Saw a lot of tweets about whether the market could trade higher this afternoon. Chirp! There were the call outs that volume was light. Chirp! Some pointed at the financials not rallying. Chirp! Others highlighted the weakness in V, MA, JPM, etc.
I have to share a funny story. One of the smartest guys we have traded with over the past decade we called,”Skippy.” The guy knew everything about the markets. And if you didn’t know this then he would make sure that you did. During the Internet explosion Skippy would chirp about YHOO being overvalued at 50, it went to 500 (split adjusted). And Skippy would warn that BRCM was over bought and it had another ten fold to go. Ooops.
And I saw a ton of guys chirping that the market couldn’t trade higher last week. And it did. And I read a lot of guys blogging how the market couldn’t trade higher today and it did.
I am not sure if the market will trade higher tomorrow. As JToma likes to say,”I am not drinking the Kool Aid just yet.” It is my job to identify patterns. I noticed that V, MA, and the banks were very weak. I noticed that AMZN, RIMM were very strong. I noticed that SPY could not trade above 95, and SPY could not hold below SPY 94.50 into the Close. I noticed that FCX rolled over when the market showed weakness.
This is what I know. I will now start to develop trading plans based upon what I know. If we hold above SPY 95 I will look for some good prices to get long some RIMM. If we hold below 94.50 SPY on the Open and show weakness I will start to look at FCX, V, and the banks for excellent risk/reward shorts.
Don’t make trading so hard please. Find strong stocks and get long. Find weak stocks and get short. And don’t fight the trend of the market. And for those interested Skippy doesn’t trade anymore.
Best of luck with your trading! Don’t forget to follow us on twitter.