John Ward's  Instablog

John Ward
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Equities trader. I currently live in California. Email: Twitter: JWard_73
  • May 27, 2010 0 comments
    May 27, 2010 10:33 PM | about stocks: XOM, CSCO, JNJ, V, GOOG, GS, JPM, GMCR, PCLN, QID, DXD, SPXU, TZA, EDZ, OUTR, CTRX, STRI, ARUN, AVGO

    Of the top 20 stocks highlighted in today’s Investor’s Business Daily’s “Stocks on the Move” (stocks that were being bought heavily by institutional investors), only 3 – TIF, PAY, CSTR – trade over a million shares on a daily basis; in fact, most on the list trade well south of 500k shares a day.  If you ask me, this speaks volumes (pun intended).  And speaking of volume:  as everybody and his mother can see, it fell precipitously when compared to yesterday’s session.  Not exactly what you want to see as an index rips over 3% higher and is fast approaching its 200 day moving average, as is the case for the S&P 500.


    It will be interesting to see how all of this plays out over the next couple of days.  Nothing says we can’t rally on anemic volume.  If the S&P 500 breaks above the 200 day moving average, for example, I could see us heading to 1140-1150 without even breaking a sweat.  If you’re short, as I am, then this is something you need to take note of.  If you haven’t already, go check out UDN's chart.  There seems to be more than a few investors who believe the dollar’s ascent is over.  Given that the Euro looks like it will try to forge a bottom here, it’s not unreasonable to imagine the market snapping back.  Only time will tell if it will be more than just a shortable rally, however.  By the looks of things, though, that’s just what it will be...if it even happens at all


    A quick look at the big institutional names and former leaders and one word comes to mind: weak.  Stocks like XOM, CSCO, JNJ, V, GOOG, these all look vulnerable.  I just don’t see much conviction buying in these names over the last month.  Conviction selling, yes, but conviction buying, not so much.  Then you have former leaders like GMCR and PCLN.  Not to mention the banks: GS and JPM.  Going just by the names above, it would be easy to conclude that the market must certainly be heading lower.  And perhaps it is.  Yet nothing is guaranteed and it’s important to be ready for anything.    


    As it stands now, I continue to focus on the short side.  That means there remains work to do in V, GMCR and PCLN.  GOOG and JPM are two others that have potential.  Other than those, the inverse ETFs – QID, DXD, SPXU, TZA, EDZ – remain favorites of mine.      


    Meanwhile, the stocks out there that are holding up the best, stocks like CSTR, SXCI, STRI, ARUN and AVGO, should continue to be on the radar.  It is by no means time to go long any of these names, mind you, keeping an up-to-date watch list is just part of the job description, no matter how weak the market is.    

    Disclosure: Short GMCR, PCLN, V; long QID, DXD, SPXU
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