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Market Comments & Soggy Cereal

K dailyJust a quick note on my current thinking.  As I typically strive to do, I posted a fairly balanced mix of both long and short trade ideas over the last few days.  Something that you might have noticed though is that most of the long setups have been very low quality stocks while most of the short setups have been higher quality, even including some blue-chip stocks.  I recently commented that I am seeing for the first time in a long, long while many clearly bearish charts in my S&P 500 top 25 watch-list.

The take-away is this:  Typically, at the very tail-end of a bull market or at least a major leg up within a larger bull market, it is the lower quality (junk) stocks that start catching a bid... like that TNP setup which was up over 20% on the day the last time I looked, while the high-quality stocks and recent market leaders start to roll over.  Keep in mind that one (or two) days does not make a trend.  This is just an early observation at this point and something that I felt might give some insight to my current thinking and overall positioning.

BTW-  I may or may not add K as an active short trade on the site.  Yes- it is clearly breaking below this rising channel shown in the chart above & could most certainly be shorted here (or at the very least, longs should consider tightening stops or exiting) but in trying to keep the trade ideas list to a manageable level, I prefer to add only those trades with a very solid R/R and significant gain potential.  K will most likely fall from here but I prefer to add trade ideas with more meat on the bone than this one.

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May 24, 2013 10:28am|Categories: Equity Market Analysis|Tags: |Comments Off on Market Comments & Soggy Cereal