Wednesday, October 1, 2008

READER'S REQUEST - Commodity Stocks

NO, NO, and NO! No long positions! In fact, most of these names are still short candidates for the long-term. Anyone hoping for some kind of nice big bounce will be disappointed. Fundamentals? Oh yea, look where they took you now. Technicals display price action, and price action is the consensus estimate of market participants, and I'm sure they know all the fundamentals they could possibly know. Sudden and dramatic changes in sentiment occur for any number of reasons, and the important thing is to react when that occurs, regardless of personal beliefs.

I love it when these dudes take long positions because these stocks are "cheap". They've fallen 25-50% further and I'm the guy on the other side shorting them. Ignoring technicals won't do you any good.

Do these names have a long ways to go down? You bet. There's too much excess "greed" money in these names and there are still people holding. Many of these names are dominated by hedge funds and as more funds blow up and have to force liquidation, you'll notice those intra-day 'blips' on the charts. That's a fund dumping a large position (get out of the way!)

Do I recommend shorting? Only on a pullback. Do not chase these stocks as they do tend to have sharp pullbacks into resistance. The only names I would short here are POT, AKS, and MOS because of the possible amount of future decline.





15 comments:

djplastik said...

Hi John. What's your opinion on the pm miners? Do you think the inverse h&s will play out? Pretty volatile market conditions.

Anonymous said...

Dead on John! Mos just post record profit but miss estimate. Pot will be effected tomorrow! I'm shorting POT right at open tomorrow! Share of related Ag stock was down avg of 10% each in AH.

-Tradermarketinfo

John C. Lee said...

djplastik - The miners will have to make a higher low. Some broke their downtrend, others are still in it, and some are consolidating. The group as a whole is mixed. No doubt, the gov't's actions will move pm.

Tradermarketinfo - I forgot about that, lol! they're down over 15% after-hours, interesting. Like I said, these ag's/fertz have only begun their descent in market hell. POT was at $10 2-years ago, and went to $240. The ones that rise the fastest and the most, will get crushed the hardest. We learned in a previous bear market, didn't we? :)

Anonymous said...

WOOT~!!

SHORTED MOS RIGHT AT OPEN 500 share at $51.75 and COVERED AT $45 easy money. No more work for the rest of the month!! I'm set LOOOL!!

John C. Lee said...

HOLY S*** they're getting killed!!

Keep them short, the selling momentum will build on itself.

Anonymous said...

IPI share were waaay over reacted! IF they read MOS's CC Potash segment were doing considerably well and see no sign of slow down with increasing demand plus low inventory!

John C. Lee said...

This is what happens during fear driven selling. Irrationality takes over and feeds on itself. They are all in a downtrend, it'll continue for some time. The people who bought at the top should be crapping their pants everyday.

John C. Lee said...

I am long IPI for a day trade, this gap is close to filling.

Anonymous said...

I totally missed the boat.! LMFAO all the stock you mention this morning before market opens were down huge LMFAO!! I bought some DUG as well! man.. I'm quite happy with today's result. I mean the market is down almost 300 points I can't ask for too much!

Tradermarketinfo

Anonymous said...

OH what about Walmart, ticker WMT!

Ready to buy again? It has been trading between the range of 58 - 61! looking at 2.00 profit? worth a shot?Thanks!

Tradermarketinfo-

John C. Lee said...

that was a short and quick trade. I bought up a lot of stuff in the industrials/materials sector. They're were responding well to the rally.

Right now will determine if I go back to being long or short. This is critical.

$2 per share isn't much for me. I like those $3-$7 stocks where I can just make like 10% off of them, both ways.

John C. Lee said...

show's over

Anonymous said...

So what determines whether you want to be long or short again? And what technical numbers do you focus on when doing day trade? I mean I have studying technical anal trading ever since I visited your blog it has been working quite well so far! Any particular program do you use? numbers you focus on? Beside WSJ, Yahoo finance, Market watch and Barron... your blog is the first thing I check out before market opens! Looking forward for your advice ! Thanks John!


Tradermarketinfo-

John C. Lee said...

man, I KILLED IT today. Goodness, everything was perfect - every single pattern so far went the expected direction. I'll have a 'Today's Action' feature that will show you where I went long and where I went short and WHY.

Still short. I wasn't kidding about these things get crapped on!

Anonymous said...

Ya! too bad I covered my MOS short at $45. wish i stay longer!