Daily Stock Pick of the Day - Fri., Oct 15, 2010

Stocks pulled back today following a lukewarm response to the government bond auction, concerns about the upcoming jobs report and continued anxiety over foreclosure practices at banks. The Dow fell more than 60 points at one point today and climbed back off the low to close only 1 point down at 11,094. The S&P 500 and the Nasdaq also fell, but only slightly.  The S&P closed down 4 points at 1,173 and the Nasdaq closed down 5 points at 2,435.  The CBOE Volatility Index, rose 4% today, near 20 at 19.88. Remember, the VIX has been trading below 20 all week, the lowest level for the index since April.

The dollar fell to a new low against a basket of currencies.  Gold rallied to record highs, actually trading above $1,380 an ounce. Other global commodities and commodity-related stocks continue to rise (think copper, palladium and silver).

Today's stock pick is Longtop Financial (LFT).  They're a Chinese firm that develops account management, transaction processing, and enterprise software for financial institutions.  The stocks in the financial sector are showing improving signs of life right now.  In addition, this stock has been under heavy accumulation recently.  On Wednesday, more than 1 million shares traded hands (average daily volume is normally around 440,000 shares).  I think a good entry point here is around the $39 range.  It will probably pull back to this range after yesterday's surge.  My first target is $42-$43 and if it can consolidate in the range, my next target would be about $45. 

Resilient is the word that comes to mind when thinking about this market. I wouldn't say the bulls are are on a stampede, but they're sure not giving up much ground these days. There seems to be plenty to worry about -- worries about European defaults, currency wars and the foreclosure debacle -- this should be enough to dampen investor spirits. Instead, this market is hanging around some new highs. I can't help but think that this market is somewhat overheated. I'm waiting for a brief, but orderly pullback so I can commit some money for the next few months. I definitely believe that we will see a traditional "year-end" rally, but the strength of that rally can only be strong if we let some of the "froth" in this market dissipate a bit.


Stay cautious - Friday is expiration day and could bring additional volatility.  Take some time and check out Wall Street Survivor below.  It's fun and free - what's better than that?

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