Sunday, December 9, 2012

Tax strategic selling to intensify........

Wall Street has been predicting that new reality of tax structure is well defined.

Capital gains are going UP in 2013 which means that "booking gains" will intensify in next 11 trading days...this will also intensify volume.

Many traders are used to selling for loss to offset any gains, this year they will be well advised not to do it in 2012, as soon as 2013 comes, tax loss selling will take hold....

These two opposite focus will impact stock market in the next four weeks.......

Buying winners of 2012 in first week of 2013 will be prudent.

Stocks which have not done well will be spared from selling in next 11 trading days, it will be smart to sell them before 2012 is out........

Based on TAPE, next few days we should grind higher above resistance in S&P 500 of 1420 area. I expect indices to be in a "holding pattern" until politicians come to an agreement. I still expect resolution of Fiscal Cliff by the week of Dec 17th.......

CMF of +0.176 is telling me that portfolio managers are buying.

I expect last week of December to be the highest point of this rally as we close month,quarter, six months & year end.....

It will be highly prudent to be in this market going into fiscal cliff resolution & new year.

China & European markets are giving a "preview" of things to come.

2013 may be the best year for stock market.......

My suggestion is to strategically look @ many stocks & try to make money......

Many traders do not look @ TAPE closely to avoid immediate pitfalls, IF you are losing money then it is not a "productive pursuit"

Pay close attention to next four weeks as TAPE will flip flop based on new capital gains rules.

Good luck with your strategy.

BLOG does NOT give buy or sell.

Saleem 

10 comments:

stocktrader_1996 said...

Hey Saleem,

You said it exactly right. A lot of the reason stocks like HPQ, RIMM and GRPN are rising is due to no tax loss sellers. It will be quite the New Year's hangover though!

I hope most of the tax selling of winners is over though. Wash sale rules don't allow repurchase for 30 days and people would be at risk of missing the rally at this point. Also, anyone who sold right after the election is finally able to rebuy if they wish, so hopefully we have a balance of buyers and sellers finally in the "winners".

Stocktrader

Stocks100 said...

Hi Stocktrader,

As Capital Gains & Losses will get "higher tax" impact......losing stocks have a higher $ point offset against winners......thus losses selling to "intensify" in first few weeks of 2013.......this selling avalanche "may impact indices" in first few weeks......

So buying winners of 2012 in early 2013 is good & selling losers of 2012 needs to be sold before 2012 is out........

Interesting 4 weeks for sure.....

Saleem

stocktrader_1996 said...

Hey Saleem,

I am really looking closely at WLT here. Good coal assets, met coal bottom, takeover possibility, negative sentiment, chart holding newest support levels.

Stocktrader

Stocks100 said...

Hi Stocktrader,

WLT chart looks strong ..above 50 DMA.....RSI @ 59.92..MACD looking north.....

I added 70% LEN this AM.....

Saleem

stocktrader_1996 said...

Hey Saleem,

In my further research, I wonder if TCK might even be better. It probably doesn't have quite the takeout possibility, but has better assets including copper and oil sands to go with the coking coal. The chart is obviously showing the best relative strength also.

Any thoughts?

Stocktrader

Stocks100 said...

Hi Stocktrader,

TCK has been my long time favourite with Meth Coal & Copper...they are executing much better now......

I still like it @ current prices...

Sa;eem

stocktrader_1996 said...

Hey Saleem,

Ended up selling some ELOQ at $17.616 due to fears about major tax selling pressure in the next couple weeks. Bought WLT at 34.08 with that money. I went with WLT due to the greater upside (and also because I missed the whole run already today!).

Stocktrader

Stocks100 said...

Hi Stocktrader,

YES..TCK is strong today......

Good luck with WLT...

Saleem

stocktrader_1996 said...

Hey Saleem,

I also realized that the "tax selling" effect makes highly profitable shorts vulnerable to squeezes as those people lock in profits also.

Stocktrader

Stocks100 said...

Hi Stocktrader,

Shorts generally have stops in their position......this will trigger & may cause stampede to cover in stock like AAPL.......

Saleem