Blain’s Nightly Stock Picks, March 19 2008
Posted by Blain Reinkensmeyer
March 19, 2008 at 7:11 pm
After yesterday’s massive run up on Fed cuts and financial earnings surprises, today’s sell off was no surprise. The problem with today’s sell off though is that it came with a focus on the only really stable and positive groups: Fertilizers, Steel, Oil, and Gold/Silver.
Before I get into anything tonight, I want to re-stress once a gain a few themed points I’ve made over the last few weeks. If they haven’t been engraved in your head yet, now is a good time.
- Use tight stop losses - With tight stops (or just following this blog) you would have sold out of fertilizers (MOS, POT, CF) some two weeks ago, for example. Tight stops gaurantee your portfolio will be around tomorrow, and keep you in the game.
- Cash is king - There absolutely nothing wrong with sitting in cash when you don’t have a good grip of where to invest your money.
- Take quick profits - If you are fortunate enough to have unrealized gains, don’t hesitate to sell out and walk away. Winning is winning.
- Discipline is the Key to Success - In poker they call it being on, “tilt” which is when you take one or two big losses then make terrible emotional decisions that normally wouldn’t be made. Same deal with trading stocks, if you don’t stick to a set strategy you will get burned.
- Follow the overall market - 3 out 4 stocks follow the overall market trend. So, if you think holding Google from $650 a share is smart because it is your favorite search engine, think again. Don’t trade long term against the overall trend.
Since last Friday I have been 100% cash at the close of each day, and at the close today I am yet again 100% cash. With reversals coming left and right intraday swings are your best opportunity for success.
Looking ahead if you are seeking a rebound move, Gold stocks may be your best opportunity. Steel is another one but as far as odds on your money go, Gold has the upper hand.
Nasdaq Composite
We are still trading in the same range. Which side will crack first?
S&P 500 (SPY)
More resistance at the 50 day moving average for the SPY.
GDX
GDX is the ETF tracking the Amex gold miners index. Basically this represents AUY, GG, BVN, ABX, etc. Today it broke the 50 MA but did not break below the gap range from 2/19. If this ETF bounces so will the majority of gold stocks.
BVN
I stated Monday night, “BVN reversed to close near its intraday lows on higher volume which suggests a rest could be in store.” BVN is down over 10% since Monday.
Today BVN broke out of its channel to the downside, and closed near its 50 MA. ABX and AUY are two other gold plays resting near or right at their 50 MAs. Is a bounce around the corner?
HES
HES makes for a great example of why tight stops are so necessary during these volatile times. I recall mentioning this stock when it broke past $100 on good accumulation volume. HES is down over 10% since then because of oil retracting in price. HES as of the close today finished at the bottom of its recent trading range.
AAPL
With Baidu.com (BIDU) breaking down today in a similar situation as Apple, my bet is that the downtrending 50 MA could be too much for Apple to handle right now. I am not a supporter of Apple until the market can turn around and we can see a bit more strength.
AKS
A similar situation to HES, AKS today broke to new highs above $56 just to turn and head way south to close down nearly 10%. The stock remains in its trading range but man is that a lot of price volatility to stomach.
CSX
There has been some talk of transportation strength recently, and CSX is leading the way. I featured CSX Monday with the break past $50.50. CSX closed today at $53.05 and is still showing good strength.
KO
If the market goes to hell and you don’t know where to turn, just grab a few shares of Coke.
Today’s close above the 50 MA suggests this defensive stock wants to make a push into the low $60s.
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Related Posts:
- Dryships Stock Breakout a Beauty
- Steel Stocks Ready to Move
- Blain’s Nightly Stock Picks, April 03 2008
- Market Gaps 2%, Three Ways to Gaurantee Profits
- Blain’s Nightly Stock Picks, March 10 2008
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I too have kept 100% cash at the closing for a while now.
I am in the opinion with tech being weak right now (AAPL above), but am mildly bullish going into next week. I bought dips on CSX last month and have been really surprised. Some transports can be really good dividend plays as well. It seems that their is a flight to coal overall with gas/oil prices being what they are currently (reference FDX disappointing numbers last week). Rails continue to be one of my favorite plays right now (a Warren Buffet play some would argue to I suppose), and the price of coal being a bit lower and less volatile than gas, it has been my safe haven for a bit.