Momentum Trader Report: 06/26/08

What a slaughter today in the market. The Dow put in its lowest close of the year, and has moved significantly lower since forming a double top in May.

As mentioned here last night, the NASDAQ wasn’t likely to have a good day today, and it fared the worst, down -3.33%. Disappointing RIMM earnings had a lot to do with this. RIMM had been a recent pick here, but it was recommended to sell before earnings. Look at what happened:

Oil also put a lot of pressure on the market, as it surged above $140 a barrel. The only position I am holding now which triggered from the Watchlist is ATW. This oil stock put in a good day, and the chart is looking strong. It triggered from the Watchlist yesterday, and today, the Squeeze indicator triggered. This indicator is described here, and often leads to power moves.

(Click to enlarge)

So will this stock continue moving higher? Who knows, but I like this chart so much, that I’m willing to hold it, even in this troubled market.

I had BZP on my Watchlist for today as a day trade. It gapped up huge this morning, way past my possible buy point of 25, but offered nice day trade opportunities nonetheless.

A Pristine Momentum Setup

Back in late May, I talked about the Pristine Momentum Setup which I learned about in the Pristine Momentum Trading DVD. The setup works like this: Look for a stock in a strong uptrend with the 20-Day and 40-Day MA’s in parallel, like railroad tracks. When the stock pulls back to the 20-Day, buy the stock if and when it breaks the previous high.

One stock that fits that criteria is ZEUS. The buy point on this would be when it trades above yesterdays high of 73.65.

The first example I posted of this setup was HP. I didn’t take the trade then, but ended up buying it later at a higher price when it broke out of an ascending triangle for a profitable trade. So I would have made more money taking this setup.

When Will There Be a Bounce?

I thought perhaps we could see the beginning of a relief rally at the end of the day, but that didn’t happen. We should see a bounce at some point, but the market could continue getting slaughtered tomorrow. Oversold can become more oversold in a market like this. It will likely continue until all the sellers are flushed out, then we could see a healthy rally develop. It’s just a matter of when the copitulation moment occurs.

If the market should bounce tomorrow, I will be looking at these stocks for possible trades:

Trade Ideas for 06/27/08:

Good luck and good trading!