U.S. stocks managed a nice rally on Wednesday, suggesting the current move from the lows may still be intact. We'll know more later in the week after the Friday jobs report is released by the government.
Stocks were set to open lower today after the release of the ADP private sector jobs report showed a loss of 742,000 jobs in March. Later in the morning, subsequent economic data showed some improvement in the housing market and manufacturing, and the market rallied on that news. I should indicate this data showed a SLIGHT improvement, but the market is looking for any excuse to rally, so it is best to go along for the ride!
As a result of the rally, we had some good moves in several of our stock picks in out Best Daytrading Stocks newsletter. For more info, check it out here!
In other markets, the Dollar was generally flat on the day, and traded within a narrow range, ahead of the G-20 summit in London. I don't expect much to come out of this meeting except some posturing rather than any strong policy. There was not much movement in Treasuries or commodities today either. Most of these markets are trading within consolidation patterns as we wait to see if and when the economy may recover.
Scott Cole
www.bestdaytradingstocks.com
Wednesday, April 1, 2009
Monday, March 30, 2009
A Weak Monday
Just a weak day, not much can be said about today's action. The best place to be was on the short side, and one of our picks, Schnitzer Steel, was off 11%. Unfortunately, most of this move occurred in the first five minutes, so it was not a good trade for our basic opening range breakout strategy. However, it did provide some good scapling opportunities for traders who like to be more active.
Unless we get some big news over night, I expect Tuesday to be a bit more quiet. We often get a bit of a turnaround on Tuesdays, particularly after a couple down days in a row. And, considering the size of today's move to the downside, there will be more opportunities on the long side for the next couple of days.
Good Trading!
Scott Cole
Unless we get some big news over night, I expect Tuesday to be a bit more quiet. We often get a bit of a turnaround on Tuesdays, particularly after a couple down days in a row. And, considering the size of today's move to the downside, there will be more opportunities on the long side for the next couple of days.
Good Trading!
Scott Cole
Friday, March 27, 2009
Stocks end week on down note
U.S. Stocks opened lower and never recovered, but traded in a narrow range today. This was a classic case of profit taking after a big up week for the major averages. Volume was very light today, and the averages generally closed near Thursday's lows.
Due to the narrow trading range in the averages today, there were not many big directional moves in individual stocks. However, many are now set up for some big moves early next week.
With all this in mind, I suspect we will see some more selling next week. We will be getting another look at the jobs market next week, which will likely have a significant impact. Any sign of improvement could help the market rally. It is all about perception, however, so pay attention to Wall Street estimates to get a feel for what direction the market will head, based upon the number reported.
Scott Cole
www.bestdaytradingstocks.com
Due to the narrow trading range in the averages today, there were not many big directional moves in individual stocks. However, many are now set up for some big moves early next week.
With all this in mind, I suspect we will see some more selling next week. We will be getting another look at the jobs market next week, which will likely have a significant impact. Any sign of improvement could help the market rally. It is all about perception, however, so pay attention to Wall Street estimates to get a feel for what direction the market will head, based upon the number reported.
Scott Cole
www.bestdaytradingstocks.com
Tuesday, March 24, 2009
Stocks Give Back Some of Monday's Gains
Well, considering that I was traveling both last Tuesday and yesterday while the market was making big gains, many people might wish that I had stayed on a plane today! After yesterday's nearly 500 point advance in the Dow, it gave back over 100 points today, and the other major averages were distinctly weaker. As Don Worden mentions in his TC2000 notes yesterday, the market rise actually occurred on volume that was lighter than last Friday. That is an indication that there was no major accumulation in yesterday's big rise.
Another ominous sign today was that the market sold off in the last hour. After opening lower, and staying down for the first half of the day, the Dow clawed its way back into positive territory. At about 3 pm, it was down only marginally, and Maria Bartiromo arrived with her pom poms on CNBC, ecstatic about the positive vibes on the floor at the NYSE.
I had no doubt a couple weeks ago that we were due for a nice rally, and we have already gotten it. Unfortunately, these are pretty common within Bear Markets. The 2000-2003 market shows many of these rallies, more so than the current Bear. But, there are far too many analysts willing to call this month's bottom THE BOTTOM, which suggests to me we may still have some pain to deal with. We may not make a new low, but we certainly will not be surpassing the 2007 highs any time soon.
Let's look at some long range issues. Our interest rates are being MANIPULATED by the Federal Reserve now at artificially low levels, while our government adds to our national debt at an alarming rate. Ultimately, this WILL result in significant inflationary problems as the Dollar will get pounded, and we will no doubt see higher personal and corporate taxes to pay for all this largesse.
Generally speaking, the current time period is more similar to the 1966-1982 period that involved an unpopular war, energy troubles, and rising debt. Until the Dow broke out above 1000 for good in 1982, it traded in a sideways pattern with several Bear markets in between. Unfortunately, our issues now seem to be worse.
Yes, we will likely see some recovery down the road, maybe even later this year. But, don't expect a raging bull market to be the result. What is going on in Washington right now will hamstring American business and the economy for years to come.
Naturally, as daytraders, we love this volatility. We've seen a good number of 5% to 10% daily swings in a number of stocks as of late. As long as we have this volatility, we will have great daytrading opportunities, no matter what the overall market is doing, and we will keep you posted!
Scott Cole
www.bestdaytradingstocks.com
Another ominous sign today was that the market sold off in the last hour. After opening lower, and staying down for the first half of the day, the Dow clawed its way back into positive territory. At about 3 pm, it was down only marginally, and Maria Bartiromo arrived with her pom poms on CNBC, ecstatic about the positive vibes on the floor at the NYSE.
I had no doubt a couple weeks ago that we were due for a nice rally, and we have already gotten it. Unfortunately, these are pretty common within Bear Markets. The 2000-2003 market shows many of these rallies, more so than the current Bear. But, there are far too many analysts willing to call this month's bottom THE BOTTOM, which suggests to me we may still have some pain to deal with. We may not make a new low, but we certainly will not be surpassing the 2007 highs any time soon.
Let's look at some long range issues. Our interest rates are being MANIPULATED by the Federal Reserve now at artificially low levels, while our government adds to our national debt at an alarming rate. Ultimately, this WILL result in significant inflationary problems as the Dollar will get pounded, and we will no doubt see higher personal and corporate taxes to pay for all this largesse.
Generally speaking, the current time period is more similar to the 1966-1982 period that involved an unpopular war, energy troubles, and rising debt. Until the Dow broke out above 1000 for good in 1982, it traded in a sideways pattern with several Bear markets in between. Unfortunately, our issues now seem to be worse.
Yes, we will likely see some recovery down the road, maybe even later this year. But, don't expect a raging bull market to be the result. What is going on in Washington right now will hamstring American business and the economy for years to come.
Naturally, as daytraders, we love this volatility. We've seen a good number of 5% to 10% daily swings in a number of stocks as of late. As long as we have this volatility, we will have great daytrading opportunities, no matter what the overall market is doing, and we will keep you posted!
Scott Cole
www.bestdaytradingstocks.com
Sunday, March 22, 2009
The Week Ahead
At the end of last week we had a modest pullback in the U.S. stock market after a couple weeks worth of big gains that saw the major averages rise over 15% from their recent lows. We saw the big follow through day we wanted to see that confirmed the recent rally may have some legs. This is no guarantee that the rally is sustainable, but major rallies do not start without that follow through day.
Now, we will see if the rally can hold. I suspect we will have a bit more pullback early this week, and then we'll if the market can break through last week's highs. A lot depends upon what comes out of Washington, as Congress begins debate on the Obama budget. Friday's release of the Congressional Budget Office's forecast of economic growth and budget deficits suggests that Obama's grand plans may need to be scaled back quite a bit, as moderate Democrats, particularly those elected in more conservative districts, worry about their re-election prospects in 2010. With that in mind, keep an eye on the rhetoric out of Washington, as it may have an impact on the markets.
The bottom line is that the markets were deeply oversold, and the market was way overdue for some kind of a rally. Short covering was clearly the primary driver in the market's rally over the last couple weeks, as there really has not been any very positive economic news. However, I think it is interesting that, since the Fed announced its plan to start buying hundreds of billions of dollars worth of Treasury securities in an effort to but a ceiling on interest rates, the market has traded lower. In my view, this is an artificial propping up of the Treasury markets, that, when combined with the incredible amount of fiscal spending and other Treasury spending in the last six months, can only lead to inflation down the road.
Scott Cole
www.bestdaytradingstocks.com
Now, we will see if the rally can hold. I suspect we will have a bit more pullback early this week, and then we'll if the market can break through last week's highs. A lot depends upon what comes out of Washington, as Congress begins debate on the Obama budget. Friday's release of the Congressional Budget Office's forecast of economic growth and budget deficits suggests that Obama's grand plans may need to be scaled back quite a bit, as moderate Democrats, particularly those elected in more conservative districts, worry about their re-election prospects in 2010. With that in mind, keep an eye on the rhetoric out of Washington, as it may have an impact on the markets.
The bottom line is that the markets were deeply oversold, and the market was way overdue for some kind of a rally. Short covering was clearly the primary driver in the market's rally over the last couple weeks, as there really has not been any very positive economic news. However, I think it is interesting that, since the Fed announced its plan to start buying hundreds of billions of dollars worth of Treasury securities in an effort to but a ceiling on interest rates, the market has traded lower. In my view, this is an artificial propping up of the Treasury markets, that, when combined with the incredible amount of fiscal spending and other Treasury spending in the last six months, can only lead to inflation down the road.
Scott Cole
www.bestdaytradingstocks.com
Thursday, March 19, 2009
Fed Plan Boosts Stocks
Ben Bernanke and the Federal Reserve announced a more aggressive plan to buy Treasury securities and mortgages, sending stock prices up yesterday afternoon, and putting a short-term top in interest rates. This announcement came after a solid up day in stocks the day before, which was the follow through day we had been looking for, signifying this could be a sizable Bear Market rally at the least.
While stocks and Treasuries rallied on the news, the U.S. Dollar plunged, as it is clear the Fed will be running the printing presses at high capacity to pay for its Treasury purchases. Combined with the Obama administrations aggressive budget plans, the long term outlook for U.S. assets may be shaky. For now however, the direction in stocks appears to be to the upside. As such, daytraders should be wary of the short side, although we are overdue for a pullback.
In other markets, commodity prices were mixed on the session. It was notable that Gold prices dropped substantially yesterday after the Fed announcement. Gold closed at its lowest price since late January. A head and shoulders top pattern was broken to the downside, and targets a price of under $800 for the precious metal in the next few weeks.
Scott Cole
While stocks and Treasuries rallied on the news, the U.S. Dollar plunged, as it is clear the Fed will be running the printing presses at high capacity to pay for its Treasury purchases. Combined with the Obama administrations aggressive budget plans, the long term outlook for U.S. assets may be shaky. For now however, the direction in stocks appears to be to the upside. As such, daytraders should be wary of the short side, although we are overdue for a pullback.
In other markets, commodity prices were mixed on the session. It was notable that Gold prices dropped substantially yesterday after the Fed announcement. Gold closed at its lowest price since late January. A head and shoulders top pattern was broken to the downside, and targets a price of under $800 for the precious metal in the next few weeks.
Scott Cole
Sunday, March 15, 2009
How To Start Your Day Trading Business
In the current economic environment, many of us are looking for new ways to make a living. Many of us are sick and tired of the daily grind and are searching for ways to work at home. That is why many people turn to day trading stocks, currencies and futures markets.
Unfortunately, the vast majority of people who enter the world of day trading are unsuccessful. Trading is an extremely difficult profession, and most people are not psychologically prepared for the pitfalls. They read one or two trading books and feel that they are armed and ready for the challenge. However, most of these books contain conventional wisdom, and a regurgitation of old ideas that rarely work.
Also, most people are not prepared to accept that most trades will turn out to be losing trades, breakeven trades, or very small winners. Most people want to be right the majority of the time, but trading is not about being right, it is about making money.
With all this in mind, here are a few basic ideas on how to start your day trading business.
1. First you must determine how much capital you can trade with. This must be purely risk capital, money you can afford to lose without hurting your lifestyle. You can start day trading futures indexes with as little as $5,000, but you need $25,000 to day trade stocks.
2. Be sure you have ANOTHER means of income to pay your basic bills. It is extremely difficult for a new trader to live of income from day trading. If you’ve recently lost your job, find a part time job elsewhere that still allows you the time to day trade, if day trading is the direction you want to try.
3. Develop a specific strategy for day trading whatever market you intend to trade. For instance, if you plan on day trading E-Mini S&P 500 futures, you must first determine whether you want to be an intraday scalper or whether you want to profit from large directional moves. Remember, if you intend to be a scalper, you must be glued to the computer screen for hours each day. That can be tough for most people.
4. Determine what your basic profit goal will be, and DO NOT make this a monetary figure! Gary Smith, who wrote “How I Trade For a Living” simply had the goal of being profitable every month. It didn’t matter whether he made $200 or $2,000 in a month, he simply wanted to make a profit. Adjust your goal for how you will trade. If you intend to scalp, you probably want to be profitable each week, if not every day.
5. Determine which market, or markets you intend to day trade, and then learn all you can about what makes those markets work, and what influences their prices. In the stock market, it is very difficult to learn all there is about how the market works, but if you learn the basics, you will gain a better understanding.
6. Paper trade first, then trade with very little leverage once you are ready to start using real money. You want to get a feel for whether your strategy will work or not. Confidence is a key to success. Also, even if your strategy is working while you paper trade, things change when real money is on the line! You must maintain the discipline to follow your strategy, if you are confident it will work in the long run!
7. Keep detailed records of your trades! This will help you identify your skills and faults as a trader, and will benefit you in the long run!
These are just some basic thoughts on starting a day trading business. There is an awful lot to learn in this business, and the fact is, most people fail. Trading is just like any other skill profession…it requires education and experience to become successful, otherwise, we would all be doing it!
Scott Cole
www.bestdaytradingstocks.com
Unfortunately, the vast majority of people who enter the world of day trading are unsuccessful. Trading is an extremely difficult profession, and most people are not psychologically prepared for the pitfalls. They read one or two trading books and feel that they are armed and ready for the challenge. However, most of these books contain conventional wisdom, and a regurgitation of old ideas that rarely work.
Also, most people are not prepared to accept that most trades will turn out to be losing trades, breakeven trades, or very small winners. Most people want to be right the majority of the time, but trading is not about being right, it is about making money.
With all this in mind, here are a few basic ideas on how to start your day trading business.
1. First you must determine how much capital you can trade with. This must be purely risk capital, money you can afford to lose without hurting your lifestyle. You can start day trading futures indexes with as little as $5,000, but you need $25,000 to day trade stocks.
2. Be sure you have ANOTHER means of income to pay your basic bills. It is extremely difficult for a new trader to live of income from day trading. If you’ve recently lost your job, find a part time job elsewhere that still allows you the time to day trade, if day trading is the direction you want to try.
3. Develop a specific strategy for day trading whatever market you intend to trade. For instance, if you plan on day trading E-Mini S&P 500 futures, you must first determine whether you want to be an intraday scalper or whether you want to profit from large directional moves. Remember, if you intend to be a scalper, you must be glued to the computer screen for hours each day. That can be tough for most people.
4. Determine what your basic profit goal will be, and DO NOT make this a monetary figure! Gary Smith, who wrote “How I Trade For a Living” simply had the goal of being profitable every month. It didn’t matter whether he made $200 or $2,000 in a month, he simply wanted to make a profit. Adjust your goal for how you will trade. If you intend to scalp, you probably want to be profitable each week, if not every day.
5. Determine which market, or markets you intend to day trade, and then learn all you can about what makes those markets work, and what influences their prices. In the stock market, it is very difficult to learn all there is about how the market works, but if you learn the basics, you will gain a better understanding.
6. Paper trade first, then trade with very little leverage once you are ready to start using real money. You want to get a feel for whether your strategy will work or not. Confidence is a key to success. Also, even if your strategy is working while you paper trade, things change when real money is on the line! You must maintain the discipline to follow your strategy, if you are confident it will work in the long run!
7. Keep detailed records of your trades! This will help you identify your skills and faults as a trader, and will benefit you in the long run!
These are just some basic thoughts on starting a day trading business. There is an awful lot to learn in this business, and the fact is, most people fail. Trading is just like any other skill profession…it requires education and experience to become successful, otherwise, we would all be doing it!
Scott Cole
www.bestdaytradingstocks.com
Subscribe to:
Posts (Atom)