May 27: Stocks gain slightly during the Close. Financials, General Motors among major losers…

The market these days seem to be all about volatility and no general direction. Major positioning plays have to be taken earlier in the day to maximize profits. The S&P futures went down almost to the 1,370 range before bouncing back to 1,385 at the close. Just to give an idea only a week or so we were in the 1,415-1,418 range. Market sentiment along with data seem to indicate that the credit crisis is far from over and the market will continue to fluctuate as the economy recovers. The rally towards the close was assisted by lower oil prices and decent housing Data but overall the market is still moving sideways and will continue to do so this month.

Citigroup (C) had a lot of volume today and had some decent size during the morning which allowed for some good long positions to be taken. A more effective  play however seemed to be for traders with large  shares and throughout the day quick profit taking was the order of the day. Another good stock was General Motors (GM) which tanked hard during the day. The company has been in trouble for quite some time now and with the high oil prices it’s SUV and truck sales are dropping further. Traders might have noticed the ADFN ECN (electronic communication network) which was selling pretty hard and often had reserve shares behind it. A great technique today on GM along with American International Group Inc. (AIG)
was to wait for the ADFN to show up on the Ask with around 9,000 -12,000 shares and go short with it. There was almost always reserve size behind and allowed for easy money opportunities throughout the day. Disney (DIS) was another stock which after hitting the low $33.26 turned direction and closed at $33.64. After every few levels  the Archipelago ECN (ARCA) would show up on the Ask with around 20,000- 25,000 shares which almost always got hit as the stock kept rising throughout the afternoon. Again good entry and exit positions were provided by the ECN and the market specialist with decent sizes. Bank of America (BAC) and JP Morgan (JPM) were other stocks which had decent sizes and liquidity.

The market as I stated earlier is just sliding back and forth and no general direction has appeared as yet. The remainder of the month should follow in a similar manner unless we hear some good news (Oil going down) or bad news (housing worries, Inflation, Credit crises etc. etc.). Those of you who are looking to invest in Stocks for the short to mid term are advised to be cautious and more careful in choosing stocks. For the longer term investors there are actually quite a few big players who are at very LOW prices. The Stock price of General Motors was last at this level back in the 1980s and Citigroup has also come down to the $20-$21 level which for the longer term is a very attractive buy in my opinion. Questions and comments are most wlecome!

-Danial Jameel (www.daytraderlog.com)