MARKET APPEARS OVERSOLD

The market is very oversold due to the drop over the last 4 trading days. Look for a rally soon...possibly Monday. The market is very volatile right now so it is possible to get a 300 or 400 point rally (on the Dow)...maybe even in one day. If this does happen, be careful in planning your trades. During the fall of 2008, there were 700 point drops that were followed by 500 point gains which were followed by 700 point drops. When markets are volatile, they can swing back and forth with big moves. It can be a dangerous game to play these swings. If you are going to do it, do it with smaller amounts of capital. If you notice, we are now pretty far below the 50 day MA. Stocks like to come back to the 50 day MA when they get too far above or too far below it. For those that have take my Course 2 class on Option Spreads, this is normally a good area to look at some Bull Put Spreads or Bull Call Spreads. We would need to be a bit more cautious in these conditions due to the higher volatility in the market. If the European Union countries can come up with a plan to help reduce the anxiety associated with their condition, these spread trades could work very well. If we do rally tomorrow, look for short term trades in well known stocks that have been beat up a bit...like AAPL, GOOG, and GS. I also like some of the stocks that have outperformed over the last year like CREE, NFLX, PCLN, HPQ, and AKAM. The play on these is for a short term bounce which should happen within the next few days. A word of warning on my bearish recommendation on GENZ. Although the stock has been moving down and appears to be in a downward trend, it did not move down much during the tumultuous days of last week. The price action is showing that it is fighting the move down. This makes me a bit nervous for a bearish trade. If you are in this trade, stick to your original plan. I don't like the idea of stopping out before the stock reached your stop loss area. Case and point is this latest move down in the market. I was able to profit because I didn't panic and get out of my bearish positions before the stop loss area was reached. If you are in a put option trade on GENZ and you don't have a stop loss plan, make sure you decide on one soon. You are suppose to have an entry, stop, and profit target plan for every trade you get into.