Day Trading Thoughts For Mon. Feb. 2

Discussion in 'Trading' started by erikrkolodny, Feb 2, 2009.

  1. erikrkolodny

    erikrkolodny ET Sponsor

    Everyone is talking about the poor January performance of the stock market amidst fears of the whole “So goes January, so goes the market for the year’ hypothesis. For those not familiar, there is an old saw that whatever the market does in January is what it does for the year overall; of course, it has some credence because a particularly big move in January can be hard to overcome. And this was the worst January on record in percentage terms for the S&P 500. But the point of this piece is to look away from equities for a moment; rather, did anyone notice how the metals and gold have done recently? Despite commodities like oil not coming back, the price of gold (as well as other metals) closed at four-month highs on Friday. And bonds? The 10-year bond had its worst one-month performance on record. The yield on the benchmark 10-year bond has risen from just over 2% to over 2.8% in weeks. There are three possible explanations for this move. First, inflation is ‘a-comin.’ Traditionally, in inflationary times, gold outperforms and bonds underperform. Or. Second, a Depression is ‘a-comin.’ Paper in the U.S. much less everywhere would be worth a lot less whereas a safe haven is gold. But, at least in the immediate-term, I’d like to believe it is the 3rd choice. Namely, there is a risk premium being taken out of things as the panic of late last year subsides. Investors are selling off bonds as the gains got very extended in the 10-year. Of course, this does not fully explain gold’s rise except to note that gold could be being used as a bit of a safety here since the stock market is still off-limits to many people. For day traders, these two indicators will likely be discussed should the trend intensify. For months on end, the equity markets moved almost in complete inverse correlation with the price of oil…it is entirely plausible that a trend (longer-term as well as immediate-term) could well develop developing along the same lines with either bonds or gold should the moves of the last several weeks become exaggerated.

    Markets in Asia were down about 1.5% to 2.5% overnight on earnings woes. The weakness extended to Europe as well with the bourses down 2% to 3% across the board on a continued general malaise over the lack of definitive corrective action to the financial crisis by, well, anyone. And it’s Groundhog Day all over again in the U.S. with futures down hard early. With no trigger in sight, look for the continued push lower in somewhat slow choppy trade as earnings season continues.

    Please understand that if the ideas do not get to the hoped for set-ups cited below, more often than not, one should not blindly trade the symbol next to said idea.
    If the whole story is not there -
    If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified-

    Good- The following stocks have good news and/or a strong technical pattern

    STAR- closed near the high; looking for continuation thru 15

    DRIV- closed near a high; looking for momentum thru 25

    HIG- an article indicates in “Barron’s” postulates that the stock could double in the next few years

    Bad-The following stocks have bad news and/or a weak technical pattern

    DRYS- closed near another low; may be a short thru 6.50 if it opens higher otherwise likely a phenomenal pre-market trade in a stairstep lower pattern

    DDUP- likely continuation short thru Fri. 12.80 low

    BDK- closed near a low; looking to short thru Fri 28.82 low

    CACB- closed near the low; looking for momentum thru 2.19 low

    PCBC- trend low close; looking for close thru 10.50 Fri low

    FO- continued down after three days; looking to short thru Friday 31.90 low

    DOW- continues breaking down; looking to short thru Friday 11.50 low

    NWL- closed near low; looking to short thru Friday 8 low

    STI- new trend low as well; looking to short thru Friday 12.10 low

    NI- yet another one breaking down; looking to short thru Fri. 9.60 low

    CPO- bad earnings

    HUM- missed on quarter, but guidance pretty good for next year; if it opens down, it may well be a ‘buy thru unch’ candidate particularly if the market rallies

    MAT- atrocious earnings

    ROK- terrible earnings












    Good luck today.

    Erik R. Kolodny
  2. From a Fundamental investing view, i think the entire market will be holding it's collective breath ahead of Fridays jobs report.

    with all the job cuts announced so far, it could be really, really bad.

    Macy's to Cut 7,000 Jobs