|
The contents on this page are a small sample of StockTradersHQ's member resources (FREE Trial!)
1.
Our staff of professional technical traders analyze 1,000's of potential stocks every day to provide you with a list of stock picks with the greatest potential for explosive gains.
2. These stockpicks are traded with our real-time portfolio. Email alerts are sent for every entry and exit. Through the member-only website, you will have our support every step of the way.
3. Our subscription service provides all the resources, stock picks and tools an investor needs to make very profitable, consistent trades while maximizing gains and minimizing losses.
SEE OUR TOP PICKS FOR 2006...
|
|
Thursday, May 20, 2004
Good evening friends
Market Recap
Was the market open today? If it was, I must have missed it. The Dow, NASDAQ, and S&P are at about the same level they were at yesterday's close. However, tomorrow should be a different story. May options expire tomorrow and should provide for some volatility in the market so fasten your seatbelts, it will be a much faster pace on Friday.
May Options Expiration
The May options expiration should remove a lot of put contracts bought to hedge long positions. Hopefully our short positions will benefit from these expirations, because those long positions that were hedged with put contracts will now have no protection and will be exposed to further downside risk. That is good news for us shorts.
It has been the week of the weak; we are in a very weak market that, in my opinion, is ready to crumble. There are no buyers to be found and the charts indicate it is only a matter of time before we get “the big one Ethel”. That is, the big sell off. If you think we have sold off already, this is nothing compared to what we will see if, God forbid, the S&P closes below its 200 SMA. That reminds me of a dream I once had (or a nightmare you might call it): I was in a forest with a bunch of lumber jacks yelling timber and all the trees were falling around me, I was trapped and could not get out. I woke up in a sweat and I realized “It's not a dream, I'm just short in the market and it's not trees falling, it's the stocks.” Stock certificates are made from trees so I guess they correlate, lol.
In all seriousness, if the market goes down, we will be in good shape since we are on the right side of the trade. Sure we want a bull market because we can make more money that way. But as I said last night, we cannot force market direction so we have to take what we can get. A few weeks ago I said that we should either be in cash or short the market. Since that time, the market has done nothing but go down.
Short Gains
Here is link to our short positions tonight: (will open in a new browser window)
http://www.tradewithpizzadriver.com/data/sup/20may...
Our short gains are not massive, but they are steady, and they are providing us with some gains while most average investors are in a lot of pain. Although I never like to prosper at someone else's expense, their loss is our gain. That is how the market works, for every winner in a trade there is a loser on the other side. It is unfortunate but that is the way the business is. Most people do not even know what shorting is. Others know what shorting is and do nothing but bash the shorts. They can bash shorting or they can use shorting as profitable trading method, the choice is theirs. People who do not respect short sellers just do not know how the market operates. I do not short because I like to short; I short because I can make money doing it and I do not do it to hurt anyone else's portfolio. They are more than welcome to short with me.
Blue Light Special?
Almost everyone has shopped at K-mart and they have probably heard of the famous blue light special. If you are in their store long enough, you will hear an announcement of a ‘blue light special' somewhere in the store. At the same time, they have a flashing blue light to draw attention to an area of the store where something is discounted. The phrase ‘blue light special' has become synonymous with big discounts.
The following quote is from a “respected money manager”:
"We have a blue-light special on tech stocks in aisle 5," said Todd Campbell, president of E.B. Capital Markets, an independent research firm catering to institutional clients. "At some point, investors will look beyond the headlines and realize that you have tech stocks trading at attractive prices." (source: CNN)
Now, “attractive prices” is just another way of saying that the stock is “cheap”. Remember what we have said about cheap stocks, right after you buy one, you realize just how much cheaper they can get. Some “professionals” are starting to tout tech stocks as having strong valuation, or trading at a discount to their P/E ratio. But here is the real story: the rallies the market has recently had are telling me that the big institutions are dumping stock into the strength.
Trading starts off very strong early, then tank by the end of the day. Yesterday's classic bear market type action was a great example of this. A higher open on low volume to drive stocks up so the heavier volume could sell into the rising prices. This occurred over and over in the last bear market. I remember seeing futures up before the market almost every day only to have the market close lower by the end of the day.
Most of the people investing in the stock market today will not spend much time to study the market. They will listen to the talking heads on TV or read the news papers. The thought that “stocks are cheap” are planted in their head, and they wake up the next morning and start entering market orders at the open. They want to get in on those “cheap” stocks early, before everyone else realizes how cheap they are. They fool themselves into thinking they are market savvy because they bought at the open before everyone else. Soon after the open, the stocks fall back and they are under water right away. This is why I stress the importance of not buying in the opening minutes of the market. There are occasions where we will take a calculated risk and buy at the open; this is only for stocks that we absolutely have to be in at any price. Those are rare occasions for sure. I think in the year we have been running this service, I can count on one hand the number of stocks we have bought at the open. The majority of the time we will avoid trading in those first 30 minutes or so.
Be wary of all the hype on TV. June is the end of another quarter, and a lot of fund managers are likely to do some window dressing. This could result in a volatile market in the last week of May.
Remember: do not buy the hype, do not buy the strong fundamentals, do not buy the upgrades, but DO buy the charts. Blue light specials are off limits for me. The only light we are looking for is the green light, and the only place you will find the green light is in the charts.
No Long Trades
There are still no charts set up for long trades at this time. There are numerous stocks set up for shorting. We have many of them on our list, almost too many, so I will not add any new ones tonight. Let's see how Friday goes and hopefully Sunday I can have some fresh plays to look at for the coming week.
As always, thank-you for your support past, present and future! Have a great night everyone; we will see you all Sunday evening.
Joke of the Week
There are primarily 3 different types of investors who post on Yahoo message boards.
1) Those who don't know anything
2) Those who don't know much
3) Those who don't know they don't know
OTC BB Watch List
- None
|
|
|
|
|
|
|
