My Ideal Stock Report

So, if I was going to create my own stock report and put what I wanted in it, this is what it would look like right here:

May 10, 2009 - Sunday Evening

The market had a big turnaround Friday to a higher high for the Dow30 and the SP-500 and clears the path for a continued uptrend. The Nasdaq Composite looks like it is taking a rest as technology stocks have been far ahead of the other indices these past weeks. The financials catapulted the Dow and S&P and these two charts look very strong for more likely gains.

At the same time we have euphoria with bullish market conditions that easily gives profits to the lazy investor we cannot ignore the technical indicators that are giving overbought conditions on a short term basis. The VIX-X, Chicago Board of Options Market Volatility Index is a measure of “fear” and this looks like we should have a short term correction that may start this week. Sentimentrader’s Smart money/dumb money index and Telechart’s T2108 chart shows strong overbought conditions and S&P Oscillator shows mild overbought, Investor’s Intelligence is a slower indicator to develop but confirming other indicators. Remember these are short term indicators and will “reset” themselves once we have a short term correction.

We then would look to see if the market is going to have higher highs to resume this uptrend we have been on since March 10th.

REPEAT FROM Thursday Night: This may be a good time to close long positions on this temporary “pop” as we are seeing many stocks showing topping patterns that were once momentum stocks. We use these “early scouts” as indicators that people are starting to take profits on the high fliers.

As you have been reading in this report the last few days that many stocks are getting dangerous to buy long, remain nimble and set tighter trailing stop losses because it would only take 1-2 days of sharp corrections to give up all the long profits we have made recently. Most long positions in the stock list below are now closed as we move mostly to intraday trading (scalping) tomorrow.

The stocks that have been the hottest runs or what could be called momentum stocks, ASH, CIEN, ARO, BIDU, CLF, MEE (and many others we don’t have listed) are going to correct hardest and it is likely that we see some rebound attempt next week but my hunch is that the market will start breaking down and short opportunities with short swings will be very profitable.

So in technical analysis terms, it is possible that today was a key reversal indicator (short term) and that is my personal hunch. We are going into a transitional period where we have few positions and most will likely be now short. You could play part of your opening short positions tomorrow early and add to them as any bounce in the market occurs.

Note the life insurance stocks had a big move up today against the tide because some insurance companies were listed by the Federal Reserve as passing the stress test and not needing additional funding. The whole sector moved up, PRU, MET, HIG, PFG.


The Oil index moved up 4% today to close at $58.67 and is still shadowing the direction of the indices. Moving averages, MACD, OBV, stochastics and price charges are all starting to turn up on this sector, use XOIL as index.

Intermediate Trade Positions: NGS, Natural Gas Services is showing a nice uptrend along with the natural gas ETF, UNG. For 10 ½ months natural gas has experienced a steep drop and this recent rise in the last 8 days is the most significant of all. It is likely to see a little selling in this sector first before higher advances are made. So the best process is to let it run its current run and then pullback before opening a position.

It is good to see the companion sector of oil moving up as well so monitoring XOIL and other oil and gas stocks like XTO, EOG, COG, GMXR, APA, ATPG, CNQ, and SNP would be good to get a feel of the oil and gas sector.


Swing Trades: CMG, Chipotle Mexican Grill has more downside but let it rebound up to $80+ before considering opening a small short position.

MEE rebounded Friday but monitor this as a potential swing short trade assuming it does not make a higher high over last Thursday’s high. It looks a little on the weak side so be prepared to open a small short if it doesn’t move above $23.50 tomorrow.

Potential short swings:

ABG, Asburn Automotive is starting to turn over but still needs another spike down tomorrow to confirm a short candidates. This needs a little more time to convince us that it does to go higher highs before shorting.

ADCT, ADC Telecomm looks like a very good short idea that was opened today and is likely going to break down over the next two weeks. Worth a short position tomorrow.

REPEAT: For aggressive traders or very small position: In the next 4 to 6 weeks, look for GM, General Motors to do a reverse split and watch for opportunity to sell short or work with long put options or selling calls short. This won’t happen for some time. They plan to do a 1 for 100 shares reverse split. That will put the stock at $185 at current pricing and reverse splits are desperation attempts to stay listed on the exchange, usually done by deeply troubled companies financially. This last gasp for air strategy rarely works.

Day Traders/Intraday stock ideas: CMG, Chipotle Mexican Grill swing trade short was covered Friday morning and may give another short opportunity (2nd helping).

MEE, Massey Energy and PCX, Patriot Coal both had excellent scalps, 8.5% for MEE and 11.8% for PCX. Look for a slight pop and a drop but don’t expect for the same big profits as on Friday. These could give both long and short scalps. Intraday trading is pumping out strong profits most every day now and I see that pattern continuing. As usual, look for good intraday trades in GMXR, FSLR, ICE, BLK, CME, BIDU, AMZN, WHR, IPI, POT, MON, MOS, COG, EOG, XTO, AAPL, WFC, JPM, BAC, WFC, JPM, C, and USB or any high volume, high volatility stocks. CSIQ and STP had big short scalps, 9.3% for CSIQ and 10.8% for STP.

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Progress Report: We have had numerous requests for the real-time the Trading Room and we will be more aggressive with the programming of this software. Our first programming attempt last summer was abandoned and more capable programmers are on the task now. We will keep you posted but our estimate is mid June if all goes well. The delivery of information and quality of ideas will be very unique-there won’t be anything like this!

Thoughts: Keep steady, calm, decisive, aggressive. Have no fear and no greed. Keep looking at what to be doing next in a calm manner. Don’t focus on the past or beat yourself up what you did or didn’t 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.

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.

When I list several stocks from the same sector, like the housing industry for example, don’t short all of them unless you are well diversified and it represents a small percentage of your total stock account (in that same account).

Ticker Symbol Type
Notes Target
Open Price Target
Close
Price
GE, General Electric LONG-INT Still acting strong, didn’t turn over; hold if long.
BAC, Bank of Amer NEUTRAL Banks hot on stress test news.
ASH, Ashland LONG-INT Excellent intraday scalp Friday; may give us short soon?
CIEN, Cienna LONG-INT Breaking down; swing trade idea long next week
RS, Reliance Steel LONG-INT No trade idea; DELETE
ARO, Aropostale LONG-INT Could give us long swing trade opp next few days
SWKS, Skyworks LONG-INT No trade idea; DELETE.
RADS, Radiant Sys LONG-SWI Watch & wait, may present short possibility?
AMZN, Amazon LONG-INT No trade idea; stopped Thursday.
BIDU, Baidu LONG-INT Still in uptrend but sold “just in case”
UTX, United Tech LONG-INT Still going up; too dangerous to buy now
AAPL, Apple Cmptr LONG-INT Sell signal Friday.
DIOD, Diodes LONG-INT 2 big down days; watch and wait, possible Swing long.
CMG, Chipotle SHORT-INT Covered short position Friday, might get 2nd helping soon 84 75.50
SMH, Semi ETF LONG-INT Turning over; Nasdaq taking a rest
STP, Suntech SHORT-SWI No trade idea; DELETE
CSIQ, Canadian Sol SHORT-SWI Short swing idea near $10? Very small short position
BCRX, Biocryst SHORT-SWI No trade idea although still breaking down
JPM, JP Morgan LONG-SWI 10.5% move up today, higher high on bank news
RST, Rosetta Stone LONG-INT Look for rebound started Friday.
QCOM, Qualcomm LONG-INT Sell Friday if still long; may present long entry next week
GS, Goldman Sachs LONG-INT Resurged up, resuming uptrend.
GMXR, GMX Res LONG-INT On sidelines, looking for short entry?
CLF, Cliffs Nat’l LONG-INT No position.
MEE, Massey Energy SHORT-SWI Short position opened; hold into next week 23.25 17
RIMM, Research LONG-INT No postion.
IBM, Int’l Bus. Mach LONG-INT Worth small long position 100.500
RTN, Raytheon LONG-INT Bad sell
ADCT, ADC Comm SHORT-SWI Mistyped last report; hold short position 8 6.50






SWI (SWING): 2-7 days INT: Intermediate term position 8 days to several months. Open Price: price paid on opening long position or price sold on short position. Bold notes on table above represent changes from previous day.
Current positions are highlighted in yellow. Green colored lines are next probable positions to consider. Red, take action or watch closely.
IMPORTANT: The notes in this stock list is how I have been writing notes to myself about stocks for 16 years. They are general guidelines as to how I am approaching a particular stock and conditions may change during the next trading day that may cause a change in opinion before the next evening report is written.
Thoughts: Best odds only, be decisive, aggressive, mentally flexible, stay in position size, don’t 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.
Don’t trade unless the setup is there for you, then use the charts to tell you when the odds are heavily in your favor. Don’t 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 I’ll talk to you this tomorrow.
Mitch King
www.TradeStocksAmerica.com
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Mitch King is the founder of TradeStocksAmerica.com. All material presented herein is believed to be reliable but we cannot attest to its accuracy. All material represents the opinions of Mitch King. Investment recommendations may change without notice and readers are urged to check with their investment counselors before making any investment decisions. Opinions expressed in these reports may change without prior notice. Mitch King and/or the staff at TradeStocksAmerica.com may or may not have investments in any stocks cited above before or after this newsletter is prepared. Opinions expressed in these reports may change without prior notice. Disclaimer - Stock investing or stock trading has large potential rewards, but also large potential risk. There is risk of loss as well as the opportunity for gain when buying or selling stocks, bonds, option contracts or engaging in any strategy listed in the Daily Stock Report, The Wizard Training Course, The Trading Room and our seminar or workshops. You must be aware of the risks and be willing to accept the risks when investing or trading in any financial markets. Don't trade with money you can't afford to lose. This website is neither a solicitation nor an offer to Buy/Sell stocks. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this website. The past performance of any trading system or methodology is not necessarily indicative of future results.
Bill Smith, Vaunted Stock enthusiast, who has found a great stock report, by Mitch King at www.tradestocksamerica.com.