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Thursday, November 04, 2004
Market Recap
The Dow tacked on another triple digit gain today as the stock market forged ahead with a super continuation rally, adding to the big gains from yesterday. The Dow is up +175 points, the NASDAQ is up +19 points, and the S&P is up +18 points. Today's rally was also sparked by a $2.00 drop in oil prices. Anytime oil drops this much in a day, the stock market will do well.
Good News All Over
There was a lot of good news in the market today. The uncertainty of the election is over, oil prices are falling, volume on this run-up the last two days has been super heavy, advancing stocks are far out numbering decliners, and the most important news of the day, the S&P 500 closed at a new 52 week high. This closing high along with a number of other factors are very bullish signs. Tomorrow we will have the employment report out before the bell. If the numbers are good, it will add fuel to this rally and this market could start to make a real big move up. Remember the list of charts from a few nights ago, the strongest stocks in the market, the leaders? Those are the stocks we need to be in if the year end rally happens as I think it will.
Last night I mentioned that I thought the NASDAQ needed to rest a bit, today it did. It was up, but certainly lagged the other indices. I believe this pause is our chance to buy stocks. We need to be selective, but I will start getting long tomorrow or Monday with a little more leniency on stops. Remember, if this is a bull market about to swing into action, we must hold stocks longer than we would in a flat or down market. Only buy stocks with super-good charts and give them a little room to work.
TSAR is an example of an excellent chart. It broke out today and I think it could run to new highs if the market turns into a running bull. $60.00 is not out of the question for TASR and that would be a 50% gain from our buy point. These are the gains we are used to when the market is running, so let your winners run. By the way, for those of you who do not follow short interest, there are 19 mil shares of TASR in the float and 16 mil or 84% are short. That is correct, 84%. All those shorted shares have to be bought to cover at some point. That is one heck of a short squeeze!!!! And can only add powerful upward momentum.
Oil Article Flashback
A couple weeks ago I posted a link for an article that was pumping up oil and oil related stocks. That article was telling us we should be long oil and buy the stocks of oil companies. Before the article was published I was bullish on oil. However, after hearing these talking heads rave about oil, I became skeptical and cautioned against following the advice of the article. We all know that when the so-called experts start talking about a stock or commodity, it is time to sell your long positions and go short. I noted the price of oil the day the article came out and said that because of this article I would not be surprised if oil is near its peak. Oil closed that day just above $55.00 and at an all time high. The next day, oil prices started to fall and have been falling ever since, now down $7.00 since the article. No surprise at all really.
Sectors Re-visited
Leading up to the election we had a couple commentaries about sectors that would do well or sectors that would decline based on the outcome of the election. If Bush was re-elected, drugs, defense, oil, utilities, and energy would all do well. Alternative energy and stem cell stocks would decline. Everything has worked out as expected in these stocks under the Bush scenario so far. With the exception of oil stocks, the groups that were supposed to do well if Bush won, have done very well the last two days. Oil stocks are flat because of the decline in oil prices; those stocks are directly tied to the price of oil. The two sectors I felt would suffer most if Kerry lost were alternative energy stocks and stem cell stocks. Both these groups were down big yesterday with continued selling today. Even in the strong rally in the markets the last two days, these stocks were down. A few of these names include FCEL, BLDP, PLUG, STEM, and ASTM. Stay away from these two groups. They will lag the market for awhile in my opinion.
OTC BB Watch List
- ONEI
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