Online Stock Trading | Stocks rebound from extremely oversold conditions, end higher on massive volume

Stocks rebound from extremely oversold conditions, end higher on massive volume


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The sellers’ bandwagon had been continuing to gain momentum however, too many people piled in at the end causing it to topple.  There are many reasons for yesterdays move; short covering, bottom feeders, options expiry trades etc. the fact of the matter is we saw a relief rally.  CBOE total put/call saw extreme readings of 1.9 during morning trade and the VIX gapped higher zooming past 37.  Gold members of MauiTrader’s Big Wave Trading saw both myself and MauiTrader calling the bottom and were looking for a rebound.  Now, we don’t trade intraday but, we’re keen enough to spot when events get out of hand.  When the dust settled, the S&P 500 sat in positive territory with the NASDAQ, Dow, and NYSE all sitting with small losses.

Speculators must use the info in front of them to intrepret their next move.  Individual stocks should not be touch at this time, we do not have the ripe conditions at this moment to be taking long positions.  We aren’t looking for 1 or 2 point moves in stocks.  What we are looking for are those stocks that move 50%, 100%, 1000% but, this is not the time to see those types of gains.  However, if I were an options player I’d be looking for Calls on the indexes for 2-3 months in expiry that are in the money.  Mind you, this would only be holding for a day or two nothing long term.  At any rate, individual stocks we should not be taking positions. 

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Last night I was listening to CNBC’s Fast Money in my car.  Each and everyone of them were calling today the bottom and looking for stocks to move higher.  For the VERY short-term I think yesterday’s move was the bottom however, I do think we revisit these lows at some point within the next month or two.  If I were running money I would be using this opportunity to be trimming my portfolio further.  At this point, I would have only my big winners and would be taking profits.  I would not be going into BAC, GS, BA, CAT, and PG.  The advice given out by these “Professionals” I believe is very dangerous.  It may appeal to a wide audience but, the analysis is incorrect.  I am sure we’ll see a snap back in these names and if you can grab a few percentage points than congratulations but, I am not looking for 5% gains.

Please be mindful of this rally, today is options expiry and we will see lots of volitility and possible MORE volume.  Tread carefully and always enjoy yourself!

Market Speculator

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Comments

2 Responses to “Stocks rebound from extremely oversold conditions, end higher on massive volume”

  1. DeMerchant on August 17th, 2007 8:57 am

    I don’t understand why people want to stay fully invested in markets like these… I know that the bottom was likley hit yesterday… and agree it’s likley that stocks will keep moving upwards… but what if they don’t… what if there is a 10% dorp over the next week… a lot of people will look stupid… that risk compared to the small reward should keep people in almost all cash… good call on the trying to move $$ into cash I think… no sense in gambling in a market like this just because you’re afraid you might miss out on a few % growth

  2. Market Speculator on August 17th, 2007 9:34 am

    You are right DeMerchant!

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