I'm writing this from my phone so hopefully it posts ok. the markets
gapped down hard today in a move that was begging to be faded. while
most indices closed red, they closed far above the lows of the day. I
will take advantage of any strength in the next few days to scale out
of any remaining short term trades I have. It looks like there is
still a lot of room to move down here, so hopefully some low risk
shorting opportunities present themselves. I won't be home till much
later so there won't be a regular post tonight.

good luck,

DT

The markets looked like they were poised for a strong bounce early this morning but fizzled out fairly quickly. None of the indices could even muster a 1% gain today which doesn't bode well for bulls. I took opportunity to reduce exposure in some positions, but I also started to put on some guerilla type trades on as well. These are pseudo daytrades, lasting anywhere from intraday to 2 days. I don't know if the markets will continue this dead cat bounce or rollover right here so I am preparing for both. Ideally, we either continue bouncing higher, or have at least one more narrow range day in order to allow for less risky shorting.

Since I am preparing for two scenarios, I am going to highlight what I am looking for in individual equities.

The first play is if there is more left to this bounce. I am looking for stocks that are on their lower bollinger bands with oversold indicators. I then look for a narrow range or hammer type candle that I can use to trade off. FDO below is a good example. It is clearly oversold, and had a nice narrow range day today. If the general market is behaving appropriately, and FDO trades above todays high, then I think the odds favor a long position. The target on these types of trades is fairly aggresive, near the 9ema for a partial sell and middle band to close the position. This is a little risky in this environment, but the tight stop may make up for it. This type of play should not be treated as anything other then a long scalp.

The second play is to hope for some consolidation in order to allow weak stocks to catch up to declining moving averages. This is more of a swing entry, depending on the market environment. With the indices oversold already, I will be looking to keep these fairly tight as well. AEOS is a good example of a stock that is retracing it's way higher to declining moving averages. It is also below a trendline that has held for months. In an ideal world, it would trade sideways to higher for a few more days.

One thing to keep in mind is that I'm putting these out there as ideal scenario type trades, and more then likely, the market will not be so easy to follow. If the opportunity is not present, then I will sit on my hands. I will wait for the dust to settle before commiting any longer term money to any positions.

Good Luck,

DT

The bears took the markets down hard today. The blame fell on the Chinese drop overnight and possibly on the Cheney bomb attempt, but in reality, these markets have been due a correction for quite some time now. Days like today are a swing traders nightmare because you are holding positions overnight, mostly weighted to the general trend (up until today). I took a beating from the premarket on, although I think I did a fair job of maneuvering my way around some stocks. I also saw some really weird stuff happening today on NYSE stocks, as others reported seeing too(Kevin, JC, Bill). I was watching MR as it dropped 65% to $10 and then pop back up to $25. There were a few trades down there and I even tried buying some, but the ask was stuck at 24.50. Now, it is showing the low of day as 21.11. I saw crossed bids, stickies, market orders not filling. All the sorts of things you can expect to see when a system is overwhelmed with volume. So what happens next? I can't pretend to know, but I have to think that an intermediate, if not a primary top is in.

If you think about the psychology behind a top, there are a lot of people that were hurt with todays drop. They will be itching to get out on any bounce that occurs in the next days and weeks. This should cause a supply imbalance, absorbing any buying. I don't know if the markets bounce immediately here, or if they follow through tomorrow, but I can't fathom institutional money aggresively buying here. I think the best course of action for swing traders is to sit tight and manage your open positions as best you can. There should be a low risk buying or selling opportunity soon. Daytraders should find the increased volatility refreshing, and I even bought a couple things today, looking to fade the panic selling. Should be an interesting day tomorrow to say the least.


Good Luck,





DT

My trading PC blue screened on me yesterday and wouldn't even boot up this morning. I spent all day downloading drivers and reinstalling programs. All this and I still have all sorts of problems. I may have a hardware issue at this point which would really be a pain in the @#$. Needless to say, I wasn't able to track the markets today and won't be able to do any research tonight. This will keep me on the sidelines tomorrow as well. At least I had some open positions move well today. Hopefully I can resolve these PC issues tonight.

Good Luck,



DT

The Dow and S&P500 have pulled back to their rising 20 day sma's and could be ready to move higher. It is interesting how there has been a disconnect with the Nasdaq and Russell recently. When the large caps were making new highs recently, the Nasdaq was threatening to break down. Then last week, the Nasdaq, led by seminconductors, decided to move higher while the large caps drifted back. Now, the large caps seem ready to bounce, as the Nasdaq and Russell are getting extended. Interesting action to say the least. Here are a few charts I found interesting this weekend.


Empire Resources, Inc. (Public, AMEX:ERS)
ERS has a high flyer last year and has had a steep correction. It has attempted to end the correction a few times, but there were still too many sellers. It takes time to build a proper base, but it looks like ERS is close to attempting another breakout.


Home Inns & Hotels Management Inc. (ADR) (Public, NASDAQ:HMIN)
I can't say I've traded diamonds often, as they are hard to find. Often times, a diamond is really part of a larger pattern. While this may not be a text book diamond, it looks pretty close to me. Either way, it looks like this is a continuation base regardless of how it is labeled.


Advanced Magnetics, Inc. (Public, NASDAQ:AMAG)
AMAG may have a false breakdown here which could leave to a powerful move higher.


DXP Enterprises, Inc. (Public, NASDAQ:DXPE)
I've mentioned DXPE a few times as potentially resuming the uptrend, and it has basically drifted sideways. It is close to do or die time here, so it is worth watching to see if it breaks out.


Immucor, Inc. (Public, NASDAQ:BLUD)
BLUD is also close to do or die time, as it needs to either get back over the ascending trendline or possibly continue the corrective phase.


Rambus Inc. (Public, NASDAQ:RMBS)
RMBS is looking pretty decent to me, as it is trading a very narrow range while drifting to the 20sma.


The Estee Lauder Companies Inc. (Public, NYSE:EL)
EL looks like it begun to break out of this tight bull pennant base and then pulled back and succesfully tested it as support. I will be watching for a continuation move here.

Good Luck,





DT