Stock Trading Strategies pt1

Daily Stock Report for Wednesday Morning, February 10 pt1

Stocks moved up after being the last week and a little trigger that Greece may be getting some sort of rescue package. A mid-day rumor that Germany committed to a rescue package spiked the buying even further pushing the Dow30 well above +200 points at one point. Then a denial from Germany dropped the market down a little and a live broadcast of Obama couldn’t even drop stocks

The Dow30 ended up 1.5%, Nasdaq up 1.2% and the S&P 500 up 1.3% today at the close with broad buying across most sectors. The overall theme is that Europe appears to moving toward working out some sort of rescue plan despite conflicting reports. The only problem will be the other countries that will also need a bailout: Spain, Portugal, Ireland and Iceland.

Many stocks ignored bad news like the downgrade of Bank of America (BAC) and Citigroup (C) by Standard and Poors to a negative credit watch. The implication that these banks will need an additional bailout which will leave the debt holders (bond holders) high and dry if additional bailout money is needed.

Even with today’s rebound, the market is still very vulnerable to further selling and we could see “selling into strength” as professional money managers could sell as stocks move higher.

REPEAT from previous report: Trading action supports the idea that we are probably starting a longer term downtrend more than just what has been a typical pullback within the uptrend we have been in since March 10th last year. What is very common in a selling type of environment is “selling causes more selling” which usually ends in a panicky type climactic fashion with high volume and often with one more piece of bad news that scares the last suckers positions.

This exhaustion in selling is the ideal place to build long positions but few people can recognize or have the courage to buy when it feels like the sky is falling (you should learn, the great investors and traders understand this). If this scenario is what we are starting, at least on some scale, it appears as though we are far from that climactic point.

Mitch King www.TradeStocksAmerica.com Contents: online stock trading, trading strategies, stock picks, stock market education, stock market investing course, educational stock trading videos, stock trading newsletter, stock market newsletter,

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