I don’t trust today’s strength, and may use the last hour of trading to initiate some small short positions. The reason for my distrust is twofold.
I believe the market is overreacting to comments from Bush that do little to address the subprime problem. Unless he is willing to provide federal aid to subprime borrowers, the problem will get worse. El Presidente has pretty much laughed off the idea of helping this group. Greedy, irresponsible corporations and hedge funds get bailed out of their mistakes, while the hard working Americans they preyed upon don’t. As my man John Lennon would likely say, the “working class hero” doesn’t get shit from this prez.
Off the soapbox and on to the second point. The market historically does well today, and the move is on low volume. What this says to me is that today’s bounce is a meaningless victory for the bulls.
I still like the momentum stocks on my watchlist. However, I’ll look for better entry points.Stocks such as GRMN, NOV, CROX and FLR, to name a few. Most momentum plays are bouncing right into resistance, and that’s not where I like to enter.
I’m going to spend my research time this weekend focusing on tech stocks. That’s where the money seems to be flowing, so we may see the beginning of a new tech trend. I want to be properly positioned when it’s time to jump on the tech train.
I thought GRMN looked sort of impotent today>>Some old favorites that might be coming back if you are looking at tech are BRCM, SNDK>>Agree on the points about the market – we are in inning 2 of a long unwinding. I added more SKF, SRS, TWM around 3 pm today. All indexes save NASDAQ are at resistance (Russell 2k cannot even get above 200 dma) Basically the markets are exactly where they were Sunday night – amazing. >>I think Ben made it clear he won’t be raising rates until the meeting so who are they going to roll out to make a speech next week to save the market? Maybe a frozen cryogenic Reagan? I long for the day the market does not react 200 points due to what a politican or Fed governer says in sentence 4 of paragraph 12 of a speech.
Good point tradermark. As soon as I see all of the “safe haven” techs take a big hit we’ll know how much worse this can really get.