The Stocks I Favor
Folks, first off, sorry
I was not able to put together an article yesterday, although given
the way the market traded, it would have been difficult if not impossible to
predict and come up with a game plan in advance. Which leads me to today’s
piece, a summary/commentary on yesterday’s action. When I sent out an email to
my subscribers last night to recap the
trades we had taken, I used the phrase, “one step forward, two steps back.” It
summarized the day perfectly. While the trades we took, six in total, and one
FX trade were solid set-ups technically, the S&P’s erratic nature stopped us out
either for losses, or very small gains. Naturally, the losses somehow outpaced
the gains yesterday…funny how that happens.
As I said, the price action in the S&P’s was
rather erratic, I suspect this had a great deal to do with the hit and miss
performance yesterday.
The areas where the 2 X’s are represent classic
set-ups for my style of trading, the follow through was limited however. On the
short in the morning, I was quite surprised that the market did not break more,
especially after breaking the hourly moving average (red dashed line), but it
was simply not to be.
Some will naturally ask, “Why did you miss the
big move up at point Y?”
Two reasons:
1. I am not a big fan of counter-trend trading.
Yes, I do it on occasion, but the market and/or the stock I am trading needs to
be extremely overbought or oversold, this was not one of those instances.
2. Easy to see the trade in hindsight. In fact
prior to the move back above the 15-minute moving average, I was looking for
short opportunities. Look at the chart before the move higher, be honest, that
move higher was tough to forecast.
I also took a couple of shots at
Goldman Sachs (GS) on the opening,
Fade the Gap set-ups. Go back and look at the
5-minute chart on the opening, well outside the lower Bollinger Band offering a
solid rebound. The chart does not tell the whole story, once again, hindsight
is 20/20. The price action in GS was
erratic and there were no big gains on the trades, although at least they were
profitable.
I continue to really favor the gold stocks, not
only from an investment standpoint, but also intra-day. My favorite, as you
probably know by now is Newmont (NEM). The
other day I mentioned it was make-or-break for this and other gold stocks after
the recent pummeling they took. Yesterday’s action has put hope in the minds of
many gold stock fans, the progress though still bears watching.
Meanwhile in FX land, the Yen continues to make
gains against the dollar, breaking the key 110 level yesterday. Traders remain
cautious of further BoJ intervention however, so progress higher may be
slow. The AUD continues to move higher,
although it too is going at a snails pace, a lot of backing and filling is the
process this time. Nonetheless, a break above .6880 early Tuesday morning has
set the stage for a move towards .70-.71.
| Support/Resistance Numbers for S&P and Nasdaq Futures |
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As always, feel free to send me your comments and
questions.