Online Stock Trading | Roller Coaster Ride for Stocks

Roller Coaster Ride for Stocks


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1:00pm EST  Import prices hit 25 year highs but the market ended mixed.

Import prices were the talk of Wall Street as trading began.  Import prices rose to their highest levels in 25 years.  The decline in the value of the dollar has helped boost import prices.  Although the dollar index is looking to put in a meaningful bottom its unlikely prices will stablize or fall due to importers passing on their currency costs.  Volume started out as if it were going to end the day higher however as the day moved along it began to taper off.  The last gasp by the market did not have enough muster to carry the NASDAQ into positive territory.  All in all, the action was mixed and certainly could have been a lot worse, but the follow-through day is under threat.

I am not buying into this follow-through day one bit.  We were lead higher on that day by our old leaders, AAPL, GOOG, RIMM, and MSFT.  In a fresh new bull market you do not see old laggards leading the charge what you see are fresh new companies with new products/services breaking out of sound price patterns.  Not too mention New Lows continue to DOMINATE New Highs:  201 to 25.  Almost a 10 to 1 margin.  However, this is typical action you see in Bear Market rallies.   Old leaders rebound off lows on lower volume sucking in the bottom feeders who inevitably lose their trading capital.

I think it is very important to stay cash heavy during this type of market.  Tuesday we’ll receive the release of the Consumer Price Index.  If there is any indication from Import Prices the CPI will no doubt be higher than expected.  Whether or not this sends fear into the market or not but the risk/reward picture is not in our favor.  Another thing to watch out for is how the overseas market trades on Monday.  The US markets will be closed and it would be interesting to see if we get any big moves.  Martin Luther King day brought in our most recent lows when the Asian markets decided to free fall for a bit.

The proper bet here is to stay on the sidelines building cash and building watch lists of stocks.   If one was to go long here, I would consider taking a smaller position than normal and be quick to exit the trade if it goes against you.  In addition to, if you are able to see profits I would take them quickly.  This is not the proper market to have a long-term horizon perspective.  Nimble and Quick!

Enjoy

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