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Banking Stocks February 18, 2009 Wednesday Evening
The Dow30 moved lower but not with a decisive and sharp drop like we wanted. It also didn't have increased trading volume over yesterday. So it is likely that the bounce off of today's low will be lethargic and weak. The Nasdaq Composite remains stronger than the Dow30 and the S&P 500 indices so technology stocks as a group, have acted better. All eyes are on the bank stocks like USB, WFC, JPM and even C. These daily charts offer the most potential profit with USB still the top pick. The trading volume on USB was disappointing in that it would have been ideal to see higher volume today than yesterday, at least 60 million or 70 million shares traded today. This signals that the rebound will be weaker but should still move higher. There is still another chance to buy a full or partial position in USB, US Bancorp tomorrow but be prepared that it may fall apart and head back down before hitting mid $13's. It would not be wise to try to time any short of these banking stocks after they peak and head back down but consider taking your long profits (that may only last 2-5 days before losing steam) and sit on the sidelines after that. Remember it is guerilla warfare in this market and any profit like the potential in the USB trade is excellent in this market and time frame. We saw the low on USB was $10.09 today and it promptly did an about face on the intraday chart at 8am Pacific time and went straight to $11.54 about an hour later. That rebound was an outstanding intraday scalp if that was the technique you were using. USB gave a 14.4% potential profit in that 70 minutes while WFC also had a big drop and big pop of 12.4% today. Both stocks should still continue to move up over the next few days but with high volatility as stocks usually display at a bottom or top. Note that WFC, Wells Fargo is following the same pattern as USB in both intraday and daily charts, at the moment. Oil prices has not made new lows even though some oil stocks have been selling off. It still looks like it is going through a bottoming process and if oil holds above this $33 level and moves up, the these oil and gas stocks should move up. Keep watching the independent ones like XTO, APA, APC, EOG, COG, HAL, RIG and many others are likely to move first before the big oil stocks ones like XOM, BP, CVX or COP. Intermediate Trade Positions: New ideas: BTU, Peabody Energy is worth a small long position. This may drift lower the next couple of days so there is no hurry to buy long immediately. The ag-chemical stocks reversed and moved up today with MOS and AGU acting well. This should be treated as a swing trade for more cautious investors or a longer term time period that could last for months for investors with a higher risk tolerance. REPEAT: The commodities have been making a gradual trend upward these past three months and look poised to move higher. Swing Trades: XTO, XTO Energy is a little shorter term trade idea than the BTU listed above. We are only looking for a 10-12% profit in the next week or two. WFC, Wells Fargo Bank is been down sharply this last few weeks and is likely to move up. This hit a low of $12.06 today and rebounded 12.4% off that bottom. There is still time to buy long tomorrow even if the stock gaps up a little at the open to $13.50. This is going to be very volatile so start with small positions, as usual. Day Traders/Intraday stock ideas: We did see some really fabulous opportunities with intraday trades today, mostly in the banking stocks. Stocks may have a shallower drop but a steadier move upward tomorrow if especially if the whole market is moving up the next couple of days. Continue to watch ICE, BLK, CME, POT, MON, MOS, AMZN, AAPL, FSLR, BIDU, USB, WFC, JPM and any high volume, high volatility stocks. NOTES: Even if the market does what we are forecasting and that is a move upward lasting only a few days, don't get lulled into thinking the market is turning into a bull market. It is very likely it is what we call a countertrend rally within a bear market. Meaning, the market is still in a bear market and has a downward trend but powerful rallies can be seen within that downward trend. This is what we are trying to profit from right now with the banking stocks and other sectors. 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, learn to get used to it, this 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). REPEAT: Keep an eye out for biotechs; they are building momentum and often do well in January
For more tips and information about Stock trading online , check out http://www.tradestocksamerica.com/daily-stock-pick-results.php .
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