Stocks rallied nicely for the second day in a row, in spite of a big move up in crude oil of over $4 on a decline in gasoline stocks. The market opened higher and continued up for the rest of the day, as traders are becoming more convinced that the bottom is in for financial stocks. Jim Cramer also proclaimed that the bear market is dead! Well, it is quite possible that this may be the case, as the market has shrugged off the big down days of last week, and is ready to test the July highs. However, there is still some major data due out the rest of the week, and this market seems capable of turning on a dime, so tread carefully!
As mentioned, Crude Oil was strong today, up over $4 on the September contract. Some analysts remain quite bullish, and recent data suggests that speculators had net short positions as of the last week, according to Commitments of Traders data. As such, oil was due for a bounce after its recent sell-off. However, this appears to be just another opportunity to sell this market. A rally up to $135, or even the highs over $145 would not be surprising, considering the mood of traders, but afterward, this market looks toppy. Stay tuned!
Crude Oil’s rally today killed off the Dollar’s attempt to move higher, and it remained relatively unchanged on the day. It is notable that the recently strong Aussie$ appears to have rolled over, as it made fresh 1 month lows today.
In other markets, Corn continued to bounce off of its recent low, but the trend in this market remains to the downside, and this bounce is providing an opportunity for shorts to increase their positions. In the metals markets, there was a bit of a divergence today, as Gold was sharply lower, while Silver and Copper, which have more industrial uses, bounced off of their lows, and closed higher for the session. This could be a further sign that traders are convinced the economy may be ready to turn.
Due to the strength in the industrial commodities, the industrial oriented and coal stocks showed a lot of strength today. Some of these stocks look set to test their recent all time highs after significant sell-offs. I still believe these stocks require more time to form bases before considering any intermediate and long term positions. These stocks are simply too volatile at this point.
In regard to our Ultimate Stock Trading System, we have a couple stocks we are monitoring for potential buy signals in the next week.
Good Trading!
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
Wednesday, July 30, 2008
Monday, July 28, 2008
Bear Market Growls as Stocks Tumble
The Bear Market re-asserted itself Monday as financial stocks, tech stocks and telecom stocks took a sizable beating. AAPL continues to drop after a decent earnings report last month, but conservative guidance. The stock looks like it may want to head down to the $115 level where it bottomed in February.
Stocks look set to re-test the July lows after a couple sizable down days in the last few trading sessions. Interestingly, Merrill Lynch, one of the big financials, made a new low today, which could be an ominous sign for the rest of the sector in the near term.
This will be a big week for the stock market as major economic data is due (2nd Quarter GDP and July Employment), and earnings season continues. Significantly weak data could provide the market with the opportunity to test the lows. Unless we can get a spike in the VIX up to the 35 level, not sure it will be a successful test. The market can go through its lows by a decent margin and still achieve a successful test if it gets a good bounce off of the new low. Stay tuned!
In the futures markets, Crude was up a little today, and the Dollar was slightly weaker. The sell-off in financials provided a nice boost to the Treasury markets, which were sharply higher today, reversing Friday’s sell-off. These markets are having a difficult time finding direction lately, and have been quite volatile, so be careful!
This week, Corn and Soybeans have set up nicely for short term swing trades to the downside. Cotton looks like a potential trend following trade to the downside on a break below 68 in the October contract.
Good Trading!
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
Stocks look set to re-test the July lows after a couple sizable down days in the last few trading sessions. Interestingly, Merrill Lynch, one of the big financials, made a new low today, which could be an ominous sign for the rest of the sector in the near term.
This will be a big week for the stock market as major economic data is due (2nd Quarter GDP and July Employment), and earnings season continues. Significantly weak data could provide the market with the opportunity to test the lows. Unless we can get a spike in the VIX up to the 35 level, not sure it will be a successful test. The market can go through its lows by a decent margin and still achieve a successful test if it gets a good bounce off of the new low. Stay tuned!
In the futures markets, Crude was up a little today, and the Dollar was slightly weaker. The sell-off in financials provided a nice boost to the Treasury markets, which were sharply higher today, reversing Friday’s sell-off. These markets are having a difficult time finding direction lately, and have been quite volatile, so be careful!
This week, Corn and Soybeans have set up nicely for short term swing trades to the downside. Cotton looks like a potential trend following trade to the downside on a break below 68 in the October contract.
Good Trading!
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
Sunday, July 27, 2008
Weekly Stock Market Re-Cap
The Stock Market ended the week mixed, with 1% plus gains in the Nasdaq and Russell 2000 averages on Friday, but much more modest gains in the Dow Jones and S&P 500 indexes. The week was mixed with strong gains seen in the Russell 2000, but a 1% loss in the Dow. Profit taking was seen in the financial stocks, which had a huge bounce off of their lows of a couple weeks ago, as short sellers were caught with their hands reaching back into the cookie jar.
Overall, bear trends remain in place, but new leadership appears to be emerging within the small cap sector, as evidenced by the sizable move up in the Russell 2000 average over the last couple of weeks. Financial stocks continue to weigh down the S&P 500 and Dow Jones, as the real estate market continues to show weakness. For another couple of weeks, quarterly earnings reports should be the primary driver of stock prices.
In other markets, the Dollar enjoyed a positive week as Crude Oil continued its slide downward. Treasury futures gave back much of their gains from Thursday on Friday. Treasuries are locked into a rather wide trading range, reflecting a tug-of-war between inflationary expectations and economic weakness.
Good trading!
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
Overall, bear trends remain in place, but new leadership appears to be emerging within the small cap sector, as evidenced by the sizable move up in the Russell 2000 average over the last couple of weeks. Financial stocks continue to weigh down the S&P 500 and Dow Jones, as the real estate market continues to show weakness. For another couple of weeks, quarterly earnings reports should be the primary driver of stock prices.
In other markets, the Dollar enjoyed a positive week as Crude Oil continued its slide downward. Treasury futures gave back much of their gains from Thursday on Friday. Treasuries are locked into a rather wide trading range, reflecting a tug-of-war between inflationary expectations and economic weakness.
Good trading!
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
Thursday, July 24, 2008
Weak Housing data causes Stock Market Sell-off
A weak housing report suggesting that the housing market is nowhere near recovery sent stocks tumbling on Thursday, effectively ending the recent rally. This was not a good day, with the major averages off anywhere from 1.5% to 2.5% and more. Today’s price action suggests that we must test the recent lows in order to have a chance at a more significant rally going forward. It will not be necessary for the markets to make new lows in order for a successful test to occur. However, that may be what is necessary to truly cleanse this market so that a bull market may begin anew.
One positive development is that in spite of the stock market declines today, the Dollar pushed a little higher closed above its 20 day moving average for the second day in a row. Most of the strength came against the British Pound, but the Dollar gained against most currencies, except for the Yen.
The weak housing data also sparked a nice rally in Treasuries today, and 10 year notes enjoyed their biggest one day gains in months. Commodity prices were generally flat today, except for Natural Gas, which continued to plunge as supplies continue to build. This market is now down over 30% from its closing high just three weeks ago.
Traders interested in putting a little risk capital at work should consider SQNM. This is the top stock on our list at the momentum. It is not meeting all of our trading criteria just yet, but it is a top performer and is offering a relatively low risk entry for more aggressive traders. GTLS also appears to be heading for our list for next week.
Good Trading!
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
One positive development is that in spite of the stock market declines today, the Dollar pushed a little higher closed above its 20 day moving average for the second day in a row. Most of the strength came against the British Pound, but the Dollar gained against most currencies, except for the Yen.
The weak housing data also sparked a nice rally in Treasuries today, and 10 year notes enjoyed their biggest one day gains in months. Commodity prices were generally flat today, except for Natural Gas, which continued to plunge as supplies continue to build. This market is now down over 30% from its closing high just three weeks ago.
Traders interested in putting a little risk capital at work should consider SQNM. This is the top stock on our list at the momentum. It is not meeting all of our trading criteria just yet, but it is a top performer and is offering a relatively low risk entry for more aggressive traders. GTLS also appears to be heading for our list for next week.
Good Trading!
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
Wednesday, July 23, 2008
Stock market rally continues with modest advance
U.S. Stocks continued the recent rally with a small advance Wednesday, buoyed by another $4 drop in Crude Oil prices, but tempered by earnings reports. The advances were also tempered by weakness in energy related stocks, as well as agricultural related stocks, as commodity prices continued their recent declines. In a recent post, I mentioned that the last brief rally in these stocks was likely the last opportunity to lock in profits near their highs. That opportunity is now gone, as these stocks are now making new lows for this move to the downside. This is confirmation that new leadership will emerge to take the market higher when this bear market ends.
Good Trading!
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
Good Trading!
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
Trading and Investing in a Bear Market
As I browse the typical investing discussion forums, I am continually amazed at how many people are interested in knowing whether now is a good time to buy some stocks that have absolutely been crushed by the ongoing bear market, while there have been some stocks that actually doubled in value or more in 2008 (JRCC, ANR, WLT, FDG are a few that come to mind).
Quite honestly, this is not a common occurrence in a bear market, as 3 out of 4 stocks will decline during such market conditions, and typically more than the Dow Jones Industrial Average or S&P 500 index themselves. However, it makes absolutely no sense to buy a stock that has declined day after day, when other stocks have held up reasonably well during the decline.
I actually read in one forum a question of whether it would be smart to consider investing in one particular stock that had declined from $35 to under $2 per share. Such an investment would be pure speculation! The stock declined 90% because its business was no longer viable! Stocks do not decline 90% if they are managed well and have a good business.
I recently posed this question to a friend in regard to investing... “when you are looking for a doctor while you are in need of surgery, do you go straight to the cheapest doctor, or the more expensive one with the good reputation?” Her answer was naturally the second choice. I then asked her “when looking for a stock to buy, are you more interested in the cheapest stock, or the more expensive stock that has been more profitable?”
You see, stocks are priced based on their ability to generate profits, and shareholder value. A stock that is in decline is declining for a reason. Now, it may just be that economic conditions do not allow that stock to perform very well, or it may just be that the stock is declining because the overall market is declining. However, if there has been a significant change in the company’s business, and the stock has declined significantly because of that, then it is not a good time to buy that stock. That is pure speculation. You have no idea when that company’s business will turnaround, and chances are, you are not Warren Buffett, with billions of dollars to invest, and the ability to influence the management of a company.
Therefore, it is essential that you focus your attention only on the strongest performing stocks. You can screen for stocks that have generated consistent profits and have outperformed the market averages. When the stock market turns around, it will be these leaders that will provide you with the best returns.
One other question that concerns me is that people want to trade or invest while the market is in decline and the economy is performing poorly. Well, this is actually a good time to invest in high quality stocks that you will hold for a long period of time, but most people are looking for substantial performance in a much shorter period of time. While the current bear market has yielded some strong performing issues in the energy sector (coal companies in particular this year, solar stocks in 2007), and agricultural sector, it is generally a wiser move to just sit tight while waiting for conditions to improve!
The most successful investors have had the patience to wait for the right opportunities when the market is ready to yield profits more easily. It makes no sense to try and buy a stock when it is in decline, as you simply have no idea how low it will go. Just look at MBIA, Countrywide Financial, Bear Stearns and Lehman Brothers! Some smart investors got burned by all of these stocks by buying them because they looked cheap after declining 30% to 50%, and then they fell much further!
Therefore, the smart thing to do in a bear market is sit tight, and monitor the market for the next great opportunities. Investors Business Daily is a great publication that allows you to monitor that best performing sectors and the emerging stock market leaders. I personally use the TC2000 software package by Worden Brothers to screen for the best performing stocks simply by identifying the stocks that have risen the most above their 52 week lows, and are closest to their 52 week highs. I then wait for these stocks to consolidate for a bit so that they offer a low risk entry price to enter a new position.
Now, when will you know whether it is safe to at least dip your toe in the water and consider buying a new stock? Well, last week we had a couple 200 plus point up day in the Dow Jones, and today we had a strong reversal to the upside after a weak open. This suggests that there is some new buying in the market, and this rally may have some legs. However, you must tread lightly until all of the major average surpass their May highs. If the markets are able to close well above these highs, and stay there for more than a few days, then it is very likely the bear market is over. Until then, sit tight and do your homework!
Once you have determined that it is safe to consider buying a new stock, figure out at what price you want to buy it, AND where you will sell it in case it starts to decline immediately and you have a loss! The easiest thing to do in trading and investing is figuring out what to buy, and maybe what price to buy. However, most people have no clue when to sell. A decent rule of thumb is to sell if the stock sells off over 7% below your purchase price. You must get out, and do not HOPE the stock will turn around. If it is a good stock, it will eventually, and you can re-enter. But, you must cut your losses when they occur.
If the stock then rises in price, learn how to lock in profits with trailing stops by monitoring the stock’s price action. Look for swing lows and support levels where the stock sold off to on a minor pullback, but then resumed its uptrend. These are excellent levels to exit positions if they are violated to the downside. Also, it is important to monitor unusual price and volume action in the stock. A sizable one day decline on large volume suggests distribution by large money managers, indicating they are no longer confident that the stock will continue to rise.
These are just a few tips for you to develop a trading/investing plan. The fact is, there are many ways to skin a cat, but you will always have the odds in your favor if you only focus on the top performing stocks.
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
Quite honestly, this is not a common occurrence in a bear market, as 3 out of 4 stocks will decline during such market conditions, and typically more than the Dow Jones Industrial Average or S&P 500 index themselves. However, it makes absolutely no sense to buy a stock that has declined day after day, when other stocks have held up reasonably well during the decline.
I actually read in one forum a question of whether it would be smart to consider investing in one particular stock that had declined from $35 to under $2 per share. Such an investment would be pure speculation! The stock declined 90% because its business was no longer viable! Stocks do not decline 90% if they are managed well and have a good business.
I recently posed this question to a friend in regard to investing... “when you are looking for a doctor while you are in need of surgery, do you go straight to the cheapest doctor, or the more expensive one with the good reputation?” Her answer was naturally the second choice. I then asked her “when looking for a stock to buy, are you more interested in the cheapest stock, or the more expensive stock that has been more profitable?”
You see, stocks are priced based on their ability to generate profits, and shareholder value. A stock that is in decline is declining for a reason. Now, it may just be that economic conditions do not allow that stock to perform very well, or it may just be that the stock is declining because the overall market is declining. However, if there has been a significant change in the company’s business, and the stock has declined significantly because of that, then it is not a good time to buy that stock. That is pure speculation. You have no idea when that company’s business will turnaround, and chances are, you are not Warren Buffett, with billions of dollars to invest, and the ability to influence the management of a company.
Therefore, it is essential that you focus your attention only on the strongest performing stocks. You can screen for stocks that have generated consistent profits and have outperformed the market averages. When the stock market turns around, it will be these leaders that will provide you with the best returns.
One other question that concerns me is that people want to trade or invest while the market is in decline and the economy is performing poorly. Well, this is actually a good time to invest in high quality stocks that you will hold for a long period of time, but most people are looking for substantial performance in a much shorter period of time. While the current bear market has yielded some strong performing issues in the energy sector (coal companies in particular this year, solar stocks in 2007), and agricultural sector, it is generally a wiser move to just sit tight while waiting for conditions to improve!
The most successful investors have had the patience to wait for the right opportunities when the market is ready to yield profits more easily. It makes no sense to try and buy a stock when it is in decline, as you simply have no idea how low it will go. Just look at MBIA, Countrywide Financial, Bear Stearns and Lehman Brothers! Some smart investors got burned by all of these stocks by buying them because they looked cheap after declining 30% to 50%, and then they fell much further!
Therefore, the smart thing to do in a bear market is sit tight, and monitor the market for the next great opportunities. Investors Business Daily is a great publication that allows you to monitor that best performing sectors and the emerging stock market leaders. I personally use the TC2000 software package by Worden Brothers to screen for the best performing stocks simply by identifying the stocks that have risen the most above their 52 week lows, and are closest to their 52 week highs. I then wait for these stocks to consolidate for a bit so that they offer a low risk entry price to enter a new position.
Now, when will you know whether it is safe to at least dip your toe in the water and consider buying a new stock? Well, last week we had a couple 200 plus point up day in the Dow Jones, and today we had a strong reversal to the upside after a weak open. This suggests that there is some new buying in the market, and this rally may have some legs. However, you must tread lightly until all of the major average surpass their May highs. If the markets are able to close well above these highs, and stay there for more than a few days, then it is very likely the bear market is over. Until then, sit tight and do your homework!
Once you have determined that it is safe to consider buying a new stock, figure out at what price you want to buy it, AND where you will sell it in case it starts to decline immediately and you have a loss! The easiest thing to do in trading and investing is figuring out what to buy, and maybe what price to buy. However, most people have no clue when to sell. A decent rule of thumb is to sell if the stock sells off over 7% below your purchase price. You must get out, and do not HOPE the stock will turn around. If it is a good stock, it will eventually, and you can re-enter. But, you must cut your losses when they occur.
If the stock then rises in price, learn how to lock in profits with trailing stops by monitoring the stock’s price action. Look for swing lows and support levels where the stock sold off to on a minor pullback, but then resumed its uptrend. These are excellent levels to exit positions if they are violated to the downside. Also, it is important to monitor unusual price and volume action in the stock. A sizable one day decline on large volume suggests distribution by large money managers, indicating they are no longer confident that the stock will continue to rise.
These are just a few tips for you to develop a trading/investing plan. The fact is, there are many ways to skin a cat, but you will always have the odds in your favor if you only focus on the top performing stocks.
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
Tuesday, July 22, 2008
Stocks enjoy nice rally as Crude Oil Drops Again
The U.S. stock market opened weaker today, but once Crude Oil started to head lower, stocks turned around, and made a last hour charge, suggesting this current rally has more legs to the upside. This morning I warned readers of some earnings reports that were going to lead to a weak open. However, the weak open was somewhat muted and stocks began to turn around immediately. As the sell-off in Crude Oil worsened, stocks seemed to get more legs, lead by financials. In the last hour, they exploded to the upside, with all the major averages closing up over 1% on the day.
Although this ended up being a solid day to the upside, a stronger day is required for this current rally, which began last week, to have confirmation that there is potential to test the May highs.
Nonetheless, this rally is bringing some new leadership to the forefront as the energy and agricultural related stocks start to slip to the wayside. Once this current rally runs its course, and a re-test of the lows occurs, there will be an opportunity to buy some the new leaders at low risk entry points. At this point though, the list remains pretty small.
Also benefiting from the sell-off in Crude Oil was the U.S. Dollar, which was up nearly half a cent on the day. Most of the dollar strength came against the Euro, as the European Central Bank may be less inclined to raise rates in the face of a weakening economy, especially with crude oil slipping.
In other markets, most commodities joined Crude Oil to the downside, particularly Gold, Silver and Corn. Treasury futures were also modestly lower on the day.
Good Trading!
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
Although this ended up being a solid day to the upside, a stronger day is required for this current rally, which began last week, to have confirmation that there is potential to test the May highs.
Nonetheless, this rally is bringing some new leadership to the forefront as the energy and agricultural related stocks start to slip to the wayside. Once this current rally runs its course, and a re-test of the lows occurs, there will be an opportunity to buy some the new leaders at low risk entry points. At this point though, the list remains pretty small.
Also benefiting from the sell-off in Crude Oil was the U.S. Dollar, which was up nearly half a cent on the day. Most of the dollar strength came against the Euro, as the European Central Bank may be less inclined to raise rates in the face of a weakening economy, especially with crude oil slipping.
In other markets, most commodities joined Crude Oil to the downside, particularly Gold, Silver and Corn. Treasury futures were also modestly lower on the day.
Good Trading!
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
Tuesday Morning Commentary
Due to some events of the morning, I thought it necessary to update readers in regards to the stock market this morning. Apple shares are getting pounded before today’s market opening, down over $16 from Monday’s close. This will put significant pressure on the Nasdaq. The price drop is in reaction to Apple’s earnings report last night, which included a conservative forecast for the rest of the year.
Treasury Secretary Paulson just finished another speech in regard to Fannie Mae, Freddie Mac and the rest of the financial sector, which appears to have provided some support to the market, but it will still open significantly weaker.
As I mentioned in my post last night, the rally from last week appears to have lost its steam, and the market looks set to re-test its most recent lows. Once that happens, we need to see a big follow through day to the upside if the recent rally is to turn into something bigger.
Good Trading!
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
Treasury Secretary Paulson just finished another speech in regard to Fannie Mae, Freddie Mac and the rest of the financial sector, which appears to have provided some support to the market, but it will still open significantly weaker.
As I mentioned in my post last night, the rally from last week appears to have lost its steam, and the market looks set to re-test its most recent lows. Once that happens, we need to see a big follow through day to the upside if the recent rally is to turn into something bigger.
Good Trading!
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
Monday, July 21, 2008
Stocks ready for Re-Test of Lows?
Today was another typical slow summer Monday for the stock market. Based upon Friday’s price action, and today’s, it looks like the current rally has run out of steam, and the market is ready to re-test the recent lows.
After the market closed, there were two big earnings reports that should have a significant impact on Tuesday’s trading. Apple reported earnings a bit better than expectations, but its guidance remained conservative. After hours trading saw Apple shares trading as much as $8 below Monday’s close, but rebounding sharply after the earnings announcement, and were essentially unchanged as I write this post.
Also reporting earnings was American Express, and it was a weak report. As a result, the stock was down over 10% after hours. This will have a significant impact on the Dow Jones on Tuesday.
In regard to our Ultimate Stock Trading System, it remains 100% in cash. Presently, there are only a couple stocks that are viewed as potential trading opportunities in the near future. First, though, the overall market likely needs to re-test its lows and begin a true rally for these stocks to step up.
In other markets, Crude Oil was up over $2.00 today after trading in a relatively narrow range. There is a new tropical storm in the Gulf of Mexico, which could impact some of the refineries and drilling platforms. A rally from these levels could actually provide a good shorting opportunity.
Elsewhere, the Dollar was modestly weak today, and Gold rallied over $5.00, within a narrow range. Corn and Soybeans were off sharply again, as those bull markets are clearly over. In spite of the Dollar weakness today, Treasuries were up slightly.
Good Trading!
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
After the market closed, there were two big earnings reports that should have a significant impact on Tuesday’s trading. Apple reported earnings a bit better than expectations, but its guidance remained conservative. After hours trading saw Apple shares trading as much as $8 below Monday’s close, but rebounding sharply after the earnings announcement, and were essentially unchanged as I write this post.
Also reporting earnings was American Express, and it was a weak report. As a result, the stock was down over 10% after hours. This will have a significant impact on the Dow Jones on Tuesday.
In regard to our Ultimate Stock Trading System, it remains 100% in cash. Presently, there are only a couple stocks that are viewed as potential trading opportunities in the near future. First, though, the overall market likely needs to re-test its lows and begin a true rally for these stocks to step up.
In other markets, Crude Oil was up over $2.00 today after trading in a relatively narrow range. There is a new tropical storm in the Gulf of Mexico, which could impact some of the refineries and drilling platforms. A rally from these levels could actually provide a good shorting opportunity.
Elsewhere, the Dollar was modestly weak today, and Gold rallied over $5.00, within a narrow range. Corn and Soybeans were off sharply again, as those bull markets are clearly over. In spite of the Dollar weakness today, Treasuries were up slightly.
Good Trading!
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
Thursday, July 17, 2008
Crude Plunges, Stocks Rally!
Ok, we had a nice follow through on Wednesday’s rally, accompanied by a plunge in energy prices. As such, I suspect we have seen the beginnings of a longer term rally! Whether this turns into anything more than a Bear Market rally, only time will tell. Next week, we still need to see a significant follow through day, or this will likely turn into nothing but an oversold rally within the current leg down in an ongoing Bear Market. Today though, we should celebrate, as there were some positive developments throughout the marketplace.
First and foremost, Crude Oil plunged through the $132 level to close below $130. I had mentioned $131 as the key number, as most sell orders would be triggered below $132. Floor traders and short term traders would be aware of that, and attempt to trigger those orders, only to buy them back en masse. So, we really needed to see a close under $131 to give any weight to a break below $132. That happened today, and Oil closed below some key moving averages for the first time in five months. This suggests that the current rally is over, and path of least resistance should be to the downside. Also, Natural Gas sold off sharply again today, and is now over 20% below its highs, and its moving averages have rolled over as well.
Interestingly, Treasury futures sold off again today in spite of what appears to be the potential for easing inflationary pressures. There is now the possibility that the economy is not quite as weak as investors have thought. This is due to some decent earnings reports over the last couple of days, and some stronger than expected housing data reported this morning. As such, the chances of the Fed easing again this year are dissipating again.
Although the Dollar has benefited somewhat from rising interest rates in the last couple of days, its chart still looks a little ominous. It has now pulled back up to an important downtrending moving average, and needs a significant close above that to signify some potential strength in the near future.
In other markets, agricultural commodities such as Corn, Soybeans, Sugar, Coffee and Cocoa sold off sharply.
As I mentioned the other day, if you had not sold off any of your positions in the high flying coal stocks such as JRCC, WLT, and ANR that were on our Ultimate Stocks list for weeks, and agricultural related stocks such as POT and MOS, you would have had a second chance to get out. Well, that chance may have come and gone now based upon today’s selling in these issues. If you are not out yet, you need to get out soon.
Good Trading!
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
First and foremost, Crude Oil plunged through the $132 level to close below $130. I had mentioned $131 as the key number, as most sell orders would be triggered below $132. Floor traders and short term traders would be aware of that, and attempt to trigger those orders, only to buy them back en masse. So, we really needed to see a close under $131 to give any weight to a break below $132. That happened today, and Oil closed below some key moving averages for the first time in five months. This suggests that the current rally is over, and path of least resistance should be to the downside. Also, Natural Gas sold off sharply again today, and is now over 20% below its highs, and its moving averages have rolled over as well.
Interestingly, Treasury futures sold off again today in spite of what appears to be the potential for easing inflationary pressures. There is now the possibility that the economy is not quite as weak as investors have thought. This is due to some decent earnings reports over the last couple of days, and some stronger than expected housing data reported this morning. As such, the chances of the Fed easing again this year are dissipating again.
Although the Dollar has benefited somewhat from rising interest rates in the last couple of days, its chart still looks a little ominous. It has now pulled back up to an important downtrending moving average, and needs a significant close above that to signify some potential strength in the near future.
In other markets, agricultural commodities such as Corn, Soybeans, Sugar, Coffee and Cocoa sold off sharply.
As I mentioned the other day, if you had not sold off any of your positions in the high flying coal stocks such as JRCC, WLT, and ANR that were on our Ultimate Stocks list for weeks, and agricultural related stocks such as POT and MOS, you would have had a second chance to get out. Well, that chance may have come and gone now based upon today’s selling in these issues. If you are not out yet, you need to get out soon.
Good Trading!
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
Wednesday, July 16, 2008
Big Rally for Stocks, but...
The U.S. Stock Market enjoyed a sizable rally today, with the major averages up anywhere from 2.5% to over 3%. This should be the start of at least a short term move to the upside, and maybe something more significant. However, today’s rally occurred with a decline in volume compared to yesterday, not a good sign of conviction. If this is to turn into at least an intermediate term rally, we need to see a follow through day within the next week. This means a day with gains similar to today, but hopefully on higher volume.
The news of the day was that Wells Fargo reported better than expected earnings and that got the market started, in spite of a nasty CPI inflation report. Then, Crude Oil provided the boost for the rest of the day, as it plunged another $4 per barrell today. It broke initial support at $136, but $131 is the key level to watch, as many commodity funds will have sell orders triggered on a break below that level.
Elsewhere, Treasury futures dropped a bit on the inflation news, while Crude Oil’s plunge benefited the Dollar a bit, which enjoyed a modest bounce. It still has significant work to do to end its long term downtrend. Naturally, with some Dollar strength today, Gold took a dive. Natural Gas ended lower today, but only modestly so. This market has collapsed significantly of late, suggesting its bull run may be over for quite a while. Finally, the grain markets ended their recent slide with a decent rally today, but Corn definitely appears to have seen its high price for the year.
Good Trading!
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
The news of the day was that Wells Fargo reported better than expected earnings and that got the market started, in spite of a nasty CPI inflation report. Then, Crude Oil provided the boost for the rest of the day, as it plunged another $4 per barrell today. It broke initial support at $136, but $131 is the key level to watch, as many commodity funds will have sell orders triggered on a break below that level.
Elsewhere, Treasury futures dropped a bit on the inflation news, while Crude Oil’s plunge benefited the Dollar a bit, which enjoyed a modest bounce. It still has significant work to do to end its long term downtrend. Naturally, with some Dollar strength today, Gold took a dive. Natural Gas ended lower today, but only modestly so. This market has collapsed significantly of late, suggesting its bull run may be over for quite a while. Finally, the grain markets ended their recent slide with a decent rally today, but Corn definitely appears to have seen its high price for the year.
Good Trading!
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
Tuesday, July 15, 2008
Roller Coaster Day for Stocks
Most traders were property just about sick to their stomachs by the close of trading today after a roller coaster ride of a day in the stock market! The market was set to open lower, and the Dow Jones was down about 100 points within a few minutes. Fed Chairman Bernanke’s comments then sent the market lower, but Treasury Secretary Paulson’s comments indicating that the Treasury should have unlimited funds to help support Fannie Mae and Freddie Mac, along with a plunging crude oil market, helped the stock market erase a 200 plus point loss in the Dow. The Dow was looking like it might end up with triple digit gains, but the rally evaporated in the last hour, and it ended down nearly 1%. The result was a mixed market, with the Nasdaq up slightly, and the S&P 500 and Dow Transports down over 1%.
On a positive contrarian note, the VIX pushed above 30 today, before closing at about 28.5. This indicates that there is beginning to be more fear in the market, which will need to set an intermediate type of bottom.
Crude Oil was off over $6.00 per barrel today, and nearby support for many trend followers is at about the $136 level on the August Contract, which will be expiring soon. Significant moving average support is at this level as well. A break below this level, and then below $130 could finally lead to a significant break in this market. On Wednesday, all eyes will be on the supply report at 10:30 AM.
The Dollar tested its multi-month lows, before rebounding to close nearly unchanged on the day. Treasury futures closed in positive territory, but a bit off their high prices for the day.
Good Trading!
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
On a positive contrarian note, the VIX pushed above 30 today, before closing at about 28.5. This indicates that there is beginning to be more fear in the market, which will need to set an intermediate type of bottom.
Crude Oil was off over $6.00 per barrel today, and nearby support for many trend followers is at about the $136 level on the August Contract, which will be expiring soon. Significant moving average support is at this level as well. A break below this level, and then below $130 could finally lead to a significant break in this market. On Wednesday, all eyes will be on the supply report at 10:30 AM.
The Dollar tested its multi-month lows, before rebounding to close nearly unchanged on the day. Treasury futures closed in positive territory, but a bit off their high prices for the day.
Good Trading!
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
Monday, July 14, 2008
Bear Market Rolls On, Pessimism on the Rise
As expected, the stock market got a boost from Sunday’s news that the government would take steps to aid ailing mortgage backers Fannie Mae and Freddie Mac. Unfortunately, the opening pop fizzled quickly and the market trended down the rest of the day. Pessimism is clearly the order of the day at present with the S&P 500 and Dow Jones Industrial Average continuing to extend its bear market lows on a daily basis it seems. Today, however, the Russell 2000 was the leader to the downside, down over 1.5%.
One good sign for the market is that there are very few bulls to be found, with sentiment very weak. The VIX is now starting to approach 30, closing over 28 today. The March high was over 35 and the January high was over 37, intraday. The higher the figure, the more likely a bottom is near.
There has also been a noticeable increase in daily volatility, but the average daily price range is still well below those seen at the March and January bottoms. Current volatility is nowhere near the levels seen at the bottom of the 2001-03, and not even at the levels seen at the 1998 bottom.
With all this in mind, the market is clearly due for a bounce, but it is apparent that there is no sign of a Bear Market Bottom yet. We may get a rally soon from the current lows, but it likely will not be the Bear Market bottom. Bear Markets rarely die with a whimper.
Some of the recent energy and agricultural related stocks such as ANR, WLT, MEE and others are starting to rally again, and may test their recent highs. Be careful with these stocks as their recent sell-offs indicated clear distribution. If you did not sell at or near the recent highs, this is likely your second and last opportunity to sell these stocks.
In other markets, Treasuries rallied on the stock market weakness, and the Dollar fell against most major currencies. The Euro made a new high earlier in the session, and the Aussie$ closed at new highs. Crude Oil was essentially unchanged, while Gold rallied strongly, and is approaching the $1,000 level again, after trading below $900 as recently as three weeks ago.
Good Trading!
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
One good sign for the market is that there are very few bulls to be found, with sentiment very weak. The VIX is now starting to approach 30, closing over 28 today. The March high was over 35 and the January high was over 37, intraday. The higher the figure, the more likely a bottom is near.
There has also been a noticeable increase in daily volatility, but the average daily price range is still well below those seen at the March and January bottoms. Current volatility is nowhere near the levels seen at the bottom of the 2001-03, and not even at the levels seen at the 1998 bottom.
With all this in mind, the market is clearly due for a bounce, but it is apparent that there is no sign of a Bear Market Bottom yet. We may get a rally soon from the current lows, but it likely will not be the Bear Market bottom. Bear Markets rarely die with a whimper.
Some of the recent energy and agricultural related stocks such as ANR, WLT, MEE and others are starting to rally again, and may test their recent highs. Be careful with these stocks as their recent sell-offs indicated clear distribution. If you did not sell at or near the recent highs, this is likely your second and last opportunity to sell these stocks.
In other markets, Treasuries rallied on the stock market weakness, and the Dollar fell against most major currencies. The Euro made a new high earlier in the session, and the Aussie$ closed at new highs. Crude Oil was essentially unchanged, while Gold rallied strongly, and is approaching the $1,000 level again, after trading below $900 as recently as three weeks ago.
Good Trading!
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
Sunday, July 13, 2008
Weekly Stock Market Recap
The Dow Jones closed down for the sixth consecutive week, ending with another solid decline on Friday. The S&P 500 had the worst week among the major averages, due to its heavy weighting with financial stocks, which lead the market lower. Otherwise, the Nasdaq and ND100 had minor losses for the week, while the Russell 2000 and even the Dow Transports closed up for the week. There clearly appears to be cash flowing into some techs and small cap stocks.
Stocks were spooked primarily on Friday by rumors that Fannie Mae and Freddie Mac would be allowed by the Federal Reserve and Treasury to fail, which would worsen the residential real estate crisis. This sent the market into a tailspin. Later in the day, it was rumored that the Federal Reserve would open the discount window to both companies, but then that was denied after the markets closed. Stocks closed well off of the lows Friday. Sunday, it was officially announced that the discount window would indeed be open to both companies, and Treasury Secretary Paulson indicated that the government would extend its line of credit to both companies as well.
Further pressure was put on the stock market this week by a big two-day rally in Crude Oil, which pushed to new all time highs, before pulling back a bit on Friday. Dollar weakness all week also did not help the market. The Dollar pushed to new two-month lows on Friday, and is just over 1% above its 40 year lows seen in April. With all this turmoil in the markets on Friday, even Treasuries took a big hit, wiping out its rally of the previous four days. The 10 Year Note experienced its biggest one day decline in months.
Based on today’s news regarding Fannie Mae and Freddie Mac, it would be no surprise to some sort of rally early on Monday. Whether this leads to something more significant, only time will tell.
Our Ultimate Stock Trading System is still presently in 100% cash.
Good Trading!
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
Stocks were spooked primarily on Friday by rumors that Fannie Mae and Freddie Mac would be allowed by the Federal Reserve and Treasury to fail, which would worsen the residential real estate crisis. This sent the market into a tailspin. Later in the day, it was rumored that the Federal Reserve would open the discount window to both companies, but then that was denied after the markets closed. Stocks closed well off of the lows Friday. Sunday, it was officially announced that the discount window would indeed be open to both companies, and Treasury Secretary Paulson indicated that the government would extend its line of credit to both companies as well.
Further pressure was put on the stock market this week by a big two-day rally in Crude Oil, which pushed to new all time highs, before pulling back a bit on Friday. Dollar weakness all week also did not help the market. The Dollar pushed to new two-month lows on Friday, and is just over 1% above its 40 year lows seen in April. With all this turmoil in the markets on Friday, even Treasuries took a big hit, wiping out its rally of the previous four days. The 10 Year Note experienced its biggest one day decline in months.
Based on today’s news regarding Fannie Mae and Freddie Mac, it would be no surprise to some sort of rally early on Monday. Whether this leads to something more significant, only time will tell.
Our Ultimate Stock Trading System is still presently in 100% cash.
Good Trading!
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
Wednesday, July 9, 2008
Stocks Whipsaw, Bear reasserts itself
The stock market bulls enjoyed exactly one day of bliss before the Bear Market decided to give traders a little more pain. Today’s losses for the most part more than offset yesterday’s gains, particularly in the Dow, S&P 500 and Nasdaq. Bucking this trend was yesterday’s top performer, the Russell 2000, which was still down significantly, but not enough to offset yesterday’s gains. Today’s culprits were apparently some weak earnings reports out of the tech sector, but this mainly involved big cap techs.
In other markets, Treasuries enjoyed a nice rally, and if this current move can persist, we will begin to get some natural stimulous if the credit markets can loosen up a bit. Lower interest rates will mean lower mortgage rates, and hopefully demand for refinancing and new real estate deals. The economy desperately needs the real estate market to turn around, along with lower energy prices of course. Energy markets also cooperated some today on the back of this weeks supply report for Crude and its derivatives. Crude supplies fell more than expected, but gasoline and heating oil supplies rose more, which resulted in flat to down prices on the day. Meantime, Natural Gas sold off sharply again. Its bull move appears to be over.
Commentary from traders on CNBC today suggest that most are willing to buy the dips in the energy markets. Sooner or later, that trade will fail, and they will need to sell. That will lead to a sharper sell off that could finally kill the bull market in this sector.
Good Trading!
Scott Cole
www.theultimatestocktradingsytem.com
www.kungfutrader.com
In other markets, Treasuries enjoyed a nice rally, and if this current move can persist, we will begin to get some natural stimulous if the credit markets can loosen up a bit. Lower interest rates will mean lower mortgage rates, and hopefully demand for refinancing and new real estate deals. The economy desperately needs the real estate market to turn around, along with lower energy prices of course. Energy markets also cooperated some today on the back of this weeks supply report for Crude and its derivatives. Crude supplies fell more than expected, but gasoline and heating oil supplies rose more, which resulted in flat to down prices on the day. Meantime, Natural Gas sold off sharply again. Its bull move appears to be over.
Commentary from traders on CNBC today suggest that most are willing to buy the dips in the energy markets. Sooner or later, that trade will fail, and they will need to sell. That will lead to a sharper sell off that could finally kill the bull market in this sector.
Good Trading!
Scott Cole
www.theultimatestocktradingsytem.com
www.kungfutrader.com
Tuesday, July 8, 2008
Nice Stock Market Rally, Commodities Sell Off
The U.S. Stock market enjoyed a nice rally on Tuesday, potentially signaling at least a short term bottom. Leading the way were the small stocks, as indicated by the Russell 2000, up well over 3% on the session. The Nasdaq and ND100 followed, while the Dow lagged, held back by weak energy stocks.
The market apparently liked comments by Fed Chairman Bernanke, Treasury Secretary Paulson, and JP Morgan CEO Dimon, as well as another $5.00 drop in crude oil prices, and significant drops in other commodities such as Natural Gas and Corn.
Now, if this is to be more than just a short term rally within this current leg down within the Bear Market, we will went to see another similarly strong day within the next week. No significant rally will occur without such a follow through day. I am still concerned with the low reading in the VIX, which peaked over 26 in the current leg down. The high reading in March was over 34. However, it is not completely necessary for this indicator to confirm a new rally. Still, this suggests there has not been a complete washout or capitulation yet that could signify a more important bottom.
Good Trading!
Scott Cole
The market apparently liked comments by Fed Chairman Bernanke, Treasury Secretary Paulson, and JP Morgan CEO Dimon, as well as another $5.00 drop in crude oil prices, and significant drops in other commodities such as Natural Gas and Corn.
Now, if this is to be more than just a short term rally within this current leg down within the Bear Market, we will went to see another similarly strong day within the next week. No significant rally will occur without such a follow through day. I am still concerned with the low reading in the VIX, which peaked over 26 in the current leg down. The high reading in March was over 34. However, it is not completely necessary for this indicator to confirm a new rally. Still, this suggests there has not been a complete washout or capitulation yet that could signify a more important bottom.
Good Trading!
Scott Cole
Monday, July 7, 2008
Oil weak, but Stocks Fail to Hold Rally
The U.S. Stock Market opened trading on Monday on a positive note, and at one point the Dow was up over 100 points. This was due mainly to weak oil prices in the morning. However, once the afternoon rolled around, stocks rolled over, trading down over 100 points on the Dow. But, they managed to rally in the last hour, and ended well off session lows. A true roller coaster of a session. The main culprit is the fear of weak earnings reports, as the beginning of 2nd quarter earnings season is now upon us. As there is limited economic data due out this week, earnings reports and crude oil prices will drive the market.
The Dollar, similar to stocks, failed to hold onto early morning gains, and finished down modestly for the session. Treasury prices were generally steady today.
Interestingly, Corn prices opened locked limit down today (down 30 cents), and stayed there, indicating further weakness on Tuesday. Soybean prices sold off sharply in sympathy, down 70 cents on the November contract. Wheat prices were also very weak today and traded at three week lows. Any positive weather developments the rest of the growing season will result in sharp sell offs in these markets going forward as there is a significant weather premium built in to current prices.
Elsewhere, there were also big sell-offs in Cocoa, Coffee, Cotton and Sugar, and there was also weakness in the metals complex as well. It appears that commodity funds are pulling out again, just like they did after the huge run ups earlier in the year.
Good Trading!
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
The Dollar, similar to stocks, failed to hold onto early morning gains, and finished down modestly for the session. Treasury prices were generally steady today.
Interestingly, Corn prices opened locked limit down today (down 30 cents), and stayed there, indicating further weakness on Tuesday. Soybean prices sold off sharply in sympathy, down 70 cents on the November contract. Wheat prices were also very weak today and traded at three week lows. Any positive weather developments the rest of the growing season will result in sharp sell offs in these markets going forward as there is a significant weather premium built in to current prices.
Elsewhere, there were also big sell-offs in Cocoa, Coffee, Cotton and Sugar, and there was also weakness in the metals complex as well. It appears that commodity funds are pulling out again, just like they did after the huge run ups earlier in the year.
Good Trading!
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
Sunday, July 6, 2008
Weekly Stock Market Commentary
Stocks ended the holiday shortened week on a mixed note Thursday, with the Dow picking up 73 points while the Nasdaq fell. On the week, all the major market averages were down significantly, with the Down and S&P 500 making new Bear Market weekly lows. As mentioned after Wednesday’s trading, the Bear took a huge whack at the leading groups, i.e., the coal stocks, the steel stocks, and even the energy groups. The coal and steel stocks in particular were hit hard, essentially ending their bull moves. Primary leader JRCC, up over 1,000 percent in the last 12 months, was cut down by over 30%.
As a result of the action in the market this week, we recommend a 100% cash position. The Bear Market has now taken a bite out of all stock groups and we see few quality stocks ready to make any new, significant breakouts. Over the coming days and weeks, new leaders will begin to emerge, but it will take some time for these to develop into worthy candidates.
In the meantime, we will monitor the market for new leadership, and keep our readers aware of these new opportunities.
In other markets, the Dollar halted its recent skid with a sizable rally on Thursday. Much of this strength came against the Euro, which failed to hold a recent breakout. The Dollar continues to be most strong against the Yen.
As a result of the Dollar rally, Gold pulled back a bit on Thursday. However, Crude Oil continued its climb into record territory, closing over $145.00 on the August contract.
Elsewhere, Soybeans continued to push into new high territory, and Corn will be testing its recent highs in the next few days.
The Dollar strength on Thursday gave traders more reason to buy Treasury futures all along the yield curve as it becomes less likely the Fed will raise interest rates in 2008.
Good Trading!
Scott Cole
As a result of the action in the market this week, we recommend a 100% cash position. The Bear Market has now taken a bite out of all stock groups and we see few quality stocks ready to make any new, significant breakouts. Over the coming days and weeks, new leaders will begin to emerge, but it will take some time for these to develop into worthy candidates.
In the meantime, we will monitor the market for new leadership, and keep our readers aware of these new opportunities.
In other markets, the Dollar halted its recent skid with a sizable rally on Thursday. Much of this strength came against the Euro, which failed to hold a recent breakout. The Dollar continues to be most strong against the Yen.
As a result of the Dollar rally, Gold pulled back a bit on Thursday. However, Crude Oil continued its climb into record territory, closing over $145.00 on the August contract.
Elsewhere, Soybeans continued to push into new high territory, and Corn will be testing its recent highs in the next few days.
The Dollar strength on Thursday gave traders more reason to buy Treasury futures all along the yield curve as it becomes less likely the Fed will raise interest rates in 2008.
Good Trading!
Scott Cole
Wednesday, July 2, 2008
Bear Market hits Leading Stocks hard!
The recent leading stocks, those such as our list of Ultimate Stocks, got crushed by the Bear Market today. As I have been warning, it was just a matter of time, as these stocks have been defying gravity. Today, investors in these stocks all headed to the exits at once. Fortunately, I had been suggesting traders in these stocks take at least partial profits for the last couple of weeks. Today, these stocks, such as JRCC, WLT, ANR, FDG and CLF all were down on huge volume, trading within their largest trading ranges of these bull moves. They also broke support levels and uptrend lines. In other words, traders in these stocks should be completely out of their positions. If not, there may be one other opportunity when they try to re-test their highs, but there could be some more heavy selling before that occurs.
Since there are no other strong sectors in the market, traders should be 100% in cash at this point. Today, the S&P 500 joined the Dow at new closing lows for this Bear Market. The Nasdaq is still off its lows, but was weaker than the Dow and S&P today.
The interesting thing about all of this today is that Crude Oil settled at its highest closing price ever on the back of a supply report that showed a lower build up of supplies than traders expected. However, the list of stocks mentioned above are related to Coal. But, there was no real news involving the coal industry today, so it appears that funds that had been riding this sector moved to take profits to cover losses elsewhere.
That is what a Bear Market does. Eventually, it hits every sector and industry. Although these stocks could rally from these levels, it may take some time. The same sort of thing occured in the solar stocks earlier in the year after their big run-ups. The leader, FSLR, sold off hard for a few weeks, then scratched out a new high in May, but is now well below that level now, and was among the weaker stocks today as well.
So, time to sit back and watch for a while! Be patient! A lot of money was made in these Ultimate Stocks during a Bear Market! We will keep an eye out for the new leaders, and when they emerge at the start of the next intermediate move up, we will be there to jump on them!
Good Trading!
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
Since there are no other strong sectors in the market, traders should be 100% in cash at this point. Today, the S&P 500 joined the Dow at new closing lows for this Bear Market. The Nasdaq is still off its lows, but was weaker than the Dow and S&P today.
The interesting thing about all of this today is that Crude Oil settled at its highest closing price ever on the back of a supply report that showed a lower build up of supplies than traders expected. However, the list of stocks mentioned above are related to Coal. But, there was no real news involving the coal industry today, so it appears that funds that had been riding this sector moved to take profits to cover losses elsewhere.
That is what a Bear Market does. Eventually, it hits every sector and industry. Although these stocks could rally from these levels, it may take some time. The same sort of thing occured in the solar stocks earlier in the year after their big run-ups. The leader, FSLR, sold off hard for a few weeks, then scratched out a new high in May, but is now well below that level now, and was among the weaker stocks today as well.
So, time to sit back and watch for a while! Be patient! A lot of money was made in these Ultimate Stocks during a Bear Market! We will keep an eye out for the new leaders, and when they emerge at the start of the next intermediate move up, we will be there to jump on them!
Good Trading!
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
Tuesday, July 1, 2008
Stocks Open Weak, Close Strong
The U.S. stock market opened significantly weaker today after weakness in global markets over night, only to rally in the last couple of hours after General Motors reported that sales in June were down only 8% vs. an expected decline of 19%. After the automaker reported sales, the stock market took off, lead by the tech stocks, particularly Apple, which closed up over $7 on the day.
The market was also aided by Crude Oil failing to hold its earlier gains. After testing new all time highs again today, Crude actually closed slightly lower. However, Wednesday is a new day, and the weekly supply report will be reported as usual at 10:30 am ET.
The market was certainly due for a bounce today and was looking for any excuse to rally. Furthermore, the beginning of the month and the beginning of a new quarter are typically seasonally favorable times for the market to rally due to new investment inflows to mutual funds. Also, the few days before a holiday also tend to be favorable to the market. With these conditions in place, and likely low volume, it would not be surprising to see a sizable move up in the next couple of days.
In other markets, the Dollar firmed a bit today, Corn and Wheat sold off sharply, and Gold was off slightly.
Our list of Ultimate Stocks were flat to down overall, which is not surprising since they tend to be highly correlated to the Crude Oil market. Some of these positions should have been scaled back in the last couple of weeks.
Good Trading!
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
The market was also aided by Crude Oil failing to hold its earlier gains. After testing new all time highs again today, Crude actually closed slightly lower. However, Wednesday is a new day, and the weekly supply report will be reported as usual at 10:30 am ET.
The market was certainly due for a bounce today and was looking for any excuse to rally. Furthermore, the beginning of the month and the beginning of a new quarter are typically seasonally favorable times for the market to rally due to new investment inflows to mutual funds. Also, the few days before a holiday also tend to be favorable to the market. With these conditions in place, and likely low volume, it would not be surprising to see a sizable move up in the next couple of days.
In other markets, the Dollar firmed a bit today, Corn and Wheat sold off sharply, and Gold was off slightly.
Our list of Ultimate Stocks were flat to down overall, which is not surprising since they tend to be highly correlated to the Crude Oil market. Some of these positions should have been scaled back in the last couple of weeks.
Good Trading!
Scott Cole
www.theultimatestocktradingsystem.com
www.kungfutrader.com
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