Wednesday, September 17, 2008

Trade Alert: GS WFC

With fear in the market, blood on the streets and the VIX at 33 I am looking to go long. I noticed the SKF was at 126 earlier, but remember that the SKF, is a short on the financials. With the VIX at 33 I shied away. Instead I'm looking for something for the possible turnaround rally

I have two candidates come to mind. One is Goldman Sachs, which got hammered after earnings yesterday, and based on the volume many have reached the point of temporary exhaustion selling. On the chart you can see that it crashed about 40 points from 155 two 115. remember no matter what the fundamentals say, when all the sellers who have intentions of selling have sold. It marks a temporary bottom.

The other candidate is Wells Fargo Corp. WFC. despite the shellacking taken by the overall market, Wells Fargo is in a clearly defined up trend in the daily chart. That is it's showing relative strength.

Don't believe any rally is a turnaround. It will just be short covering, but it will be vicious.

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