Friday, April 04, 2008

Day Trading... Swing Trading... Position Trading

In a perfect world, I would not have a job.

Instead I would day trade stocks and indices, or more accurately, swing trade: keeping positions anywhere from a few hours to a few days. Follow market trends and nimbly get in and out. Position trades are longer term, holding positions for months or years.

Today is such a perfect day. I had a big case cancel, so I took the day off. The non-farm payroll report, i.e., the jobs report, for March was scheduled to be announced at 8:30 am, so the market promised to be interesting.

The jobs report was terrible by all standards, which by itself did not surprise me at all. Service and manufacturing jobs declined month over month and year over year. The only maintenance of job numbers were in the government sector-- go figure (I thought we had small government conservatives in charge. Ha!)

The market has responded very well this week and it seemed to take the poor jobs report in stride. Either the traders and investors feel this is the bottom, or they are confident that Ben Bernanke and his team are not willing to allow any more drainage on market returns. The market is solid.

As Charles Kirk says:

As we saw from trading [Thursday], investors are showing some confidence (or brash complacency) depending on your perspective. I suppose with bailout Bernanke and Paulson now on high alert and the economy already out of recession, there’s no downside risk anymore. At least that’s the vibe I’m getting from a number of people.

Granted, there is always downside risk, but in relative terms the market should fly over the next 2-6 weeks. If it can absorb the crappy metrics in the economy, then it will certainly weather the storms of any poor earnings next week.

Barry Ritholtz, the writer of an award winning macro-economic blog, recently has called for traders to close their short positions and look for select long opportunities. I agree. Last week I began looking at tech plays like Sybase, (SY), Taiwan Semiconductor (TSM) and Sun Microsystems (JAVA). I think that tech will lead us out of this recession eventually.

Also, small retail banks should be at multi-month bottoms. Associated Bancorp (ASBC) is located in Green Bay, home of the vaunted Packers (who are looking for Lynn Dickey to come out of retirement now with the departure of Favre, but I digress). Northern Wisconsin has a relatively stable economy based on tourism from Chicago and Milwaukee, paper and other natural resources. Another is Union Bank of California (UB). Both of these have 4%-plus dividends, great technicals and solid fundamentals. These are longer term holds-- probably through the summer at least-- but eternal vigilance is the price of trading.

Another flyer I got into recently is Cameco (CCJ), the largest producer of uranium. If the world isserious about decreasing carbon emissions, then nuclear energy will play a huge role. Toshiba just signed a large contract to make several reactors for the United States and they will all need substrate uranium. Cameco has not the run up in valuation that solar stocks have had and nuclear power offers proven potential to generate large quantities of electric power, unlike solar. Cameco is a long term secular trend that should last several years, if not a lifetime.

By the way, the trade today was China (FXI) on the upside. In at the bottom, out near the top. The perfect day-trade. The perfect day.

Disclaimer: I'm a simple working stiff who knows less than nothing about finance and economics. My interest in the market is solely for entertainment purposes. In no way should my ranting serve as investment advice in any way. (Unfortunately, the same disclaimer is true for every financial "adviser" I've ever sought out.)

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