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Although the U.S. government can avoid a default, a downgrade is out of their hands. Anything outside of a $4 trillion deficit reduction plan could trigger a ratings change by S&P, Moody's or Fitch, which would exacerbate the slide in the U.S. dollar - even though the dollar has fallen significantly, it can get a lot worse if a debt deal is not reached.
It is also very important to note that many leading stocks such as Google Inc.(NASDAQ:GOOG), Apple Inc.(NASDAQ:AAPL), and Goldman Sachs Group Inc.(NYSE:GS) have actually traded higher over the past few days. This type of activity in the leading stocks would not occur if the markets were fearful. Most traders and investors are expecting a bounce once Washington completes a deal between both sides. Now things can always change in the markets, however, the fear is just not there at this time.
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The basic emotions that are released inside the Intra Day Stock Chat by some of the newer members are quite common. Fear, greed and lack of discipline. These are the main factors in all new investors, swing traders and day traders. To become a pro, you must avoid the pitfalls. Below is one major pitfall of the newer investor that I see every day inside the Intra Day Stock Chat. Each day going forward, I will explore another pitfall, helping you up your profitability.
Chasing stocks is one of the worst habits new traders have. Many questions popped up today in regards to chasing stocks that had already popped 5-10-15% on the day. Last week, I had traders that wanted to buy Sino-Global Shipping America, Ltd. (NASDAQ:SINO) after it ran from $1.50 to $9.00 last week. I shudder at that thought and look at it now. Back down in the $4.00 range. Today, questions also surfaced of whether or not to short a stock like United States Steel Corporation (NYSE:X) after it had already been clobbered on earnings. They feel they missed out on making money one way or the other and emotion takes over. It pushes them to overcompensate and chase. Ultimately, they lose on these trades most of the time. My job in the Intra Day Stock Chat is often to keep handcuffs on them, keeping them from losing money is as important as helping them make money with great calls.
The key here is to understand there are two groups of traders. The ones that get in before the more and those that chase and push the stock up for the first group. Institutions are always in the first group. They push a stock when it is low, and sell when it is high. Generally, the small investor buys high from the institutions. When you look at a stock, make sure you see a chart pattern that predicts upside or downside but has not started to play out yet. Then go long or short depending on the pattern. Once that stock is already in motion, except the fact you have missed it and move on. No profitable long time trader or investor ever chases. The small players chase and push it up for the pros. Think of it like hot potato. The pros have the play early, and pass the hot potato off to the less educated traders. Then, the less educated traders end up holding the back. Buy early, never buy late.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
“It is well enough that people of the nation do not understand our banking and monetary system,for if they did,I believe there would be a revolution before tomorrow morning.” -Henry Ford
http://warlords2010.blogspot.com/2011/07/if-you-are-unaware-of-this-you-are.html
This Sunday night deadline was nothing significant in reality. It was a made up deadline by people in power to scare the little guy into forcing the others hand. It failed miserably in forcing the other political parties hand but caused collateral damage. The only people that got screwed again were the small investor who panicked and dumped at the open.
These people in power need to realize their effect on the smaller investor. Fear mongering is nothing but a shady activity to try and get their political agendas passed while screwing the small player in the process. Profit with the pros by taking the seven day free trial of the Research Center.
Since the markets opened this morning and put this nonsense to bed, the markets have recovered and surged higher. The SPY is trading at
$134.12, -.46 (-.34%). The PowerShares DB US Dollar Index Bullish (NYSE:UUP) is trading at $21.11, -0.02 (-0.09%). SPDR Gold Trust (ETF) (NYSE:GLD) is trading at $157.44, +1.32 (+0.85%). The United States Oil Fund LP (ETF) (NYSE:USO) is trading at $38.82, -0.11 (-0.28%).
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
Having said that, the key is to look for stocks that are still low no the chart but have put in bottoms. Those will be the best plays when the next push higher comes. It appears the financial stocks are primed for a blast off. Bank of America Corporation (NYSE:BAC) becomes a buy if it pulls back into the $9.75 range. The reversal off of earnings was a clear indication of a bottom and any retrace can now be looked at as a buying opportunity in the short run.
Another stock that has put in a nice bottom and is hovering just off its 52 week lows is Cree, Inc. (NASDAQ:CREE). A pull back to $31.50 yields a nice risk to reward swing trade to the upside. This stock has been beaten and should see more upside when the debt ceiling issues subside. What is the next big trade idea all the hedge funds are jumping on? Take the seven day free trial to the Research Center and find out. Click here.
Lastly, a small cap with explosive potential must be mentioned. The name of the stock is Motricity, Inc (NASDAQ:MOTR) and it is trading at $7.10 today. This stock is down from a 52 week high of $31.95. Over 20% of the float is short at this point and the forward price-to-earnings is around 7. This is setting up for a squeeze of the century. Anything in the low seven range looks cheap when the markets break to new 52 week highs.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
