FRI. SEP. 5- What Happened Yesterday?

Despite the Dow rallying almost 200 points on Tuesday morning, it is very notable that the bond market began rallying sharply while the VIX crept up as well. This showed an early sign of trouble for the rest of the week. The market leveled off on Wednesday, but yesterday was a debacle. Ostensibly, there seems to be- for whatever reason- another bout of what appears to be a renewed credit crisis. Risk spreads are widening across the board on corporate bonds and major entities simply are feeling that it is better to be safe than sorry. People like the world’s biggest bond trader (Bill Gross) are going on CNBC and telling the world that they are not buying any issued stock from banks for capital raising purposes. Along the same lines, there are countless rumors out there that several hedge funds are getting monetarily destroyed so they are forced to sell out their stock. Now, while there admittedly has been a relative paucity of truth to back up the rumors, the perception indeed becomes the reality and it can become a self-fulfilling prophecy. Finally, the decline in commodities has continued unabated with the shares of many winning oil/gas/metals/steel stocks (i.e. stocks up in 2008) getting shattered which of course further exacerbates the market’s difficulty. For day traders, this is a massive storm of volatility that one must carefully maneuver. One of the guiding principles of day trading is this: if something doesn’t seem to be acting ‘correctly,’ the ‘wrong’ move will likely continue and extend. So, continue to look for nuances in individualized stocks and when you see one of these aforementioned nuances (tech stocks falling when the Dow is up as occurred Tuesday), go with what doesn’t seem right because, really, that IS the type of action that will work for day traders right now.

Overnight, stocks were pummeled throughout the world. Things got worse post- jobs report. Today is an extremely pivotal day for stocks…the stock market needs to hold this morning or else this afternoon may get very very nasty ahead of the weekend..

Reiterating-If the whole story is not there -
If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf something is bad, assume either a buy thru unchanged or an A-B-A2 based on direction of the market unless specified

Good-

SNDK- rumors of buyout; in all likelihood, rumors false and a short above 17 for a target of 16.50 pre-open may well be one of the best trades of the day.

HOKU- up on major contract; some may be factored into stock…likely will trend with market though

MATK- good earnings

POT/MOS- upgrades at major brokerages house with price targets of about 100% gains for both. If they open downand market rallies whatsoever ,buy thru unch.


Bad-

SPNC- Fed raiding offices. If it looks to above unch, buy it.

MER- downgraded by GS. Will likely go with market.

CAE –terrible earnings

AKS/X- among other steels, have been bludgeoned in recent days. If any open down and go thru unch, buy thru unch.

FRI SEP 5 BEF

NSM.34/469M .37/488M 1.45/1.93B 1.69/2.07B



Good luck today.

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