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10 stocks to buy amidst all the turmoil

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After nailing the top in Apple (NASDAQ: AAPL) and warning investors this would be a painful year, I've been getting hundreds of emails from people asking me what to do next? As if suddenly after two correct predictions, I'm Nostradamus or David Blaine!

Make no mistake, I'm neither a forecaster nor a magician, I'm just a trader who bases his decisions around these key elements: a distrust of everyone and every company on Wall Street (made easier by the likes of MBIA (NYSE: MBI), E*Trade (NASDAQ: ETFC) and Countrywide Financial (NYSE: CFC); a respect, bordering on religion, for charts and a quick trigger finger if the charts turn against me. I know people want longer term predictions, but I believe those to be 100% guessing games and potentially hazard to your investment health. Pregnant women should avoid them at all costs. Just kidding, it's fine for some people, but I like to make my predictions and cash out, so I can enjoy stress-free weekends if you catch my drift.

So, here's what I see right now: two weeks in and we're already halfway to my 10%-down market prediction, and Apple is down 15% (take that you stereotypical cheerleaders, go date some football players)! The markets are definitely rolling over, and while it's usually a long, drawn-out process, the charts seem to have little concern for what's normal as all the major indices have formed perfect head-and-shoulders patterns (a very bearish sign) and investors are rightfully freaking out.


Maybe this environment will better help you to understand that short selling is as important an investment strategy as a backhand is in tennis. I'm a small-cap trader by profession and disposition, so lately, I've had success shorting into strength, stocks like Akeena Solar (NASDAQ: AKNS), Solarfun (NASDAQ: SOLF) and DayStar Technologies (NASDAQ: DSTI).

The financials are definitely a mess. I love how the value folks are enduring the pain by rationalizing that stocks like Morgan Stanley (NYSE: MS), Merrill Lynch (NYSE: MER), Citigroup (NYSE: C) are "becoming better values." Do they not see these stocks just broke through massive support levels? Sure, it's tough to keep shorting here because you risk getting caught by a squeeze orchestrated by some desperate finance types who go out of business in markets like these, but that doesn't mean you have to keep buying yourself into oblivion!

Instead, I'm considering buying small-cap companies like Sigma Designs (NASDAQ: SIGM), Taleo Corp. (NASDAQ: TLEO), Concur Technologies (NASDAQ: CNQR), BE Aerospace (NASDAQ: BEAV), Nvidia (NASDAQ: NVDA), Vistaprint (NASDAQ: VPRT), Lululemon Athletica (NASDAQ: LULU), EMS Technologies (NASDAQ: ELMG), T Rowe Price (NASDAQ: TROW) and Dynamic Materials (NASDAQ: BOOM) because their only sin was overvaluation due to solid business growth. But before I buy, I'd like to see some more panic or basing, because as the yesterday's market proved, early morning and mid-day strength does not an up day make. And, if and when I buy, I won't hesitate to sell, if the charts continue their free fall, as false bottoms are aplenty.

DISCLOSURE: No positions as of yet.

Timothy Sykes writes the blog timothysykes.com, is a former hedge fund manager, star of the TV show
Wall Street Warriors and author of the book, An American Hedge Fund: How I Made $2 Million as a Stock Operator & Created a Hedge Fund.

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Symbol Lookup
IndexesChangePrice
DJIA+203.5210,226.94
NASDAQ+41.622,154.06
S&P 500+23.781,093.08

Last updated: November 10, 2009: 09:09 AM

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