Momentum Trader Report: 09/28/08

28 Sep

Posted by Momentum-Trader as Momentum-Trader Report

All eyes that watch the market are now waiting for word from Washington on the bailout package. It’s possible that there could be news before market open on Monday. If passed, and especially if the package is better than expected, we should see a pop in the market. The question will be, will it be a buying opportunity? It’s possible that a pop in the market could provide a shorting opportunity as traders sell the news.

As mentioned last week, the S&P 500 confirmed a rally on Thursday.

A weekly chart of the S&P 500 shows a pattern that looks like a double-bottom, which would be bullish. Both the 50-Day and 200-Day SMA’s could offer some resistance if the index continues to rally.

There was a trigger from the Watchlist on Friday. It was CEPH which made a nice move.

MYGN barely triggered, then pulled back to close slightly below the entry point.

Although the Dow closes up over +1%, and the S&P and NASDAQ closed basically flat, there were some stocks that got clobbered. As mentioned in Thursdays post, RIMM was going to take a hit, and it closed down –27%. Another stock that took a beating was one I have been posting here, FSYS. It closed down over –8%. It had broke out of a channel on Thursday, but notice how weak the volume was. This is why volume should be used a confirmation when buying breakouts.

The good news is that the stock now sits at its 50-Day SMA, where it could find support. But it needs some work if it’s going to move higher.

IBD 100 Stock Near Buy Points:

Since the market is in a confirmed rally, IBD has a few stocks highlight in the IBD 100 for Monday as being near their buy points. They are: MANT, TRLG, VAR, PRGO

Even with a confirmed rally and a possible pop if the bailout package is approved, I don’t plan to hold on to positions very long. I still expect some whipsaw action in this market, and a gain of just 1% or 2% would be a gift.

There are a few stocks that I am watching, but they will need volume and a cooperative market. I will not be buying them if they gap up above the entry point on Monday morning.