Wednesday, October 20, 2004

Looks like oil hasn't topped yet

A lot of IBD 100 energy stocks look like they may be putting in short term bottoms and set to move higher. Have a look at UPL, XTO, PXP, VLO, HYDL, and OLG. Pick your favorite poison if you are in to hedging yourself with the oil stocks. A couple of energy related stocks that I like much better are EXM and WLB, but these two need to show the kind of strength we saw today in the first set of IBD 100 energy stocks listed before I take positions in them. WLB still looks at least 2 days away from setting up off of a bottom so I won't be watching that one closely tomorrow.

I am encouraged by all the green I saw today on my "Free fall" list from yesterday's journal. While most of this was just oversold bouncing, at least people are buying. If they keep buying, guess what happens ;-)

A few random picks from my watch list tomorrow:

HRS - The chart vaguely resembles JPM at the beginning of October. If HRS cannot make a positive reversal tommorow, I think it is a good short. Look at the huge volume expansion starting Tuesday when HRS pulled a negative reversal and continued down today. I haven't bothered to look, this is just conjecture, but I'm going to guess that HRS will report earnings sometime during the next two weeks and a few big hands are unloading ahead of the report.

TZOO - TZOO had a positive reversal today, bringing it to the kind of sweet spot I'm looking for to enter a position on strength the following day. If you get TZOO at the open tommorow, make sure you see about 200,000 shares traded on a price runup of at least 3% from today's close in the first 10 minutes. Anything less and you are probably being lured by sirens =)

I'm sure most of the readers (if I have any!) have picked up on the fact that almost every stock I talk about here is either currently an IBD 100 stock, or has been at some point in the recent past. A few of the exceptions to this are mostly low-floaters that have perked up. My experiences with this weekly index (the IBD 100) leads me to be confident in Investor's Business Daily's ability to screen stocks that are in timely industry groups, trending higher, fairly liquid, making money, and volatile enough for opportunity.

2 Comments:

At 1:32 PM, Anonymous Anonymous said...

Jon,
I found this site from the Rich Dad Poor Dad Paper Asset forum and want to start off by commending you on your thourough analysis. I am a newbie investor and try and combine TA and FA. The FA part to me is easy to understand but I am having trouble following the TA especially when it comes to volume. Can you tell me what the volume indicators are vs Buy and Sell?
Thanks in advance.

 
At 4:10 PM, Blogger jontait said...

Thanks for the comment. Volume by itself only tells you whether there are a lot of people trading or not. When you consider the forces of supply (sellers) and demand (buyers) of the stock, it follows that when there are more buyers than there are sellers of the stock at a given price, the price will have to rise to make more people interested in selling. This is why the price is always changing, so that buyers can be matched with sellers. When there is bigger than normal volume on a price advance, it means that there are an unusually large number of buyers coming to the stock, and this attracts even more buyers if the other reasons to buy are good enough.

Another scenario that happens is when the volume is getting bigger but the price of the stock is not going up. This means that demand is not able to become greater than supply and often precedes price declines. This is the scenario I was talking about when I analyzed the UCI chart about a week ago on the blog.

I hope I answered your question well enough =)

 

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