Market Notes (10/7/09)

• Posted by Joe Fahmy
• on October 7th, 2009

I view Wednesday’s stock market action as constructive and healthy. Earlier this week, the NASDAQ Composite nicely bounced off its 50-day moving average. I figured it would meet some resistance on the way back up near its 20-day (around 2104). I was pleased to see the market not only hold up well on light volume Wednesday, but also that it didn’t give back much of its 2-day 55 point move. When the market (or a stock) makes a decent run and then consolidates on lighter volume, it’s usually a good sign and shows that institutions are not selling.

Another positive sign I mentioned in yesterday’s Market Notes is the price action of Big Cap growth names: $AAPL $BIDU $AMZN $GS $GOOG $PCLN $ISRG. Large institutions are chasing performance and their universe of growth stocks is limited. Therefore, if they have to put money to work, these are the prime suspects.

I wouldn’t be surprised to see a “continuation” follow-through day on Thursday. I am basing this idea on two observations: 1) my screens are showing a great deal of stocks that are “setting up” and look like they want to go higher 2) everyone’s trying to be a hero and pick the top of this market; an exercise in futility over the past few months. The key with shorting is NOT to short at the top, but at the right TIME. Now is not the right time!

The following is a list of fundamentally sound stocks that are looking strong technically and are on my watch list for Thursday: $GMCR $EJ $AAPL $FIRE $QSII $DNDN $ISRG $ARST $GOLD $IAG

$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.

More “watch list” ideas are listed below. Please refer to previous Market Notes (click here for archive) for more in-depth commentary on some of these stocks.

Big Caps: $AAPL $BIDU $PCLN $AMZN $GS $GOOG $ISRG

China stocks: $PWRD $EJ $HMIN $CTRP $NTES $UTA $DGW $WATG

Gold stocks: $CDE $IAG $GOLD $AEM and $GLD (the gold ETF)

Biotech: $DNDN $HGSI

Internet Security: $BCSI $FIRE $ARST $RAX $SWI

Miscellaneous ideas: $SXCI $ININ $GFA $WFMI

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

Tickers: AAPL, AEM, AMZN, ARST, BCSI, BIDU, CDE, CTRP, DGW, DNDN, EJ, FIRE, GFA, GLD, GMCR, GOLD, GOOG, GS, HGSI, HMIN, IAG, ININ, ISRG, NTES, PCLN, PWRD, QSII, RAX, SWI, SXCI, UTA, WATG, WFMI

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