Monday, October 18, 2004

Some comments on my watch list for Monday

I'm wrapping up my weekend market homework and everything is progressing as I expected. Yahoo finance's headlines discuss oil trading above $55 overseas, the Japanese markets are down, and the dollar has fallen against the yen. These are all bearish items for the market, but I'm net short going into Monday after stopping out of a few long positions on Thursday and Friday =) Anytime a bunch of my positions stop out all at once, it makes me sit up and take notice because something is probably wrong.

A few internet stocks I expect will probably roll over on Monday and Tuesday are EBAY, YHOO, NILE, and SINA. It looks to me like all it would take on any of these stocks to push them over the edge for the week is a price decline of about 3% on Monday.

I think investors have a lot of reasons to be skittish right now. The insurance scandal, and collapse of the drug companies and industrial metals are affecting the entire market. Stocks are just not cheap enough to look like a sale to value buyers if the threat of a 15-40% collapse is more likely than a 10% gain over the next 6 months regardless of what the P/E's are and I think that picture is in a lot of investors' minds right now.

I'm also still watching TASR. I've heard they are reporting earnings on Tuesday so if I see heavy buying on the tape on Monday, I might buy some with a tight stop. I'm up about 13% in TZOO right now by using the same move just before they reported earnings. I've found that stocks are much more likely to already be in a short term decline before making a large gap down caused by a press release or earnings, so I'm comfortable taking this calculated risk if the buying before hand is heavy enough and there is no obvious strong-hand selling.

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