The so called Christmas rally or the Santa Claus rally has been something of a mixed bag in the past. There were years we just wished the Christmas season would last longer and there was last year which we all would like to forget. This year, Santa is back to give us traders something to remember as of now. This of course, is probably due to the fact that we had a very very tough fourth quarter coming into the Christmas holiday. All of the problems we have had to endure as traders during the last while, from credit crunch, housing bubble and recession worry are being put behind this last few days of the year. Put it this way, we won't deal with it until the new year. It is about time that we can end this year in a rather peaceful way.
If it's peace you want, then you are glad to know that major indices have held up well and many big cap stocks have either inched up or stayed unchanged, in a non volatile way. If you are like us who like to take advantage of this opportunistic time, then the only thing you'd be doing on a boxing day is buying and selling hot stocks online. People, if you are serious in trading like us, then you would've tied yourself to your chair during the last few trading days. These past few trading days have produced some of the best action since early October. And if you were hurt by the downturn in the late November period, then now is the perfect time to get some respect back from this market.
Basically we are about half way over this holiday trading and we'd imagine most traders would be back in force after Jan 1st. This gives us another 2 1/2 holiday trading days to do our thing. Right now, we are playing stuff that are currently in play. It is crucial that we stick to that theme for the next few days.
Solars, 2007 is the year of the solars and we think we'll carry some good momentum into the new year as well. Today's action seemed to be spreading all over the smaller and less established solar players which include SOLF CSIQ CSUN ESLR CTDC etc., while the bigger names seemed to pause to catch some breath, with the exception of FSLR. Yup, we are playing just about every single one of those smaller names today and we'd continue to play until the momentum stops. Keep in mind, many if not most of those less established solar names are still not proven in terms of earning track record. When some of these names reverse, it is crucial that you don't buy the dip thinking all solars are created equal and have awesome earnings growth. Buying dips on plays like FSLR STP JASO SPWR... have good probability that they will come back in a hurry. Buying dips on the smaller ones may get you into a situation that you'd lose another 30% before even seeing an uptick. Bottom line, you have to know what you are playing distinguish the type of plays among solar names.
MELI, then there's this one! If you cashed out last time after Cramer's mention, then today's the day to get it back. We alerted early in the morning that it looked promising but we did not imagine it'd pull a move anywhere close to 20% today. This one, unfortunately we have to agree with Cramer for once, has the marking of being a monster. Yes, it can definitely go into triple digit based on what we have seen with other similar type of stocks.
Bottom line, there's no need to go nuts with all of the hot plays out there and just trade the ones you are most comfortable with. Stay focused and stay clear headed, and we may just finish this year on a high note.