Sunday, March 20, 2011

Sunday Night Trading Thoughts

Last week was a crazy week. There was a lot going on, and definitely a lot of volatility in the markets.

As expected uranium and nuclear energy stocks got crushed. While I think some of the names in these sectors may be oversold I'm not ready to step in and buy them yet. Many companies charts, like Cameco (CCJ) are still broken and could have further to fall. CCJ might be worth a short if it gaps up on the open Monday.

The S&P500 actually held up fairly well for the week. And while it gave back a lot of its gains Friday afternoon, the index was only down about 2% for the week - which isn't bad all things considered. The fact the index was able to bounce back above its 100 day moving average is also encouraging in the short term.

With the US-led air campaign in Libya over the weekend pushing crude prices up over 2 bucks I would have expected stocks futures to have opened lower Sunday night, but S&P futures are currently up 8.50 points at 1282.75. The fact that futures are up given the weekend's events tells me the market went home short on Friday. This could lead to a bit of a short squeeze once the market opens Monday. I went long earlier tonight @ 1279 based on this view.

Currently it feels like the market wants to test 1300 in the S&P. At that point I will probably look to get short again. But right now it feels like maybe people are caught the wrong way. And any positive news out of Japan could spark further short covering in the short term.

Other specific sectors I like for this week are the golds, coal miners and the rare earths. I'll be looking at names like GLD, ABX and MCP as possible new longs.

I am already long WLT as a coal play. Coal should continue to get a boost as Japan looks for alternatives to replace its lost nuclear generation, and longer term as other countries reconsider the pace of new nuclear builds.

WLT looks to be forming a bull flag for an eventual move to new highs. Below 110 would reverse that view. Others in the coal sector I like include PCX and BTU. PCX is also in the process of forming a bull flag, while BTU is breaking out to new highs.

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