We ended today above the support lines I drew in this morning's post. Many traders will be looking for a rally tomorrow, given the extreme action today and end-of-day buying that took place. Perhaps some value investors will be looking for (what they consider to be) bargains as well. It may not happen, but odds do appear to be better for long side trades. In particular, I am looking for stocks that have seen extreme selling, and had buyers emerging late today, especially past earnings winners. The commodity- and energy-related sectors are proving quite a few of these chart types. Furthermore, if we do get a strong rally, expect many of these names to move over 10% in a single day, providing some great trading opportunities in the process.
- APWR saw considerable buying volume after its initial drop, and closed well off its low of 4.51. The 52-week high is 31.89. Considering strong past earnings and revenue growth, the selling looks overdone, with the price now back at early 2007 levels. I started a long position at the end of the day today.
- WLT closed nearly flat after being down over 20% in early trading. I am holding a small long position overnight.
- SID: The selling in steel stocks seemed a bit overdone. SLX, the steel ETF, has dropped from a 52-week high of 114.12 to close today at 40.54. I liked the intraday action in SID today, especially the late day volume.
- CLR: This oil and gas exploration company closed positive after an intraday low of 23.98.
I will be running through many more charts tonight, and will try to post more later this evening. For clarity's sake, I am not calling a bottom, nor am I highly confident we will get a rally here. However, if we do, I want to be able to ride some of these high beta names for profitable day trades. I do not see this as a good place for long-term or value investors to buy stocks. It would be literally impossible for anyone to know the true extent of our problems, given their scope and complexity, and therefore adding long-term positions now is simply a bad gamble.
