U.S. Stocks sold off sharply on Friday on the back of some more weak economic news suggesting that the 3rd Quarter GDP is being followed by disappointment in the 4th Quarter. The Nasdaq closed below its October 1st close. The Russell 2000 and Dow Transports accomplished that feat on Wednesday. Volume was heavy. This market looks like it has further to go on the downside.
More to come on the weekend.
Scott Cole
www.bestdaytradingstocks.com
Friday, October 30, 2009
Thursday, October 29, 2009
Stocks Rally on GDP Report
U.S. Stocks rallied after the government reported GDP growth in the 3rd Quarter of 3.5%. Combined with the old weak dollar trade, and an oversold market, the stock market had plenty of reason to rally today and squeeze some shorts in the process. This may carry through for a couple days, but it is notable that volume today was lighter than yesterday.
If you are a daytrader, you should have been ready for a decent bounce to the upside. The market was clearly oversold after a relatively sharp pull back in the last week. Then, all you had to do was look for some stocks that were gapping higher on the open, or had decent trading set ups suggesting a bias to the upside.
Medifast (MED) was one of those stocks poised for an upside move. After a sharp pullback in the last week, it seemed to find support yesterday and traded within a narrow range, its narrowest in four sessions. It then opened strongly this morning and traded up sharply in the first half hour. This was a tough trade to take due to the fact that the stock moved well over a dollar in the first half hour. It then broke out of its early range and traded up over another dollar above its breakout price, before settling into a trading range for the rest of the day. See the chart below.
Scott Cole
www.bestdaytradingstocks.com
If you are a daytrader, you should have been ready for a decent bounce to the upside. The market was clearly oversold after a relatively sharp pull back in the last week. Then, all you had to do was look for some stocks that were gapping higher on the open, or had decent trading set ups suggesting a bias to the upside.
Medifast (MED) was one of those stocks poised for an upside move. After a sharp pullback in the last week, it seemed to find support yesterday and traded within a narrow range, its narrowest in four sessions. It then opened strongly this morning and traded up sharply in the first half hour. This was a tough trade to take due to the fact that the stock moved well over a dollar in the first half hour. It then broke out of its early range and traded up over another dollar above its breakout price, before settling into a trading range for the rest of the day. See the chart below.
Scott Cole
www.bestdaytradingstocks.com
Wednesday, October 28, 2009
Stock Market Continues Sell-Off
U.S. Stocks closed at their lows of the day today, with their worst losses since October 1st. The worst performer among the major averages was the Russell 2000, down over 20 points on the session. This took the average below its October lows, suggesting a significant double top is in place.
The Dow Jones Industrial Average continues to hold up a bit better than the rest of the averages, down only 1.21% today. By contrast, the Nasdaq Composite was off over 2.6%.
The culprits today were a stronger Dollar, which rallied for a 5th day in a row, and a weaker than expected report on new home sales, which were reported to be down over 3% in September.
For intermediate term traders who trade high momentum stocks, today's activity should have you 100% in cash if you aren't there already. Daytraders should find the going easier on the short side than on the long side until we see a move to the upside that is at least as strong as today's move was to the downside.
Stay Tuned!
Scott Cole
www.bestdaytradingstocks.com
The Dow Jones Industrial Average continues to hold up a bit better than the rest of the averages, down only 1.21% today. By contrast, the Nasdaq Composite was off over 2.6%.
The culprits today were a stronger Dollar, which rallied for a 5th day in a row, and a weaker than expected report on new home sales, which were reported to be down over 3% in September.
For intermediate term traders who trade high momentum stocks, today's activity should have you 100% in cash if you aren't there already. Daytraders should find the going easier on the short side than on the long side until we see a move to the upside that is at least as strong as today's move was to the downside.
Stay Tuned!
Scott Cole
www.bestdaytradingstocks.com
Tuesday, October 27, 2009
Mixed but Weak Day for Stocks
The Dow Jones Industrial Average finished with marginal gains today. You would have thought the rest of the market was close to unchanged as well. Not the case! Most of the other major averages were down at least 1%, and once again market breadth was weak! At the moment, day traders can definitely make money on the short side! Follow the weak stocks and look for good set ups or major breakouts!
The chart of SNDA below is a good example of an opening range breakout that resulted in an all day trending move.
Scott Cole
www.bestdaytradingstocks.com
The chart of SNDA below is a good example of an opening range breakout that resulted in an all day trending move.
Scott Cole
www.bestdaytradingstocks.com
Monday, October 26, 2009
Stock Market Weak Again
U.S. Stocks closed lower on Monday, following through on Friday's losses. We have not seen the Monday follow through to the downside very often in this bull market that began in March. This suggests there is more room to the downside. On the S&P 500, this is major trend line support from the March and July lows at around the 1050 to 1055 level. A breach of that on significant volume should result in a test of the October lows at around 1020.
As mentioned in my earlier post, the main culprit was a strong Dollar. This resulted in an unwinding of the commodity trade, as Gold and Crude Oil were both weak today. The stock market has been propped up by the liquidity injected by the Fed and Treasury since last year. Some better than expected earnings reports added some more fuel to the rally, but it looks like it may be running out of steam. Some companies are now getting hit even when they meet expectations or slightly out perform.
Another issue facing the market, which is propping up the Dollar, is higher interest rates. The yield on the 10 Year Treasury Note settled at around 3.55% today. A further rise in yields will result in multi-month highs. There is a great deal of supply of treasuries coming this week, which could pressure prices further.
The bottom line is that you simply can not have a falling Dollar with rising stocks and rising commodities for very long. Something eventually has to give. One commentator brought to mind the 1987 crash today. That event was preceded by a weak dollar with low interest rates that eventually had to start going up. When interest rates spiked, the stock market collapsed.
Earlier this year, the 10 Year Note approached 4% yields and I believe went above those levels briefly. If you see that again, and they stay above that level for an extended period of time, watch for a big drop in stocks.
As I've mentioned, day traders need to be aware of shorting opportunities in the market now, rather than just focus on the long side.
Scott Cole
www.bestdaytradingstocks.com
As mentioned in my earlier post, the main culprit was a strong Dollar. This resulted in an unwinding of the commodity trade, as Gold and Crude Oil were both weak today. The stock market has been propped up by the liquidity injected by the Fed and Treasury since last year. Some better than expected earnings reports added some more fuel to the rally, but it looks like it may be running out of steam. Some companies are now getting hit even when they meet expectations or slightly out perform.
Another issue facing the market, which is propping up the Dollar, is higher interest rates. The yield on the 10 Year Treasury Note settled at around 3.55% today. A further rise in yields will result in multi-month highs. There is a great deal of supply of treasuries coming this week, which could pressure prices further.
The bottom line is that you simply can not have a falling Dollar with rising stocks and rising commodities for very long. Something eventually has to give. One commentator brought to mind the 1987 crash today. That event was preceded by a weak dollar with low interest rates that eventually had to start going up. When interest rates spiked, the stock market collapsed.
Earlier this year, the 10 Year Note approached 4% yields and I believe went above those levels briefly. If you see that again, and they stay above that level for an extended period of time, watch for a big drop in stocks.
As I've mentioned, day traders need to be aware of shorting opportunities in the market now, rather than just focus on the long side.
Scott Cole
www.bestdaytradingstocks.com
Sunday, October 25, 2009
Weekly Stock Market Review
U.S. stocks ended last week on a down note, with the major averages losing anywhere from 0.5% to over 2.0% for the Russell 2000. The Nasdaq averages held up better on Friday with the help of Amazon, which finished the session up over 26% on bullish earnings. That stock was also the daytrading star of the day as all you had to do was enter long at some point in the first 45 minutes and you had a 3 to 4 point gain by the close.
Back in 2007, before the bull market ended, the Nasdaq was dominated by the "4 horseman" stocks, namely, Apple, Google, Research in Motion and Amazon. Once the bear market ended in March, all four stocks began to rise again. However, RIMM over the last couple months has rolled over and appears to have fallen out of favor, possibly due to the Apple I-Phone.
Copper stocks remain the hottest industry group over the last month, followed by farm and construction machinery, catalogs, recreational vehicles and silver stocks.
10 Year Treasury Notes broke through initial support levels, leaving yields at around 3.5%, the highest levels in over a month. The Dollar managed a small rally on Friday, but still closed the week with a loss. Gold and Crude Oil closed with minor losses on Friday.
Scott Cole
bestdaytradingstocks.com
Back in 2007, before the bull market ended, the Nasdaq was dominated by the "4 horseman" stocks, namely, Apple, Google, Research in Motion and Amazon. Once the bear market ended in March, all four stocks began to rise again. However, RIMM over the last couple months has rolled over and appears to have fallen out of favor, possibly due to the Apple I-Phone.
Copper stocks remain the hottest industry group over the last month, followed by farm and construction machinery, catalogs, recreational vehicles and silver stocks.
10 Year Treasury Notes broke through initial support levels, leaving yields at around 3.5%, the highest levels in over a month. The Dollar managed a small rally on Friday, but still closed the week with a loss. Gold and Crude Oil closed with minor losses on Friday.
Scott Cole
bestdaytradingstocks.com
Thursday, October 22, 2009
Stocks Manage Mixed Gains
The headline number, the Dow Jones Industrial Average, up 131 points, or 1.33%, suggested a big up day for the market. But, the Nasdaq Composite was up barely .5% and the Dow Transports barely eked out a gain at all. Additionally, today's gains were on declining volume compared to yesterday.
Generally speaking, the price trend in the market is still up, but there are warning signs that this market is getting tired. As I mentioned yesterday, day traders should start considering the short side, especially if the tape indicators are weak during the day.
Today's chart of the day is HNI. The stock gapped up strongly at the open, and held steady for the next hour, before resuming its upward strength. Patient day traders could have traded the opening range breakout, or a pull back into support after the breakout. The stock trended higher for the rest of the session. Have a look at the chart below.
Scott Cole
www.bestdaytradingstocks.com
Generally speaking, the price trend in the market is still up, but there are warning signs that this market is getting tired. As I mentioned yesterday, day traders should start considering the short side, especially if the tape indicators are weak during the day.
Today's chart of the day is HNI. The stock gapped up strongly at the open, and held steady for the next hour, before resuming its upward strength. Patient day traders could have traded the opening range breakout, or a pull back into support after the breakout. The stock trended higher for the rest of the session. Have a look at the chart below.
Scott Cole
www.bestdaytradingstocks.com
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