I read yesterday on Twitter that the current correction is a bear trap. A bear trap is a correction in stock prices that institutions create to purchase more shares at lower prices. The rumor is that institutions want to force prices down to the 200 day moving average line on the major indexes and then start purchasing around those levels.
I have been short since April 19 which is earlier than many of the stock market “gurus”. My five RSS subscribers should have made a lot of coin at this point.
Anyway, what we are trying to say is that is getting late to hop in the bear bandwagon. If you go short, enforce strict stops from this point on.
Some interesting stocks we are looking at are: TLL, RXD, KRY (Jim Cramer recommended this penny stock a couple of years ago and it corrected heavily. Has a mine contract in Venezuela and Hugo Chavez wants to nationalize the mining industry.), and EEV.
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I am a dad, professional engineer, MBA student, and a financial fanatic. I can help you make money in the stock market. I use Fibonacci techniques for retracements and targets, technical analysis, some little fundamental analysis, and automated systems trading. I also trade options. In addition, I use CANSLIM to get neat growth stock ideas. No fluff and no BS.
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Have you ever thought about trading options in this volatile market? I do think there is some validity in the market forcing stocks down to the 200 day average. While I don’t think the economy is out of the woods, things seem to be a lot better and I think we are at about the bottom.
.-= John @ Buy Stocks Online´s last blog ..In the Money Calls Investing – WMT Sep 2010 $50 =-.
John, thanks for your comment. I have dabbled in doing some covered calls, but this environment is too volatile to trade stocks. I had some good swing trades that have been messed up by the short call and commissions on the reversals. Your strategy of buying deep in the money calls (ala Lenny Dikstra) seems viable on very liquid stocks. The problem that I’ve seen is that it is very hard to find a good deep in the money call candidate with a high delta on the stocks I have been trading. I scratched the call selling for now and I am only trading the stock and will sell calls against them in an strategic way in a case by case basis.