As expected the market rallied post holidays. Given the sharp pullback ahead of the holiday weekend, it was no surprise to see a bounce on light volume. This sort of action is to be expected in a very thin trading environment.A number of small-caps which were particularly strong. The China stocks are finding lot of interest, some of the action might be linked to year and quarter end moves by the international funds or speculation of currency moves. Still, it is difficult and misleading to draw any meaningful conclusions from the day's action.
Some of the stocks worth further investigation based on recent action are :
APKT,Acme Packet Inc (Google Yahoo Earnings BW Chart)
ARTE,Artes Medical Inc (Google Yahoo Earnings BW Chart)
CHL,China Mobile Ltd (Google Yahoo Earnings BW Chart)
DXPE,Dxp Enterprises Inc (Google Yahoo Earnings BW Chart)
FFH,Fairfax Financial Holdings (Google Yahoo Earnings BW Chart)
FMX,Fomento Economico Mex (Google Yahoo Earnings BW Chart)
GSH,Guangshen Railway Co (Google Yahoo Earnings BW Chart)
HAYZ,Hayes Lemmerz International Inc (Google Yahoo Earnings BW Chart)
JAV,Javelin Pharmaceuticals Inc (Google Yahoo Earnings BW Chart)
LNUX,Va Software Corp (Google Yahoo Earnings BW Chart)
MDCO,Medicines Company The (Google Yahoo Earnings BW Chart)
MEMY,Memory Pharmaceuticals (Google Yahoo Earnings BW Chart)
MVIS,Microvision Inc (Google Yahoo Earnings BW Chart)
PNCL,Pinnacle Airlines (Google Yahoo Earnings BW Chart)
PNSN,Pension Worldwide Inc (Google Yahoo Earnings BW Chart)
RHA,Rhodia Ads (Google Yahoo Earnings BW Chart)
SGU,Star Gas Partners Lp Sbi (Google Yahoo Earnings BW Chart)
SVVS,SAVVIS Inc (Google Yahoo Earnings BW Chart)
THLD,Threshold Pharmaceuticals (Google Yahoo Earnings BW Chart)
TS,Tenaris Sa (Google Yahoo Earnings BW Chart)
While the major indices were able to regain the ground they lost last Friday, the action was misleading. There are clearly signs of trouble ahead. Leadership is deteriorating. Follow through buying is tepid or absent. Low priced stocks are breaking out. There just hasn't been much buying interest lately, and the market has failed to make any progress to the upside for quite some time now. Currently it is tough to say that this is simply some healthy consolidation or correction. The next earning season is upon us and market might find the earnings and guidance as a catalyst to pullback and set itself up for March earning season .
Those looking for opportunities on the long side in this market should be extremely nimble and use shorter time frames and use tight stops. I am mostly using this dull market to R&D and develop and improve my trading black boxes.
Every year I use the last few weeks to consolidate all the yearly learning's and incorporate them in the trading models or software. Changing things in the middle of year can be a huge distraction. I have number of profitable systems which are currently working, so trying to tinker with them during the year often takes away the focus from trading them profitably. Plus the new idea should substantially score in profitability potential before replacing existing system.
Throughout the year I study and develop new concepts, collect ideas from the hundred or so of books I read in a year, or from academic research, or from friends at various funds or banks. At the end of the year, once the mental pantry has lots of ingredients, I cook up couple of dishes for next year. So currently I am busy with some exciting new ideas and fine tuning and upgrading existing systems.
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