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Given the uncertainties that surround the stock market, it looks like we are in a trader's market. The swings are apt to be wild with the bias remaining to the downside. Consequently, nimble traders have the potential to use the volatility to make lots of money in the market -- even if the indexes ultimately move to new lows.
I was fortunate to exit two tech positions -- Garmin (GRMN, news, msgs) and Google (GOOG, news, msgs) -- during the most recent rally. Both just topped my required sell targets of $62.50 and $475, respectively, before succumbing to renewed selling pressure on Thursday. Tech stocks generally should have difficulty sustaining an upward push given the likelihood of lower business spending in the second half of 2008. Consequently, I would use any strength in the beaten-up group to reduce my exposure.
The same holds for the banking stocks. Bolstered by earnings news that was bad but not horrible, the group has seen a nice short-covering relief rally. However, volume on the gains has been light. That suggests little buyer conviction. Consequently, we're likely to see another leg down at the first hint of trouble -- and I think most of us know that there's more bad news out there. So, I'll set a sell target on Bank of America (BAC, news, msgs) at $43. It closed Thursday at $40.37.
As for the rest of the Dog Pound, I'll hold Las Vegas Sands (LVS, news, msgs), Clorox (CLX, news, msgs) and Buffalo Wild Wings (BWLD, news, msgs).
But I'll place a sell target on Bebe Stores (BEBE, news, msgs) at $11.55. It was at $11.20 on Thursday.
The technical tone of this specialty retailer has turned sour. Given the slowdown in consumer spending, the risk of an earnings or sales miss is too high for my liking. Retailers overall could be in for an extended period of underperformance, especially as the news media starts to ramp up discussions of $4 gas prices ahead of the holiday shopping season.
I'm still struggling to get back into this contest, and I think the best approach, particularly with a basket of dog stocks, is to trade more aggressively. That's what I'll do for the time being.
I'll be back tomorrow with some new buys with the money -- just under about $27,000 -- from the Garmin and Google sales.
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