Performing As Expected
Despite a couple of trades on the open yesterday
and a late day selloff, the market performed as expected, meaning it really
didn’t do much. This is my seventh or eighth summer as a professional trader
now, and like most things in life, things don’t change dramatically. The week
before Labor Day is notoriously slow.
Nonetheless, I am remaining active on the research front and have come across
a few more ideas on the short side which I plan on executing. Yesterday’s
disappointing release of existing home sales, down 3%, is perhaps a sign of
things to come. Looking at some of the home stocks, I saw that Clayton Homes
(
CMH |
Quote |
Chart |
News |
PowerRating)
had the most vulnerable chart pattern, trading below the 50- and 200-day moving
averages. Keeping with that same theme, Lowe’s Corporation
(
LOW |
Quote |
Chart |
News |
PowerRating), the
home improvement retailer, looks to be putting in a triple top, and with its
industry counterpart, Home Depot
(
HD |
Quote |
Chart |
News |
PowerRating) having a tough time, it is hard to
imagine that Lowe’s won’t drop a bombshell in the not too distant future. Lowe’s
also sports a hefty P/E, further complicating matters if any bad news arises.
Purely from a slow-down in employment perspective, Robert-Half
International
(
RHI |
Quote |
Chart |
News |
PowerRating) is also looking weak on the daily chart and also is
rich from a P/E standpoint.
Again, I caution traders who decide to go with these themes. They are based
solely on my discretion from a technical standpoint as well as my observations
with regards to economic statistics. Always use a protective stop and never
establish a position that exceeds your ability to tolerate risk. Lowe’s is
probably the higher risk of these three short positions given the potential for
a breakout above $39.90. However, if the economy continues to slow and profits
come in weak without any real visibility, these stocks are poised for some nice
moves to the downside.
Looking ahead to today’s session, I expect the morning to offer a few setups,
with activity tapering off after the first hour. Absent a political/economic
development or a severe break to the downside, the afternoon will be sparse.
Trade selectively or take the afternoon off.
Due to a technical problem. the KTNs will not be available today.
Sorry for any inconvenience.
Have a good trading day, and feel free to send me your comments or questions.