July 30, 2008, Wednesday Evening
Today was an excellent follow through with financials continuing up another day. The symbolic signing of the housing bill by President Bush that may help 400,000 homeowners from foreclosing no doubt had a positive effect on the financials. The housing stocks started to move up then fell apart through the day.
What we should be watching closely is how the leading financial stocks act, namely WFC and BAC. If BAC breaks through $35 and moves higher, then this would be very bullish and my thoughts are to stand aside for a day or two and look for any places to short. These would be aggressive type of trades but could give us substantial profits for the short term. James Cramer probably pushed BAC up a little extra because he said BAC is a “fortress bank” and the housing bill that President Bush signed today would benefit it immensely.
WFC isn’t quite as bullish compared to BAC but if WFC moves up through $32.50 tomorrow this would be a very bullish sign and could continue to run up. I don’t see any trade on these two stocks on the long side. Both of these stocks are acting very bullish but it is too late to buy long any financials.
Oil moved up today 3.75% today and we could see several more big price increases like this in oil or maybe a couple of weeks (at the most) of general uptrend in prices. I don’t see oil making new highs above the $146.65 and I doubt oil will even hit $139 per barrel. But we do have the opportunity to make good money in the oil stocks that I’ve been talking about.
My comments have been this last few days that “we should be seeing oil move up within the next few days” and today was day one of this move I have been looking for. I’ve been early a few days but we are looking at least 15-20% moves upward from the bottom on these oil stocks.
These oil stocks are all a hold for days to come, possibly 2-3 weeks holding time but the charts will tell us when we should be selling these long positions. We probably will see a slight pullback in the morning and likely see the resuming of an upward trend. I call it a Nike swoosh that drops a little and has a higher close. This pattern will likely continue in this sector the remainder of this week and next.
XTO, XTO Energy made a decisive move upward from a low of $45.50. First target is $56-57. This might drop down a little in the morning at the open but I am not putting any stop loss on these oil stocks until they start moving up more and then it will be a big trailing stop.
ATPG started moving up with a weaker move up today of 4.98%. It looks like that is starting to build a bottoming process to move higher.
UNG only moved up 2.7% which was disappointing but this is a natural gas stock and that is a byproduct of oil drilling.
GDP had a big move up today of 14.65%. This should continue moving upward but all these oil stocks might pull back down a little before resuming an upward trend.
COG moved up 7.28% today.
The big oil stocks, CVX, BP, COP, and XOM all moved up nicely as well.
CLHB continued up, this is still a hold.
ACOR dropped today more than expected but still within the parameters of being a long. This deserves a little of your money as well.
The ag-chemical stocks (AGU, MON, MOS, POT) moved up nicely the last 3-5 days but I still see this group as lower lows and lower highs and that describes a downtrend. I see the air being let out of that bubble or at least that is what the pattern looks like.
CEDC and TXT are moving up slowly but steadily on the charts. These two could run for some time at a slow pace.
Main point tonight: hold the oil stocks long and watch for potential short in financials if they move up enough.
See you tomorrow night.
NOTE: I have received a few requests for a workshop so if we can get a few people together at my house in West Linn Oregon next Saturday, August 9th for the full day, I have a very comfortable large living room to teach with a LCD projector, sceen and one of my desktop computers. Bring a laptop if you have one and download the software from the brokerage firm you use; I can help you set that up with charts. There are chart set-up instructions with all 5 major online brokerage firms in the member’s area or I can email them to you directly as well. Cost is $399, bring a sack lunch because we live out in the country so driving somewhere to eat is inconvenient. Email me at firstname.lastname@example.org if you can make it.
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