May

Investing Systems Research Lab Blog for Week of May 9th, 2011

Last week was tumultuous to say the least and at times seemed almost surreal. The moves down in oil, gold, and especially silver were incredible and felt more like “liquidation” selling than rational trading.

I still think there’s a bit more risk to the downside, but there are a lot of opportunities setting up. We see a lot of stocks becoming oversold and quite a few potential pivot lows out there.

The best scenario would be a few more days of weakness, a narrowing range, and then to see some dip buyers step in and turn things back up.

There are a lot of stocks that are setting up, but are just a few days away from triggering. Watch the lows of last week and the stochastics for clues.

Below are some setups we see developing.

Market pullbacks and corrections are a normal part of the up and down cycles. They help work off overbought conditions and give us the opportunity to catch trades on stocks that are in strong uptrends without chasing them when they are overbought.

Notice in several of the charts above I have the stochastics circled. Keep a close eye for crosses to the upside.

Keep in mind that the market can take another leg down, so be sure to use stops on all open positions. We’ll just have to take it as it comes next week and stay defensive until it’s clear we have a short-term bottom in place.

It’s interesting to note that despite the weakness last week in may sectors and the overall market, the picks form the daily scans held up quite well.

We made some good progress on the “Live Grid” module, and everything is on track.

Here’s the updated screenshot with the picks from Friday’s close:

http://www.investing-systems.com/grid_demo.jpg

Join us on Monday-Wednesday-Friday in the Research Lab at the market open as we take the picks from the scans and mark up the charts.