Oct

6

Trading Ideas for Tuesday

Teresa Lo @ 5:49 PM | | Start a Discussion 

The stock scan conducted after the close on Monday found 3 winners and 365 losers:

  • VIEW THE SPREADSHEET online and if you wish to save it to your own computer, click File > Export from Google Docs.

Using The Scan

The stock scan is designed to find stocks that are currently in play; criteria includes price movement, range and liquidity (500,000 shares on the day, 20-day average volume of 1.5 million shares).

By ranking and sorting the entire list according relative to performance against the S&P 500 and the NASDAQ 100 indexes, stocks with the most upside price momentum will rise to the top of the list while those with the most downside price momentum drift to the bottom.

Analysis and examples given below are designed to answer some of these questions. Please refer to the podcast for background information. We do not have a position in any stocks mentioned in this article.

Winners and Losers

The winner today was an inverse ETF. We will look at MBIA Inc. (NYSE:MBI).


Daily Chart with 50- and 200-day Moving Average

MBI is currently trading just below its 50-day moving average and its 200-day MA. Note that the 50-day MA may be positioned to upcross the 200-day MA, and traders that use “the cross” as a signal into the market on the buy side will be watching. There seems to be a small pennant or wedge forming here, and so long as volume contracts, MBI maybe poised to make another move up to test recent highs.


Daily Chart with InVivo Swing Trading Tools

MBI has been outperforming the S&P 500 since August after a transition period in July. At this juncture, the stock is a little weak because the green histogram bars are below the grey threshold line. The jury is out, and we’ll see shortly if this is a consolidation pattern that resolves higher.

MOS, HERO, MTL, RRI are at the bottom of the list, but since we’ve looked at all of these, let’s move to the next one up on the list, EXCO Resources, Inc. (NYSE:XCO).


Daily Chart with 50- and 200-day Moving Average

XCO is trading under both its 50- and 200-day moving averages. The 50-day MA is falling below the 200-day MA in a downcross.


Daily Chart with InVivo Swing Trading Tools

Since July, the stock has been underperforming the S&P 500 Index. Recent price action tells us that this stock is in a “waterfall” move down, most likely in the panic phase of the Investor Sentiment Cycle.

A Word About Stock Picking

What you should do with these ideas are up to you. We believe individual investors should make speculative trades in individual stocks only with mad money after fully funding retirement accounts according to a balanced portfolio strategy. Use a well-defined process to evaluate buy and sell signals. You may wish to investigate these ideas further with the following questions in mind:

Readers frustrated by our lack of saying “buy this” or “sell that” might heed the immortal words of Edwin Lefevre:

I never hesitate to tell a man that I am bullish or bearish. But I do not tell people to buy or sell any particular stock. In a bear market all stocks go down and in a bull market they go up. I don’t mean of course that in a bear market caused by a war, ammunition shares do not go up. I speak in a general sense. But the average man doesn’t wish to be told that it is a bull or a bear market. What he desires is to be told specifically which particular stock to buy or sell. He wants to get something for nothing. He does not wish to work. He doesn’t even wish to have to think. It is too much bother to have to count the money that he picks up from the ground. — Reminiscences of a Stock Operator

The information found in this article is designed to be educational, to show readers how our swing trading tools can be used in conjunction with other technical trading approaches.

Questions and Comments

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