Free Swing Trading and Day Trading Picks & Education

These articles describe the statistical probabilities of long positions on these equities, based on neural net projections, for the next 5-15 trading days. These are not holy grail methodologies, the road to easy street, or anything else. These projections are the result of screening for technically significant retracement and momentum patterns that have been further screened for value and bullish sector performance. In other words, the projections are for long positions.

For 12/19/2007

                                   $INDU           $SPX             $COMPQ
Monthly Momentum    Negative        Negative         Negative
Weekly Momentum     Positive         Positive         Negative
Daily Momentum        Negative        Negative         Negative

Note: (OS) means oversold and (OB) means overbought. The value to price estimate (it is not a guarantee, only a cash flow based estimate) can be defined loosely as a multiplier of price. A number higher than one means the stock is undervalued using this model and a number less than one means the stock is overvalued.

Index and ETF I-shares Bullish Reversals

$DJUSCY
EWO
XLY

U.S. equity indexes managed to stave off three straight losing days by apparently responding to news regarding the raising of liquidity by banks (both U.S. and European) to stave off any lingering effects of the mortgage mess. Though Goldman Sach’s (GS) earnings were above forecast, the firm probably hedged (pardon the pun) its bets on the first quarter 2008, amid perhaps another government investigation looming over hedge fund activity. That did not help financials, brokers, or the markets in general.

There were over 1400 raw bullish reversals yesterday, meaning breadth temporarily turned bullish. There were so many individual names that it would take too long to list them all today, but retail (BBBY, BWS, FL, PLCE, SYX), mining (AU, GOLD, NEM), healthcare(CERN,HS, KND, PSYS), drugs (ALO, CAH, PFE), and general business services (CCRN, DAKT,DLLR, HMSY, SGK) led the list. Telecom (TRMB, TSU) and petroleum services (NTG, RES) also turned up. Banking (AMFI, HBHC), building construction and maintenance (BHS, EME) also made the list.

What is notable about retail is that many specialty retailers like BBBY are trying to put in double bottoms after a fairly lengthy decline. It is probably a bit too early to chase these, but as earnings news begins to filter out shortly, some of these stocks could produce buy patterns shortly. 

In the end, the gold mining stock GOLD and the drug stock, made the final cut.

Here’s what the nets saw today:

                                     Value/Price est.   7 day ATR   %( 7 day ATR)/Close
Note (O): optionable

(O) GOLD 2.60/1 60.4%           0.58             1.42            4.19   

(O) CAH 1.72/1 62.6%             1.51              0.92            1.56

That is it for now. GOLD is a short-term swing play that may only last while the sector turns up. Watch your stops at all time, but particularly with GOLD. I still do not think we are out of the woods in terms of the selloff. We will have to wait and see how markets respond the economic whims of the Fed, oil inventories, and just general year end craziness for signs of bullish breadth holding. Yesterday was a modestly positive sign, but there are a lot of forces at work on market sentiment, and that leads to what traders love, volatility.

Take care,

DBB