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
Wednesday, October 21, 2009
Monday, October 19, 2009
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
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
Sunday, October 18, 2009
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
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
Wednesday, October 14, 2009
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
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
Sunday, October 11, 2009
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
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
Tuesday, October 6, 2009
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
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
Monday, October 5, 2009
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
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
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