Remaining untrustful....
Wednesday, August 1, 2007 at 09:43PM For a market that went up 150 point, there's really not much to cheer about. In fact, the breadth stinks on this "bounce" day. What happened today may be the fact that we had entered a fairly oversold condition so any more selling was just not sustainable given the damage we've already taken. One thing remains clear about this market, is that it is going to be very volatile the next little while, with the bias to the downside. The question though, are we going to play this bounce? We think the answer really lies in the individual action, which is not much today. The psychology is to play just anything when you see Dow rallying hard. However, we think it's best just to stay put and remain calm. Less trading in this environment is better for most. Basically, we are dealing with lots of unpredictable pattern that do not put a favourable odds on trades. If you absolutely have to trade, just make sure you stick with the 52 week high stuff and carry your trade for as short term as possible.
GRMN/TRMB/NVT/TRMB, this is the GPS group that's being pushed by traders today. Just about every single on in this group hit a new high today because of earning. This is the kind of leaders we are looking for in a turbulant time like this. However, we also want to caution that this group isn't exactly new to traders/fund managers and momentum may not carry them as far as we may like. For the time being, this is about the only tradable group we have left at the 52 week high.
UA, this play had some good follow through today and it definitely stood out from the crowd. Again, this is considered one of the most uncertain weeks we've encountered in a while so any long trade will have a very short time frame.
Bottom line, it doesn't feel that market is done getting through the subprime worries. Also, we really don't have any positive catalysts we can look forward to the next little while in order to push this market higher. It may take more than a few days for us to sort things out and pick out the tradable names. Meanwhile, we should really not push for trades but rather just watch the market events unfold.