June 07, 2006

If I were a trader...

I can't resist contemplating trading gameplans after days like today in the market. Something big is happening. Greenspan was pulled on to CNBC today, Cramer is sweating, Kudlow is back on the bottle, Homebuilder stocks are crashing, India is crashing, Russia is crashing...

I sense another good opportunity brewing.

Here is my gameplan for tomorrow:

I will be watching the open closely.

Strong open – Kick the dog, Back to Bed (maybe golf – scrap that its too freaking hot). It will likely get sold off.

Weak open - play with the kids and keep an eye open for a big selloff

Overseas crashing and Futures limit down – action…

My main focus is on the OIL stocks and the Index (OIH). With oil still at $70, the stocks act horrible. Something is giving here soon. Either OIL is coming down or these stocks are ready to rally. Maoxian has a great post on why these are his "tell" right now . READ IT if you are trading!

Shorting – Not for me right now – watching Federal Express for some reason. I have been for a while and am amazed at the resilience

Would not touch the semis – they smell rather putrid! That goes for QQQQ and most tech.

Biotechs – NOT

Diamonds (DIA) – Love to see 107 and would take a long trade in the area

Gold – more nibbling, maybe some calls or sell some puts on major weakness

Spiders (SPY) – 122-123 would be an interesting panic entry for a long trade but would probably start buying at 124ish

India – Nibble on IFN (down almost 40 percent)

Japan – I am a buyer tomorrow of EWJ for a trade, maybe a hold.

An interesting post on the Homebuilders today from Bill Cara . I agree in principle; but here is my take (slanted from the booming city of Phoenix):

Everyone is panicked on homebuilders but they are much different companies than the last cycle. They carry much lower inventory risk these days.

If they fall 10-20 percent more I am looking to add MTH. They have a southwest US focus. Steve Hilton, their CEO is a smart operater and tough cookie. They have a very efficient process to building and leveraging and would not bet against him when this turns and it will.

I believe that the US dollar stays WEAK and the Asians and Europeans will be your neighbors before the real estate end is really here.

Don't get me wrong, from a trend perspective, thehomebuilding stocks are cooked, but all the charts look bad in a bad market and I can't help myself when everything looks like crap.

If you can't help yourself - now you know what I am looking at.

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