Tuesday, October 30, 2012

How to play the STORM

3month daily chart $WMT
So as everyone is aware, hurricane sandy has made its way up the East coast, and had it out with the worst for New York City, and New Jersey.  With winds up to 80mph, heavy rain causing vast flooding throughout the Northern East coast, this sets up a few thoughts of how could I take advantage of the disastrous situation.  First things that comes to mind for me would be $WMT $HD $LOW.  You could potentially get into some insurance companies due to the projected 2-5 billion dollars in repairs, but I'd like to stick to the near term.  Giant retail, and home repair.  $WMT, wal-mart, could potentially be a great play. Prior to the storm I got the opportunity to go into multiple wal-mart stores in Fairfax, Va, and Manassas Va.  Both stores had shelves completely empty, multiple employees talking about being sold out of water, batteries, flashlights, and other goods you would want to stock up on before losing power or being stuck at your house for a long period of time.  Clearly these only effect the fundamentals in the long term, maybe a spike in revenue for the quarter, maybe not, they are a trillion dollar annual revenue company, and the event was consolidated to the East coast, so you may see it may not.  We're trying to play the mass psychology of the market, not the near term fundamentals of the situation.  Investors are going to be looking for these large retailers supplying all kinds of good, to try to get a spark on what may be a down market come Wednesday.  $WMT closed Friday at 75.11 with near term resistances of 75.50, 76.71, and 77.23.  Pay attention to the futures in the morning, and the pre-market action all across the board, and make an action decision based on what you see, the move is either there or its not.

$HD Home Depot, could be a potential move for obvious reasons.  Home Depot is the national standard for home improvement followed by $LOW Lowe's.  Both these companies are going to be the go to for personal repairs and renovations, along with the contractors insurance companies hire to do the work they are obligated to provide.  You're going to want to keep an eye on all three of these stocks to look for movement in the pre-market, DON'T CHASE THE STOCK.  Like I said above, the move is either there or it is not.  Review the technicals,  be aware of the market trend, and any stock related news prior or during market hours.

As you can see in the $HD chart, you might say it looks some what bearish, looking to test the 50day at 59.11, current stock price is at 60.04.  We want to see bullish pre market action Wednesday morning for a set up.  Three near term resistance points to keep an eye on are 60.31, 61.06, and 61.89.

$HD 3month daily

$LOW 3month chart you see moderate growth of the stock perform with the market, or some what bullish.  The past couple days have started a short term down trend below the 20day, so you want to be looking for it to not only break that down trend, and break above the 20day, but also break through resistances 1, 2, and 3.  The stock price is 31.36, and the resistances are 32.16, 32.40, and 32.62.

Good luck to all.

No comments:

Post a Comment