Extended Stocks May Fall Prey to New Year
The market is up from 10 to 15% since July lows, depending on which index you follow. Such a strong move to the upside warrants caution as we approach the end of the year when hedge funds, mutual funds and individual investors try to secure their numbers for the year and adjust their positions for taxation.
The last 3 years have seen intensive selling in the first few months as momentum stocks have been brought down to earth. As such, I recommend you close out positions in any of the stocks that are extended well beyond their support levels.
I am expecting a weak first couple of months in 2007 and believe that the times ahead call for caution.
– Faisal Laljee
i agree. i want to use double downside nasdaq index ETF- QID to hedge and defend portfolio gains that began late last summer.
I disagree…I do believe the market has made a remarkable move here in the last 5 months, but with acquisitions continuing to hit the newswires every day, I think Corporate America is telling us that the market is still cheap. I think we can move another 200-250 points on the Nasdaq before a significant breather occurs.
yeah nasdaq 2650 would be nice.
on tuesday i opened longs: INSP 20.59, ANF 69.80, ZUMZ 28.77, CAKE 24.57……. for wednesday opened longs: PWAV $6.69, STEM $2.56, ISRG 96.80, CAKE $24.80, BSX $17.09.
thurs opened IVGN 56.60, LIFC 23.80, fri ruth 18.36, sono 31.09, kyph 41.25
Happy New Year!
I keep watching stocks make new highs and asking why? lol
Larry – I think the intra-day reversal today is some indication of what to expect in days to come.
– Faisal Laljee
Faisal – I bought USG @ 55.75, its now at 53.9 What’s your take on my position? Your caution is making me wanna dump it at a loss.
Sal – Do not make the mistake of selling this stock. This is a long term play and if it drops down to $50 (which is possible), I would buy even more. I personally own this one for my own portfolio and plan to own it for a while. My bearish outlook on the market is a short term outlook. Don’t let this short term outlook force you out of safe, long term positions. Only sell those stocks that are considered momentum plays, that are extended way over their moving averages and major support levels.
– Faisal Laljee