The Daily Stock Report April 5, 2009
The stock market looked like it was set to move up until an article about someone
influential saying banking problems are far from over and that headline gapped that sector down, just when we stopped out on Friday.
Asia is taking our lead and moving down tonight. We are not looking for a cascade of selling to occur on this pullback but that could partially depend upon whether the worries in the banking sector re-ignites and if that sector sells off aggressively again.
If we get a new set of news events, an entirely different spin on some problem area with something that is unforeseen, the market could and is ready to react to negative news as well as good news.
You will note in the stock list notes below that re-entering a short position for banks is being considered.
Oil index closed at $51.20 and looks like it could have a soft pullback with the market too.
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: none
Day Traders/Intraday stock ideas: Look for drop and pop again and this whole week should be good volatility for intraday trading. Since we are holding long intermediate and swing positions, intraday scalping is a good technique to turn to this week. Stay on the long side on the pop but dont buy late in day. 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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