Morning folks…looks like a slight market weakness at the open with the SPY gapping down .18% so far. GLD, AND USO both at the negative so far premarket. SLV which looked like it might be staging a mini comeback late in the day in trading yesterday is down 1.5%. It has been some tricky trading of late. Even with only slight weakness in the s&p there has been significant technical damage in many of the “hot” sectors. As we have talked about before the commodities trade had definately become overcrowded and we seeing what happens when everyone flees at the same time. Many of the hot momo stocks of the last month redf, sify, symx, hnsn, agq had all gone parabolic and now correcting 25-40% in a matter of days. we are definately setting up for some very interesting bounce points. Even though a lot of these stocks needed to correct as many had doubled inside the month its very rare that all the gains are given back. This should lead to some crazy relief bounces. The key will be timing them. Ideally I’d still like to see some more selling to setup some kunalsnapback rubberband plays. Any bounces i play in these will just be bounces. Often this type of technical damage needs a bit more time to work itself out. Ive traded the least i have all year. Only made a few daytrades yesterday. Normally when stocks getting taken down like this i like to chill a bit more cut down on my position size and make my wishlist for when i see bounces that can happen. If your a swingtrade and you had 2 positions a day for 3 days or wait till the right moment and load up 5-6 when you see the hot opportunity it doesnt really matter how you spread them. The timing matters lining things up when you see the market in your favor.
if you been caught with your pants down the last few days. No shame in just taking your lumps. Even if it will bounce back soon i feel reinvigorated in my trading when i just dump junk and start over. I dont think the markets run is just yet over (but what the heck do i know) but it is time to rotate some money into other sectors. Keep making them watchlists. there will be some deadcat bounces in these momo names…but then after that they will probably be off the list for a while. I think ive traded REDF 50x in the last 1.5 months. might need to find a new girlfriend.
kfn, fig, hero very very nice also