The S&P is now below the November lows. The Asian markets are off substantially in overnight trading. Are we in for more carnage this week? What do the professional traders of TraderInsight.com think?
Here’s the list of 4 stocks our professional traders will be watching this week:
IBM, Technology Sector SPDR (XLK), Anglogold (AU), Randgold (GOLD)
Adrian Manz, Stock Day Trader
My friends continue their quest for someone to blame, trying their best to call me each time the President appears on television to convince me that he is the reason the whole thing is going to hell. Of course, they forget that the decline started in October 2007, and when I point out that the beginning of this whole mess was pretty predictable back then, I get the standard “Monday Morning Quarterback” retort. Fortunately, my debate skills have not dulled too much since graduate school, and I seldom show up for a tussle unprepared. My reply is that my quarterbacking was done on the field, at the apex of the climbing market in late 2007 when I stated for the record in many live interviews that the problems at hand were undermining the market, and that the best course of action was to go short. This response gets me silence, at which point I forward the following two interview links as evidence that any student of the market could have seen this coming here, and here.
Attempts to lay blame for the outcome on an administration that has been in office for just over a month are little more than a coping mechanism constructed to deal with an investment strategy best described as the head-in-the-sand approach. Is it going to get better? Certainly. Just as soon as the last of the investors who buy and sell based on emotion, rumors, tips and greed have been flushed out of the market and are replaced with those who make decisions based on logic. In the interim, this has been and will continue to be a traders market.
The week gone by saw GE lower its dividend. Citi (C) took the final leg of its journey down the chute, and investors who had not already done so lost whatever faith they had left in the rating agencies. Dell moved higher on disappointing earnings. IBM left a promising Fast Ball setup for Monday’s trading as the techs hung on during the carnage, down only 2% on the week, making the Technology Sector SPDR (XLK) an attractive trading candidate for the first week of March. Finally, Anglogold (AU) and Randgold (GOLD) look poised for a move higher this week.
On an unrelated note, our representatives in Washington are suggesting that Wall Street pay for its sins in the form of a tax on the trades that we use to earn our livings. I am a firm believer in doing now rather than complaining later, so I urge everyone to take a look at the proposed tax on traders at http://www.govtrack.us/congress/billtext.xpd?bill=h111-1068 and to sign and electronically forward (or print and mail as I did) the petition against the initiative available at http://www.rallycongress.com/no2tradertax/1536/.
Art Collins, Index Futures Trader
It's not good, as my father puts it. It doesn't seem like any reassurance, testimony or government action is mitigating the financial unraveling. The major indices have not only traversed their November 21 low; they've closed below it. Only the upside offers target levels: 738.50-739.75, 743.50 and 752.00 in the S&Ps. The downside is anyone's guess. There will be a bottom, almost certainly sooner rather than later. It may come at the close of a day that has seen the markets initially tank to frightening new levels. It may be a non-dramatic quiet move that isn't noted until days or weeks after the fact.
Playing defense is about the best thing I can do at present. I've had the misfortune of being in a long for several days now and I've avoided disaster by using intraday sell indicators to mitigate the losses. I'll be in the trade as long as the numbers tell me to. It may see a happier ending than I'm in at the moment, or it may go down as one of the classic black marks in the "L" column. I will be here for the long term though, and that's the ball any trader should be keeping an eye on.
Dave Mecklenburg is the Editor-in-Chief of TigerSharkTrading.com.
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