Making a list

Posted by downtowntrader | 6/12/2008 09:40:00 PM | 0 comments »

I'm not too crazy about chasing any new shorts right now. Although I think there is a good chance we continue to see downside, we are starting to get oversold and a snap back rally will probably happen very quickly when it does. I was surprised to see that the percentage of stocks over their 40 day moving averages dropped to 27% the past few sessions. I usually look at levels under 20% as oversold and it could easily get there after a day or two of extended weakness. Therefore I am also not looking to go long in too much now either. I would rather wait to get to an extreme oversold environment, or wait for a small bounce to relieve some of the fear in the marketplace. What I am doing now, is making a list of stocks to watch depending on the next few days of action. If we gap higher tomorrow on economic news and it sticks, I will then be looking to re-short next week. If we gap lower and crash, then I will start looking for long plays next week once things settle down.

Some stocks that have been showing relative strength are:
Some specialty retail like TRLG and DLTR
Several Junior Oils like PDO,FPP,etc.
ag stocks like MON and MOS
More oil stocks like GMXR and SFY

Stocks that have been showing relative weakness are:
Any airline stock
Any financial stock
China and Financial ETF's
Non specialty retail like M and SHLD
Some oil like RIG and XOM

All of these are on my watchlist and could provide decent entries over the next few days.

Good Trading,