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Tuesday, May 25, 2004
Good evening friends,
Market Recap
How about those futures? They were down again all morning, and the market followed suit by opening down selling off in the first hour. This was followed by a massive reversal to the upside with steady buying and short covering all day with a close at the highs of the day. This market seems to always do the opposite of what the futures indicate it will do. Nevertheless, I started covering most of my short positions today when it looked like the buying was not going to subside.
The rally was very welcome, and it was long over due. But again, the volume was not what I was expecting for a rally of this magnitude. Hopefully a strong follow through rally tomorrow will occur and will bring in the heavy volume I would like to see. Volume on the NASDAQ was average and that is a very good sign compared to the below average volume we have been seeing.
The good news is that both the Dow and NASDAQ closed above their respective 200 SMAs and that gets me bullish again. I have updated most of the short comments tonight but this is it for the week. As long as tomorrow's close is again above the 200 SMA on the NASDAQ, I will turn my attention back to the long side of the market and update the long comments starting tomorrow night.
The Dow gained 160 points today, not far from the 200 point gain I predicted last night if a rally were to take place. However, the volume was not what I would have expected for such a big move. We are not out of the woods yet, but closing above the 200 SMA is a start and as long as we remain above this average, we have to focus on the long side of the market.
Our Portfolio
Today was one of our busiest days in a long time at TWPD as we covered many short positions. If you are new to the service, rarely do we send this many alerts in a day. We only did so to get out of our short positions we have been carrying while the market was going down. As mentioned, shorting will only yield us minimal gains. We did have some gains overall with our shorts so it was not a wasted effort. Hopefully, we can forget about the short side for a while and get this Bull in gear where the real big money is made.
Consumer Confidence
Well, 500 people have spoken, and they are only moderately happier with the way the economy is looking. The consumer confidence numbers were released today, and it showed a very minor gain. If you read into some the numbers, you will see exactly what I was talking about last night when I said the data is not very trustworthy. It is split down the middle on a number of topics. Some saw great improvements in areas where others saw a strong downturn.
It all comes down to the perspective of the person on the other end of the phone. Someone who just lost their job will tell you the world is going to Texas and a hand basket (Just kidding Texans). Survey someone with a new job or a big raise, and they think the sky is the limit. So, those confidence numbers should mean very little to us. It does have an impact on the market, because many believe the numbers represent everyone in the country.
Housing Sector
The housing sector also released numbers today. Those were mainly upbeat but it could simply be due to refinancing before interest rates go up even more. I do not put much weight on this indicator either.
Tying into consumer confidence are the retail sales numbers we will be seeing this week. As well, 1st quarter GDP revisions are coming up later this week. Let's look deeper into these numbers.
Retail Sales
Retail sales are obviously important to the economy. If people are buying, stores are making money. The GDP (Gross Domestic Product) numbers are also loosely tied into retail sales. GDP is the value of all goods and services being produced by the US. If the numbers are strong that is an indication that production is ramping up. If goods are being produced, businesses are anticipating an increased demand for those goods. If the numbers are weak, businesses are slowing down, and we could see additional lay offs. Those numbers have to be strong for the market to turn around.
While we will not trade based on the numbers, they are very important to the bull market if it is to turn around and run up again. If we continue to see weak numbers, we are looking at an extended downturn for the overall economy, but I do not believe that is the case.
Stocks to Note
Energy stocks did well today, and they may continue their moves tomorrow. WMB, DYN, and EP look good. I will not add these to the Bulletin yet because they are typically slow movers. However, I wanted to make you aware of them because they could see follow through tomorrow. They will be good for a quick gain for the active trader. I did not update the long list tonight but keep an eye on NAVR and EAGL tomorrow; I may enter these stocks soon
As always, thank-you for your support past, present and future! Have a great night everyone; we will see you all Tomorrow evening.
OTC BB Watch List
- AOGI
- RDVN (up 20% today after mentioned here last night)
Joke of the Week
The real definition of a Stock Split -- When your ex-wife and her lawyer split your assets equally between themselves.
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