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It is no mystery by now that we are back inside that summer trading range on the S&P 500. Even though the shorts are having their way, the nature of being inside a well-established price range is that there remains considerable risk to either direction. By many indicators we are currently oversold. Beyond that, sentiment seems to have turned soundly cautious, if not outright very bearish. All of that means nothing, though, when the bears are able to ride the momentum of a downdraft. As we saw last summer, Mr. Market seems to have a knack for laughing at indicators and sentiment at the most inopportune of times.
My main focus, as it has been for much of 2011, is in largely playing defense and engaging in a hit-and-run trading style, be it to the long or short side. Given the lack of a clear, sustained trend throughout this year, I want to be prepared for anything, and The PPT algorithm is as great a tool for that as any. I am going to hold off on any potential short swing trading ideas at the very least until some of this oversold condition is alleviated via a bounce. Despite how harsh the selling was on Monday morning, the bullish seasonality should not be dismissed just yet.
Hence, here are five long trading ideas. Note that if the bears remain in control of the market then I will take a pass, as at least eight out of ten stocks move with the broad market, and breakout plays tend to fail in bearish overall markets. That said, if the bulls can finally stabilize things and push us back above 1220 on the S&P I am going to look at these standouts.
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cvgw… guacamole bull market it seems
SPPI, HITK
Chess, thanks for posting HITK earlier. It’s one of my few recent positions I’m still holding. It is working well just like SPPI that you posted here.