12-Mar-08
Market rallied an hour too early...
Looking at most overbought/oversold readings, at the close on Monday we were at oversold levels that had not been seen since this correction began. The Fed funds rate vs 2 yr treasuries was at a 30 year high inversion, the market closed at a new low, just a handful of stocks were above their 20 day M.A., and, most telling, the CBEO P/C ratio was at a multi-year high. Almost everything was pointing to a sudden bear-market rally. The Fed's liquidity injection was the spark to the fire, and we took off immediately. The market opened up 2%, pulled back in an orderly fashion to the 50% retracement, and rallied again to close at day highs.
In all, I did not profit a cent with any new trades as I feared the 2% rise at the open increased my risk while reducing my expected return.
I won't guess where we'll be a week or month from now. The bulls are in control having been able to break away from the lows on heavy volume. However, yet again, we saw the largest gains in the weakest names. I continue to wait for confirmation. For me, I want to see the market leaders (agg stocks) consolidate while other sectors see gains. We have virtually every moving average to conquer before its safe to announce that March 10th was an intermediate or short-term bottom.
Best of luck to all those trading. For what its worth, the following stocks (long only) and their target pullbacks are on my watchlist for potential entries:
CPST-1.85, WW-50.80, HP-42.00, OFG-18.50, FLS-96.00
I also am looking for breakouts in the following names: HANS, ALB, AFSI,
From a fundamental perspective, I am seeing tremendous value in the managed care names within Healthcare. Unfortunately I am restricted from trading this sector for the foreseeable future. I do not expect any v-shaped recoveries in this space until after the first earnings reports are announced one month from now. Hopefully by that time I will have had the opportunity to buy into teh more attractive names.
Posted at 11:24 in Market Report | Permalink | Comments () | Top
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