains against the Euro and Yen, while the Pound seems to be putting in a solid bottom against most currencies. The Aussie$ and Canadian $ also showed more strength today.
Most commodities showed strength today as well. This likely explains the strength in the Canadian$ and Aussie$ today, and in the last month. It is interesting to see commodities and the Dollar rally in tandem, along with the stock market. Although many analysts appearing on CNBC do not see immediate economic recovery, the markets seem to be indicating a recovery appearing earlier in 2009.
Stay tuned!
Scott Cole
www.bestdaytradingstocks.com
Monday, January 5, 2009
Stocks Decline in Dull Trade
U.S. Stocks fell modestly in a slow trading day on Monday, the first "normal" trading day of 2009. Today's trading range in all of the averages was very narrow as volatility continues to contract.
Today's trading activity suggested a hint at a more positive outlook on the economy by some traders. The Dollar rallied sharply against the Euro as Treasury prices plunged. The 10 Year Treasury yield has jumped from a recent low of under 2.1% to the 2.5% level. This has buoyed the Dollar against the Euro and the Yen, which have also weakened against the Canadian $, Aussie $ and the British Pound as of late. The Pound continues to be the weakest currency of the major currencies, but may be putting in a solid bottom at current levels against the Dollar.
The other indicators suggesting a more positive outlook on the economy is in the sector analysis. The strongest industry group today was the resorts and casinos group, up over 10% on the day. Residential construction was also up sharply today, and, in spite of the strength in the Dollar, the energy sector continued to rally. Crude Oil prices approached $50 again today, and held above a recently penetrated downtrend line, dating back to early November. If it is able to penetrate the December 10 high, watch for a rally up to the $60 level.
Ahead this week is the release of the December Employment Report. Any sort of improvement in the data will be very welcome news. After the release of the November report, the market managed to hold its lows and has traded a bit higher since.
The chart below is SQNM, one of today's big movers. This has been a strong stock in the face of the bear market that has gripped the market for over a year. Today, it broke out to a multi-month high on high volume. This is a classic opening range breakout type of trade.
Scott Cole
www.bestdaytradingstocks.com
Today's trading activity suggested a hint at a more positive outlook on the economy by some traders. The Dollar rallied sharply against the Euro as Treasury prices plunged. The 10 Year Treasury yield has jumped from a recent low of under 2.1% to the 2.5% level. This has buoyed the Dollar against the Euro and the Yen, which have also weakened against the Canadian $, Aussie $ and the British Pound as of late. The Pound continues to be the weakest currency of the major currencies, but may be putting in a solid bottom at current levels against the Dollar.
The other indicators suggesting a more positive outlook on the economy is in the sector analysis. The strongest industry group today was the resorts and casinos group, up over 10% on the day. Residential construction was also up sharply today, and, in spite of the strength in the Dollar, the energy sector continued to rally. Crude Oil prices approached $50 again today, and held above a recently penetrated downtrend line, dating back to early November. If it is able to penetrate the December 10 high, watch for a rally up to the $60 level.
Ahead this week is the release of the December Employment Report. Any sort of improvement in the data will be very welcome news. After the release of the November report, the market managed to hold its lows and has traded a bit higher since.
The chart below is SQNM, one of today's big movers. This has been a strong stock in the face of the bear market that has gripped the market for over a year. Today, it broke out to a multi-month high on high volume. This is a classic opening range breakout type of trade.
Scott Cole
www.bestdaytradingstocks.com
Saturday, January 3, 2009
Stock Market Off To Good Start For 2009
The stock market enjoyed a nice rally on the first trading of 2009 Friday. The Dow closed above 9000 for the first time since December 8th, and has broken out to a six week high. In fact, all of the major averages closed at new highs since the late November lows. The only negative to Friday's trading was the light volume, which was to be expected. We'll need to see some follow through next week on heavier volume to get more confidence in this rally.
In other markets, Treasury prices sold off sharply on Friday, breaking some minor technical levels. It appears that at the very least, a near term top is in for these markets, as yields have dropped to unattractive levels compared to equities.
Some of the money flowing out of Treasuries also appears to have found its way back into commodities as of late, especially the energies. The February crude oil contract has rallied over $10 in the last week of trading. Precious metals and some agricultural contracts have also managed to rally in the last week. Watch for continued strength in commodities and weakness in Treasuries if the stock market continues to rally.
Scott Cole
www.bestdaytradingstocks.com
In other markets, Treasury prices sold off sharply on Friday, breaking some minor technical levels. It appears that at the very least, a near term top is in for these markets, as yields have dropped to unattractive levels compared to equities.
Some of the money flowing out of Treasuries also appears to have found its way back into commodities as of late, especially the energies. The February crude oil contract has rallied over $10 in the last week of trading. Precious metals and some agricultural contracts have also managed to rally in the last week. Watch for continued strength in commodities and weakness in Treasuries if the stock market continues to rally.
Scott Cole
www.bestdaytradingstocks.com
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