subject: Great Stock Picks -pt1 [print this page] Daily Stock Report for Thursday Morning, April 8, 2010 pt1
The US stock market had a noticeable sell-off that accelerated in the last hour on Wednesday. Stocks were already slipping gradually and then fell sharply after a senior Fed member remarked that policy makers should start raising rates back up to 1 percent soon. The Dow30 was down 0.66%, Nasdaq down 0.23% and the S&P 500 down 0.59% today.
As stated in previous reports that the strategy used by the Federal Reserve is to have various Fed governors around the country to disseminate in their own way, tidbits of information and opinions to the public. This is an effective way to gradually get the market to start pricing in the fact that interest rates will eventually have to be raised at some point. And today is the first time a Fed member made that clear of a statement. How is this for clarity?
The time is right to put the market on notice that it must again manage its risk, be accountable for its actions, and cease its reliance on assurance that the Federal Reserve, not they, will manage the risks they must deal with in a market economy, Kansas City Fed President Thomas Hoenig said today during the market hours.
What was catching the market off guard was the Fed Chairman Bernanke had just said the Fed is in no rush to raise interest rates and another Fed President reiterated his support to keep the now famous extended period language in the policy statements.
Since we have made a nice bull run in the past weeks, it doesnt take much of an excuse for investors and managers to start selling stocks. That was part of the logic we had to present stock ideas to start shorting, mostly because they have been so obvious. This is assuming you are comfortable with making money when stocks go down (short selling).
REPEAT from last report: We should start looking for some sort of softer pullback with some of the technical indicators showing early signs of overbought conditions but that can stay at an extreme for weeks before actually seeing a reversal in trend.
Scalp of the Day:
WFR, Memc Electronic Materials gave an early top for a short scalp that had a potential of 2.5% profit potential followed by a long scalp with a 2% potential profit.
*These are the kind of trade ideas we will be giving in the Trading Room, which we are in beta testing right now. Put your email address and name on website page to be notified.
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