15 Apr the Daily Stock Report

The market had a slight dip for 10 minutes this morning at the open and rebounded up. Many stocks had their buy entry on this reversal this morning and should resume this uptrend that has been going on for 2-4 months. The Dow30 was up 1.4% and the S&P 500 up 1.2%. The Asian markets were up sharply tonight at the open and sold off. As we go higher and higher, the market will tend to get more nervous and more news events may be treated as an excuse to sell.

These stocks that we are following still look “safe” to continue for a little while but keep your stops in with 5-7% trailing stops being suitable. For those who are approaching these long positions as swing trades it is likely we move up tomorrow at the open followed by some selling and this would be a logical point to sell stocks.

It would be an important barrier if stock prices move to a higher high tomorrow and it could fuel the market higher. Yet it is more likely that we have a brief positive opening, if any, considering that a report that American household foreclosures increased 24% in the first quarter. We also have housing starts, building permits and initial jobless claims.

This is the hardest part of the market to make money, after a big run-up in stocks and they are tentative to make new highs. The risk is the highest, the odds are the lowest (same thing) and the rewards are the lowest yet people don’t want to be left out of the market if it becomes a runaway train upward. Mutual fund managers can’t be left in cash when stocks are moving up, hedge funds trade the market both ways, and individuals start coming off the sidelines—all this can create a nervous twitchy market. So many people are close to the sell button.

Oil index closed up 1.3% at $49.85 and the oil index continues to have slightly lower lows and lower highs.

Intermediate Trade Positions: The following stocks all look like good intermediate trade stock ideas and any one of them would be worth a small long position.

IBM, International Business Machines
UTX, United Technologies
MA, Mastercard
AAPL, Apple Computer
BMC, BMC Software
STEC, Stec
SY, Sybase
RIMM, Research in Motion
DIOD, Diodes (semiconductor)
FCX, Freeport McMoran
BR, Broadridge
GS, Goldman Sachs
CMG, Chipotle Mexican Grill (McDonalds subsidiary)
TLM, Talisman Energy (Oil & Gas)
PBR, Petrobras
FXI, Xinhua China 25 ETF
SMH, Semiconductor ETF

Swing Trades: New Ideas: Still watching RT, Ruby Tuesday, restaurant chain as potential short sale.

Day Traders/Intraday stock ideas: Another outstanding day today with intraday trading and should continue this week. The drop and pop should continue to be very most successful. When you see the market correcting after an extended uptrend like we are having now, the first down days provide the best drop and pop which should be traded on the long side at first. Hypothetically speaking, if the market turns over and continues down, you should wait longer and longer for stocks to drop in the morning then look for the pop to go long again. Stay on the long side on the pop but don’t buy late in day. The banking stocks were strong today on the drop and pop in the first 90 minutes: BAC, WFC, JPM, C, and USB. Also look for good intraday trades in FSLR, ICE, BLK, CME, POT, MON, MOS, AMZN, AAPL, BIDU, USB, WFC, JPM and any high volume, high volatility stocks. You can try using various software programs within your brokerage firm’s trading platform that could provide you the highest beta stocks in order and review those on daily and intraday charts. The stocks above are just a few of them and this list often changes.

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REPEAT: Many of you have emailed me with questions about not having the $25,000 to do intraday trading. You can have 3 intraday trades in a 5 business day rolling period without having $25,000 in your account. Above $25,000 you can do unlimited intraday trades as long as your account equity is above $25k. You can have swing trades like we have been having the last 2 weeks and make a smaller amount of money, let’s say $10,000, to build up with swing trades.

Thoughts: Keep steady, calm, decisive, aggressive. Have no fear and no greed. Keep looking at what to be doing next in a calm manner. Don’t focus on the past or beat yourself up what you did or didn’t do or what you should have done. Just keep playing the next shot, which in this business your next shot could be just sitting on the sideline.

I am still expecting some sort of substantial rally in the stock market sometime this year mostly driven by the massive stimulus that has already been poured into the system plus the planned stimulus package being proposed now. Longer term though, in a couple years down the road, no doubt the taxpayer is going to have to pay for such the high debt amounts that the US government (and other countries) have taken on. So tax rates probably will rise in coming years, interest rates will very likely have to rise as inflation surfaces and likely the bear market resumes sometime down the road. But we don’t have to be stuck in a miserable cycle like most investors. With the techniques and approach to the market, we will still thrive.

If you have been uncomfortable shorting stocks, which most people are, try to learn this technique, it will be a useful tool in the coming years.

When I list several stocks from the same sector, like the housing industry for example, don’t short all of them unless you are well diversified and it represents a small percentage of your total stock account (in that same account).

Thoughts: Best odds only, be decisive, aggressive, mentally flexible, stay in position size, don’t overtrade and wait a little longer to buy and wait a little longer to sell. You will find that will make you more money on your trades. Trade what you see, not what you hope for. Intermediate and swing trades are really important to have trailing stop losses set.
Don’t trade unless the setup is there for you, then use the charts to tell you when the odds are heavily in your favor. Don’t force anything to work for you, let the setups develop and then take advantage of that. Be patient. Stay in position sizes without letting any intraday trade represent no more than 10-15% of your total account value. As you build your account, your position size percentage should get smaller and smaller to lower your risk.

Have a great day and I’ll talk to you this tomorrow.