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Early Bird Trading: Market Mood is Nervous


Typically, this nervous activity, which results in a very choppy tape, has the makings of a wall of worry.


Good morning Minyans. While you're sipping on that coffee and catching up on the news flow, here are some ideas to consider for the day:

After some up and down action it looks like Google (GOOG) will open higher this morning after the company once again delivered an outstanding quarter. I am not as concerned about that stock as I am the general market mood which of late I would classify as 'nervous.' It seems like there is no conviction at all and the slightest hint of a problem sends traders scrambling for the exits. Typically, this nervous activity, which results in a very choppy tape, has the makings of a wall of worry. However it is still early and one can't be too sure that will be the result. As earnings continue to roll in it seems like we could go either way.

While my position has not changed that they should be avoided, the financial and brokerage stocks are on everyone's radar and seem to be what provides this market with comfort. When they stumble participants start hitting eject and we reverse. Citigroup (C), is breaking down to a new leg technically and Merrill Lynch (MER) doesn't look too far behind. Is this the bottom or have we just started the decent? If they can stabilize I think it bodes well for other areas, however if they continue to fall, I believe we have to be cautious.

We look to be opening flat with a gap higher in the NASDAQ. Lately, strength has been sold and I will be watching for the same thing this morning. I feel comfortable sitting tight with my current positions and remaining patient.

On the trading front I continue to like all the names I have discussed this week: Charles Schwab (SCHW), Blackboard (BBBB), Adobe (ADBE). I am also looking to put a few small golds on the books and am especially interested in Yamana Gold (AUY) and El Dorado Gold (EGO). Both are basing at recent highs and I like the idea of starting to average in with stops below $13.50 and $6.50 respectively.

I suspect it will remain choppy out there. Remain open minded, remain flexible and always have an exit strategy.
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Positions in SCHW, BBBB

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