Momentum Trader Report: 05/29/08

29 May

Posted by Mo-Trader as Momentum-Trader Report

The market put in its third straight up day, helped by oil plummeting, which rose sharply in the morning, then sold off. Take a look at the USO; It appears to be in trouble.

Some more downside in oil is very likely, which could be good news for the market.

However, in Tuesdays post I mentioned to watch the Nasdaq for resistance at 2500 and the 200-Day SMA, and also watch for a possible head and shoulders pattern. The Nasdaq took out both resistance levels today, but then pulled back to close below the 200-Day SMA. This is a key level to watch. If it can’t close above here, then look for the RS (right shoulder) of a head and shoulders pattern to form. This would be a bearish sign for the market.

I wasn’t able to watch the market much today, and I didn’t set any buy stops for the two stocks on the Watchlist. When I did get to a computer in the afternoon, SOHU had already broken out, so I didn’t trade it. It made a nice move today on heavy volume, but pulled back a bit later in the day.

There was some awesome continuation on a trigger from yesterday, it was SQM. What a day this had, closing up almost 7%!

I held this one from yesterday, and was a bit worried about it, as it was down significantly after hours yesterday, and pre-market this morning. The big move today was a pleasant surprise.

In last nights post, I mentioned the Pristine Momentum Play, named after the Pristine Momentum Trading DVD, in HP. HP did move significantly today, but gave back most of its gains.

Could have been a nice day trade.

Friday will be the last trading day of the month, and we could see some more “window dressing”. If one of the indexes closes significantly higher tomorrow on heavier volume, it will be Day 4 of a rally attempt, and could change the IBD market outlook from “Market in a Correction” to “Market in a Confirmed Rally”.