Finally, a Relief Bounce

 | Oct 03, 2011 | 10:41 AM EDT  | Comments
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Better-than-expected numbers from the ISM Manufacturing Index, constructive spending and auto sales at General Motors (GM) are helping to produce a little relief bounce. There was talk about the possibility of an ISM number under 50, but since it cleared that figure (it was 51.6), buyers have inched their way in and short covering has kicked in as well.

Buyers are still understandably tentative, but buying Monday morning weakness is a strategy that attracts interest. Once it starts to work, others pile in quickly. The key is to hold above the early lows. As long as we do that, the bears are likely to give an oversold bounce room to develop.

The tricky thing is that you aren't going to find good charts. If you want to buy, you have to be willing to buy broken stocks and hope that an oversold bounce gains momentum. The flipping can kick in very quickly, so you have to be quick, too.

I have a few minor trades going, but my time frame is so short that it is barely worth mentioning them. I have my eye on a couple of shorts, such as FLIR Systems (FLIR), which is my stock of the week, but I want to see if the bulls can build on this early bounce before I pursue that more aggressively.

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