Market Notes (10/5/09)

Posted by Joe Fahmy
on October 5th, 2009

I am going to try and get in the habit of writing “weeknight” Market Notes to summarize the trading day and give some ideas for the following day.

As I mentioned in yesterday’s Market Notes, I came into Monday cautious and wanted to see the market prove itself. A positive sign was that buyers stepped in today and the major indexes lifted off their 50-day moving averages. The major negative sign was the lack of volume (not just in the indexes but in individual stocks). One reason this doesn’t bother me too much is that every market selloff over the past 3 months began its recovery on light volume.

(The following 3 examples are easier to follow if you look at a Nasdaq chart while reading):
1) The pullback in early July was met with buying on 7/9 thru 7/14, but the real volume didn’t show up until a few days after that. 2) Same thing with the decline on 8/17, volume didn’t increase until 8/20-8/21. 3) When looking at 9/1, the recovery started on 9/3 but the real volume didn’t appear until 9/8 thru 9/10. My point is that if we’re going higher, we might not see heavier volume until later in the week.

Here are some trading ideas (followed by a bunch of quick notes, so please excuse the grammar):

$AAPL – Held up extremely well during last week’s decline. With the holiday season coming up and possible announcements that the iPhone will be available on Verizon, T-Mobile or China Telecom’s networks, I am expecting more upside from now until year-end. A “must own” stock for big institutions. Support around 178-180. Looking for a move above 187-190 soon.

$GMCR – Acting phenomenal technically. Great earnings and sales growth. Their traditionally conservative management guided higher last quarter so I am expecting a solid upcoming quarter. Strong support around 65-66. Approx 32% of the float is short. Shorts will get punished, expecting new highs soon.

China stocks – $BIDU (great support around 368-370, a big institutional stock) $PWRD (support in the 44-45 area, one of my favorite China plays) $EJ (great weekly chart, huge support at 20, large short interest, looking for a move above 23 soon) $HMIN (huge earnings growth last quarter, if it clears 30.40, could see 35 soon, support around 27) $DGW (thinly traded with support at 33) $VIT (thinly traded with support near 16-17) $NTES (waiting for more strength, not buyable yet).

Big Cap watch list – $ISRG $PCLN $GS (all these charts look strong).

Gold – I read over the weekend how every time gold dips below $1,000/ounce, people forget about it (a very true statement because I’m also guilty). My feeling is that gold might surprise everyone and breakout to $1100-$1200 when no one’s expecting it. Stocks to watch include $CDE $IAG $GOLD $AEM and $GLD (the gold ETF)

Biotech – $DNDN (very strong support in the 24-25 area, major institutional accumulation recently) $HGSI (bouncing nicely off its first test of its 10-week moving average) $MNKD (support at 8.5, presenting on Tuesday 10/6, click here for details)

Miscellaneous ideas – $SXCI (support around 44, major acceleration in earnings the past 4 quarters) $ININ (support near 18) $GFA (major increase in earnings expected next year, strong technical chart with support near 28) $PALM (support near 16, approx. 33% of the float is short) $WFMI (support near 28, highly shorted)

Please keep in mind that the purpose of this blog is to help people with idea generation. If you trade some of these stocks, PLEASE, PLEASE, PLEASE use stops. In other words, if some of these stocks turn against you and the market doesn’t cooperate…protect your portfolio! Thank you. Good luck trading!

Follow me on Twitter @jfahmy

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

Tickers: AAPL, AEM, BIDU, CDE, DGW, DNDN, EJ, GFA, GLD, GMCR, GOLD, GS, HGSI, HMIN, IAG, ININ, ISRG, MNKD, NTES, PALM, PCLN, PWRD, SXCI, VIT, WFMI

Market Notes (10/5/09)

Archives