FRI. JUN. 20 THOUGHTS

Well, it ain’t original, but we’ve got to keep sticking with what is working right now. This feels like a mishmash of everything that has been on this blog to date really, but really, here goes. It is summertime so volumes are down. Money is rapidly flipping from sector to sector. The price of oil and the financial stocks are making all the headlines. And harking all the way back to yesterday, stocks are reacting more to financials than to oil prices at the present moment…until/unless the price of oil makes the market sit back and watch (on an intra-day basis). Why is this case? Does anybody really know? Ever? Which brings us to two recurring themes: first, don’t fight whatever is prevailing. Don’t ask why whatever it is that is prevailing works. Just know that it does. Inevitably, the answers will come later. If the Dow falls 1000 points and oil falls 10 dollars a barrel, but suddenly a major bank becomes insolvent, we’ll know that the market was falling because there was indeed a problem with the financial sector. Second, as always, what works today specifically may not work tomorrow specifically. Oil’s massive price drop yesterday afternoon –building on an already rather large decline- forced people/funds/entities to take notice and the market took off. So, as has been the case this week, focus on the financials with a glance towards oil and everything else because while the condition of Citicorp is at the forefront of the minds yet the ferocity of a move in commodities and/or another sector could at a whim change the feel of the market for today as well as most days as oil comes back into play.

Very interesting set-up for the day. Markets in Asia traded higher, but bourses in Europe have trended lower amid reports of Israeli military exercises with an eye toward a pre-attack on Iran. Oil has soared in the early going. Furthermore, there are rumors that Merrill Lynch is going to warn (which the company has not denied). Add to the mix that today is a quadruple options expiration day and all the ingredients are there for a pretty active opening and closing in particular.

IOC- one of the most preposterous closes that has ever occurred was in this thing. It closed nine points higher from its last tick. Not an error. The best trade here is if It opens around 35 or so to short it there; otherwise, just an anomaly to monitor.

HBAN- pre-announced positive data last night. When investors are expecting the worst and the worst doesn’t happen, short covering happens. Best trade (maybe of day0 is if HBAN trades well below the range of last night…was locked in 5.70 to 5.90 most of evening…if you can buy this below 5.40 pre-open, do it. Post-open, probably a very difficult A-B-A2.

FITB- issued guidance as well, but should track HBAN. Likely a buy at 9.95 near or just after the open with a tight stop.

ESLR- likely a buy on continued momentum; if it opens negative, buy thru unch.

CAL/UAUA- all mergers talks are off. Airline sector may get decimated with price of oil skyrocketing.

FWLT/MDR- Cramer

ABK/MBI- downgraded last night. Precarious situation which may lead to rumors of default- particularly in ABK- today.

MF- downgraded and in position to lose all ground from yesterday. With stagnation, a short thru 7 is a possibility later today.

STI- getting hit again; worth watching.

ROYL/FPP/PDO/MXC- all small oils rocketing in earlygoing…likely some A-BA2s setting up.

Keep your eyes on oil stocks and financials. All of them.

Good luck today.

THURS JUN. 19 THOUGHTS

Ready for a unique phenomena for the week? Oil and the equities markets have been in direct correlation. This actually makes some degree of sense. The focus for the market seems to be shifting over to the performance of LEH - financials. The performance of the banking sector has been nothing short of abysmal. Thus, it becomes a bit of a ‘demand’ issue rather than a ‘supply’ issue for oil because if banks worldwide are in trouble, this also portends bad things for the U.S. economy much less economies throughout the world. The talk seems without a doubt to be shifting to the financials. So, without a doubt, keep your eyes on the price of oil because a gigantic rise or fall will be notable for the markets, but really keep your gaze upon those financials right now. Old-line banks are at decade plus year lows; it is very notable, worrisome, and troublesome. For day traders, really be watching these financials. Whether whacking new lows or helping the shorts along in covering on whatever the news of the day happens to be, it is certainly a sector to work with in the immediate-term.

Overnight, markets in Asia were drilled again with China now well off more than 50% from its record high. Tokyo and Hong Kong were down 2% each. Things are quiet in Europe though and oil down slightly.

ENER- doing massive share offering at 72 a share. They announced the offering several days ago- before the stock rallied 10 points. In the pre-open, it is hovering just above unchanged and rallying a bit; the best trade in it for the day is to get long it at a new high pre-open at 74.75ish. The best post-open trade is to short unchanged if it opens higher.

CSE- doing share offering; best guess is that it trends lower, but A-B-A2 probably the ‘easiest’ trade here.

HUN- the company was to be bought out, but the deal collapsed last night. Now, it seems as if the company may be in financial trouble. Best trade here again is pre-open…if 13 holds on the offer, it is a short below 12.95. Post-open will be an A-B-A2.

ESLR- signed massive contract. 11.75 is resistance area so post-open, it is likely a buy above there.

CVH- warned horribly. A-B-a2 here ,but hard.

UNH - HUM - WLP- should move in sympathy with CVH

AET- pre-announced reiteration of guidance, but still well down as of this writing. If CVH rallies, it is a buy above 40.50.

CWST - USNA- good earnings. A-B-A2

SSN - LPX - SHZ - NOG - KOG - ROYL - BDCO - GBR - FPP - CNX - MEA - HKN - ACI - BTU- all closed at or near their highs. If any of them open down, look to buy on continued momentum.

OZRK - ASBC - ZION - MF - RF - STI - CATY - STSA- all weak yesterday. Looking to short any of them if they open higher when - if they get to unchanged on the day

Good luck today.

WED. JUN. 18 THOUGHTS

It’s back to the theme of oil and Lehman (LEH). Yesterday, oil prices were weak for the bulk of the session, but the equities market failed to react to this development largely due to the renewed vigorous decline in the financials. When Goldman Sachs (GS) in particular posted solid numbers and could not stay positive, it helped to lead the rest of the financials down. Universally, the banking group was the worst sector in the market. Over and over and over again- this is going to be a theme for the foreseeable future. Watch oil and if oil is not really moving, keep your eye on LEH and the other financials. At this point, monitoring these two distinct things is the absolute key to the direction of the stock market intra-day.

Overnight, markets in Asia were higher as a group, but are down in Europe. Oil is quiet as are currencies and bonds.

FITB- announced huge offering in attempt to raise capital. Best trade of day may be pre-open; as of this writing, stock has held 10.90ish…want to short 10.85 for a 30-35 cent move…if it holds 10.90 into the open (without trading below there), there is a lot more than 35-50 cent potential.

FDX- terrible earnings. Low of morning thus far has been around 79.75. Looking to short below there.

MS- beat on bottom line earnings, but revenues missed making me (and many) wonder how they beat their earnings with such light revenues. Best trade of day here is probably pre-open as well in shorting just above 39. Post-open, it is an A-B-A2 of some fashion.

MF- massive share offering. Stock has largely held 11 this morning; it is likely a short below 11.

KMX- terrible earnings. A-B-A2 of some degree- likely to the short side.

GIS- pre-announced good earnings. It is an A-B-A2 as well probably to the upside.

LNN- terrible earnings. Best trade of day will likely be pre-open around 108 as it has been holding there; if it works, it will likely be a terrific short.

SOL- doing a share offering at 20.50. Should open below there. It is a buy above 20.50.

UNP- warned on earnings, but not horribly. It is a buy thru unch if it does not open down much.

ABAT/PDO/MCF/KAZ/RNN/NOEC/SPIR- all closed at or near their highs yesterday. If they open down in a presumed weak market, any of them are buys thru unch.

LINE/BEZ- featured on Cramer last night

PNRA- pre-announced to upside; likely an A-B-A2

Good luck today.

TUES. JUN. 17 THOUGHTS

One concept that most traders fail to understand is this: when the markets are very active, do everything you possibly can to earn a living. These times do not happen very often and this is when the money you will make for a week or even a month should be garnered. However, when every little is going on, always keep an eye on things but don’t push buttons. In other words, don’t try to create action where isn’t any. Yesterday was a fine example of this. On a Monday in June when newsflow was not all that great and many people were out of their offices, television sets throughout the country were tuned into the playoff between Tiger and Rocco instead of CNBC. Now, if everybody is paying attention and you are not, this is a problem. But if nobody is paying attention, and you try to make something happen, that is trouble as well because if stocks aren’t trading, why should you be the first to plow into the action? The point of all of this is to be aware of the circumstances around you. It is always always always better to be cognizant of the markets because something could happen at any time. But it is just as important to be aware of this: if there is nothing obvious going on, don’t try to be the first one to create something.

Overnight, markets were up across the board throughout the world with oil down. Decent economic data and strong Goldman numbers should lay the groundwork for a decent open which should hold.

GS- great numbers. Blew out earnings. High in pre-open is 187.25. Looking to buy there post-open and/or an A-B-A2 type play.

LEH/MER/MS- watch to see if they act in accordance with GS

BBY- respectable earnings. Stock traded over 47 this morning as well as negative as well…looking (most easily) for a short thru unchanged and/or an Ab-B-A2 off of the open.

CSIQ- raised guidance. A-B-A2 here

LDK/FALR/SPWR/SOLF/STP- these are mixed with SPWR and FSLR barely higher as a brokerage house said to ‘take profits.’ If CSIQ sells off a little post-open, FSLR/SPWR in particular are shorts thru unch.

TSO- bevy of good news out including reduction in debt. Could be decent thru unch.

VHC- very strong yesterday; if it opens negative and gets positive, buy thru unch (5.70ish).

ENER- extraordinarily strong yesterday on no real news. If it opens negative and goes thru unch (76.90ish), buy thru unch for a very quick trade.

SQM- up on Cramer’s show

CQB- reaffirmed guidance following FDP’s warning yesterday. Looking at A-B-A2 on CQP and a short thru unch on DLP.

Good luck today.

MON JUN 16 THOUGHTS

Short covering can be a powerful force. When people wait for the worst to happen- and nothing approaching the worst happens- people who happen to be short tend to panic to get out. This all sounds so obvious, but it really isn’t. On Friday, the strongest sector in the market was brokerage houses. On March 14, Bear Stearns slipped into deep-seeded trouble on that fateful Friday morning, taking the market with it. With all the tumult surrounding Lehman (LEH) this week, many people were expecting the same ahead of the weekend. When there began to be rumblings from within Lehman (LEH) that it was looking to be bought out, the prevailing attitude went from “who’s next” to “is everyone up for bid” which led to a burst of people rapidly exiting their positions. Mind you, many stocks like Wachovia Bank (WB) were still down, but in cases such as what occurred on Friday, do not try to guess where stocks will stop rising after such a bad spate…just go with the flow.

Overnight markets were up in Asia, very quiet in Europe, oil is down, and the dollar down slightly. State-side, the emphasis seems to be on the LEH earnings and a GE downgrade.

LEH- LEH is trading higher on its earning as I type this. If it stays positive pre-open and goes negative (especially post-open), it is a terrific short as earnings were merely in-line. If it gets negative pre-open and goes back positive, the stock becomes very difficult to trade the rest of the day.

AIG- CEO ousted. Stock should open higher. But, the thing is that just because there is a new leader does not necessarily mean that things will improve in the immediate-term. Thus, it is a short thru unchanged.

TITN- great earnings. Think it is an A-B-A2 in some fashion. Do not know what the price points are, but looks like a trade.

RAME/SNHY- Cramer stocks

ACAD- phase III trial failed. A-B-A2 of some type.

TEVA- positive phase III trial. Same theme today- A-B-A2, but will likely be harder than most as it is an ADR.

YHOO- has been weak all morning. GOOG up though; think if GOOG maintains positive ground pre-open that it is a short at unch.

Relative slim pickings. Good luck today.