|
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...
|
|
Sunday, December 19, 2004
Market Recap
If volatile high volume days are your cup of tea, then you had a big tea party on Friday as quadruple witching closed out the week on Wall Street with a bang. The high volume and volatility was certainly expected. Unfortunately though, the major indices spent most of the day in the red as the selling that had started on Thursday afternoon continued. The Nasdaq closed the day down –10 pts. The Dow finished lower by –55 pts, and the S&P closed down –9 pts. A good portion of the selling came right near the close as all three major indexes closed near their lows of the day. The combination of high volume and closes at the LOD as you probably already know is a short term negative and we should not be surprised if there is following through selling on Monday.
As if quadruple witching was not enough, the markets had a couple of other events to digest on Friday. Drug maker Pfizer(PFE) announced before the bell that its arthritis drug Celebrex was shown to have heart attack risk in a new trial study. PFE finished the day down 11%. Anytime one Dow stock is down 11%, it is almost guaranteed that the Dow will be down for the day. Oil continued its bounce as predicted by the chart I showed last week. Oil is now back above $46/barrel as the price climbed over $2 on Friday. With so much going on in the markets on Friday it is very difficult to tell just how much effect the higher oil prices had. I think oil still and will always have an effect on the markets, but not as dramatic as when oil first climbed up over $50/barrel. This obviously could change if oil decides to jump back above $50/barrel and blast off to new highs.
Looking Ahead
The bad news is that with about 8 trading days left in the year, I think we may have seen the highs for the year and I am leaning towards calling the recent market action a short-term double top that we are likely to pullback from. I have charts tonight that will show you why I believe this. The good news is that there is still a good amount of quality charts that I have confidence in if played with discipline. As I have said many times recently, the preferred way to enter stocks at the moment is on pullbacks to support to ensure only a small loss if we do happen to get stopped out.
As much as I would like to tell everyone on a nightly basis that the markets look ready to explode and that the bull is running, we cannot ignore what the charts are telling us. Right now based on the negative divergence I am seeing in both the Dow and the Nasdaq charts, I believe we are likely to pullback further from the recent highs. In a bull market, pullbacks are healthy, so please be assured that there is no change in my long-term bullish sentiment. The pullbacks that are not healthy are the ones that drop below trend lines and support. We are nowhere near those levels yet, so this is by no means a call to go to cash or to start shorting stocks. This is simply a reminder that we should only take what the market is willing to give us. Right now the market looks like it wants to rest, so we will continue to be cautious until the charts tell us otherwise. However, as we all know the markets can turn on a dime so we will have our cash ready to put to work if and when it does happen.
What's your style?
Occasionally I receive an email from a member asking me about how to better manage their positions and trading activity in their portfolio. The following is an exercise that might help some of you that think you are either over trading or that you have too many open positions at any given time. I would consider myself to be a fairly conservative trader. I know that we have members that are much more aggressive than myself and I know we have members that are much less aggressive than I am. So considering that my aggressiveness is about middle of the road, compare your aggressiveness to mine and then compare how many open positions you have to how many that I have open. Excluding the stocks that will be sold for year-end tax loses I currently have 6 open long positions in my TWPD swing trading account. If you consider yourself less aggressive than I am, you should currently have less than 6 open positions. If you consider yourself more aggressive, you probably have more than 6 open positions. This comparison is only for your short-term swing trades. The number of open positions that I have at any given time will always be a reflection of how much confidence that I have in the markets at that time.
Expensing Stock Options
A story that did not seem to get much coverage last Thursday was the announcement that starting next year companies will be required to deduct the cost of stock options from their profits.
http://news.moneycentral.msn.com/category/topicart...
I am not sure yet how this is going to effect the markets or, more importantly, the individual stocks of the companies that issue large amounts of stock options to their employees that are currently not expensing those stock options against their earnings. The article talks about how Apple Computer's (AAPL) 2004 earnings would have been 60% lower if they had expensed their stock options. Yuck! The problem I see is that most of the companies that will have this same problem are tech companies that already have higher than average PE's. So what will these companies do to combat this new law? My prediction is that they will develop a new way to state earnings so that these companies can still advertise the higher “pre options expensed” earnings number. This is a story that I think we need to follow closely until it is fully explained how this will play out.
Stockcharts Listing
Please vote for us once a day at stockcharts.com.
http://stockcharts.com/def/servlet/Favorites.CServ...
Thank you all for voting.
As always, thank you for your support past, present, and future! Have a great night everyone; we'll see you all tomorrow evening.
|
|
|
|
|
|
|
