The Daily Stock Report April 2, 2009
It was a strong bull market all day with little selling in all indices
. The Dow30 +2.8%, Nasdaq Composite +3.3%, S&P-500 +2.8% and all three indices made higher highs today. The Hong Kong market was up 7.4% last night and Japan closed up 4.4% and their market was surging way ahead of ours so they were clearly going to be leading us higher.
Any negative news that would have sent the market running for cover just a month ago has been ignored but the market looked beyond that. This type of trading action changes the odds toward the long buyers now and virtually all the stocks on the wish list moved up except for MS. Many of them made higher highs.
The banking stocks didnt get quite as frisky as the wish list stocks so it seems very possible this group still could turn over but the odds are not quite as favorable as they were a few days ago. We are at a critical point in time where the market could rollover to the downside OR euphoria takes over and we get a nice running with the bulls.
The odds are shifting toward the bullish case, especially with the wish list stocks since they were on an upward movement and some on a small momentum run. If there is any news that could jolt the market, it would be the payrolls and unemployment report but that seems unlikely any of those numbers would bring down the market.
Oil moved back up 8.7% today to close at $52.64 on the oil index. Oil is still tracking in parallel with the market.
REPEAT: Let market pull back before getting too heavy in LONG positions. It could take several weeks before this bottom is well established. Stocks that have been the strongest and pull back the least amount with more of a sideways action are the ones to be watching for long intermediate trades.
Swing Trades: New Ideas:
Cancel this idea: BIG, Big Lots discount stores.
Day Traders/Intraday stock ideas: Friday should have a lot of volatility, many stocks are overbought and could see a nice drop followed by a nice pop. Stay on the long side on the pop but dont buy late in day. Look for Monday being another big drop and pop. Look for good intraday trades in FSLR, ICE, BLK, CME, POT, MON, MOS, AMZN, AAPL, BIDU, USB, WFC, JPM and any high volume, high volatility stocks.
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REPEAT: Many of you have emailed me with questions about not having the $25,000 to do intraday trading. You can have 3 intraday trades in a 5 business day rolling period without having $25,000 in your account. Above $25,000 you can do unlimited intraday trades as long as your account equity is above $25k. You can have swing trades like we have been having the last 2 weeks and make a smaller amount of money, lets say $10,000, to build up with swing trades.
Thoughts: Keep steady, calm, decisive, aggressive. Have no fear and no greed. Keep looking at what to be doing next in a calm manner. Dont focus on the past or beat yourself up what you did or didnt do or what you should have done. Just keep playing the next shot, which in this business your next shot could be just sitting on the sideline.
I am still expecting some sort of substantial rally in the stock market sometime this year mostly driven by the massive stimulus that has already been poured into the system plus the planned stimulus package being proposed now. Longer term though, in a couple years down the road, no doubt the taxpayer is going to have to pay for such the high debt amounts that the US government (and other countries) have taken on. So tax rates probably will rise in coming years, interest rates will very likely have to rise as inflation surfaces and likely the bear market resumes sometime down the road. But we dont have to be stuck in a miserable cycle like most investors. With the techniques and approach to the market, we will still thrive.
If you have been uncomfortable shorting stocks, which most people are, try to learn this technique, it will be a useful tool in the coming years.
Thoughts: Best odds only, be decisive, aggressive, mentally flexible, stay in position size, dont overtrade and wait a little longer to buy and wait a little longer to sell. You will find that will make you more money on your trades. Trade what you see, not what you hope for. Intermediate and swing trades are really important to have trailing stop losses set.
Dont trade unless the setup is there for you, then use the charts to tell you when the odds are heavily in your favor. Dont force anything to work for you, let the setups develop and then take advantage of that. Be patient. Stay in position sizes without letting any intraday trade represent no more than 10-15% of your total account value. As you build your account, your position size percentage should get smaller and smaller to lower your risk.
Have a great day and Ill talk to you this tomorrow.
Mitch King
www.TradeStocksAmerica.com
by: Mitch King
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