Afternoon Rebound
The market took a break today, although the indices pushed higher in the closing minutes to finish breakeven. It was a rough morning in the market as most indices were down over 1% to start the day. Volume was on the lighter side, but decliners outpaced advancers by as much as 10 to 1 to start the day. As the trading progressed in the afternoon, the SPX found strength near 1085 and rallied nicely into the close.
Our portfolio remains entirely long, but we did move up stop losses for all positions in the portfolio today. Additionally, we closed our position in Ford (NYSE:F) with an 11.5% gain. The market still looks bullish, but it could see a near term pull-back. Since it is unhedged I believed it was important to lock in our gains.
In news overseas
The GDP of the People's Republic of China grew 10.3% in the second quarter. Although analysts expected 10.5%, the growth is impressive. In the first half of the year China's GDP expanded 11.1%. Investors are worried about a growing bubble in China that would hamper future growth. In fact, some analysts believed the bubble already burst.
Instead, the country showed no signs of a slowdown last quarter. The central bank in China is concerned about inflation, and rightfully so, but remain cheerful about the economy. Bankers affirm that the measures in place to moderate inflation and accommodate sustainable economic growth are appropriate. The chance for additional monetary tightening measures, such as reserve-ratio requirement hike has become smaller in the past couple of quarters. Also, if growth slows, the Chinese government can use its fiscal surplus to provide investment in infrastructure and public housing. Now is the time to pick up Chinese ADR at low prices.
The Chart of the Day
Portfolio position Richardson Electronics (Nasdaq: RELL)
(CHART) finished the day 1% higher. The stock broke an important
declining channel back in June. After the break-out, the stock moved lower
and tested the broken trendline where it found support. As is often the case,
previous resistance became new support.
At the trendline support, the stock put in a bullish engulfing candle, which
is often a strong signal of a bottom. Shares continued higher and flirt with
$9.70 resistance now. In a hot market, which I believe we are in, shares
would take out that resistance and challenge the $11price level. My first
target takes shares up to $10.85 resistance while my secondary target is
fresh highs into the $teens.
Watch List
The TradeMaster watch list was mostly lower today,
similar to the market.
Leading the gainers today was China TransInfo Tech (Nasdaq:
CTFO) up 5%. The stock was my stock to
watch earlier this week and it entered our TradeMaster Daily Stock
Alerts' watch list the following
morning. Shares are moving towards my first target, which is
$7.67 and the 200 day moving average. Volume continued to escalate suggesting
real buying pressure from investors. My secondary target, calls for a quick
move above $9.50 price resistance.
