FRI. AUG. 29 THOUGHTS

At 4:55PM on Wednesday afternoon, a seemingly innocuous headline appeared on the tape: “MBIA to Reinsure $184 Billion Portfolio of Investment Grade U.S. Public Finance Credits Insured by Financial Guaranty Insurance Company.” If you read through the story, you’ll find that FGIC insures a number of municipal bonds – specifically general obligation water and sewer, tax-backed, and transportation sector AND does not contain any credit default swap, below investment grade debt, or anything else that would seem untoward. What they want MBIA (MBI) to do is provide insurance for them on these very safe bonds; MBI in return will receive $741 million in unearned premiums. Now, think about this. If everything goes fine, MBI gets $741 million. If everything does not go OK, it means the American economy is in perilous trouble because things like debt to pay for water and sewer systems cannot get paid back. So, either MBI gets cash or they don’t get paid because the entire financial system failed. Good bet. This is why MBI rallied sharply yesterday. Just as relevantly, it shows a sudden surge of faith in the reinsurance sector and calms the entire market re the possibility of big reinsurers failing. In turn, this confidence builds in the Fannie Mae’s (FNM) of the world which spills over to the rest of the financials which spills over to the financial sector which spills over to the equities markets. Mind you, volume was extremely light yesterday, but it was a significant development. For day traders, it shows just how news-centric our profession has come and that we must focus on the here and now because the ‘here and now’ is in constant flux- providing us with opportunities on an intra-day basis that continue to be rather remarkable.

Markets overseas were higher on the heels of Wall Street’s gains yesterday. However, markets state-side will likely be down a bit ahead on DELL’s negative report and amid nervousness over the track of Gustav.

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-

FNM/FRE- both huge run-ups yesterday continued. If they trade higher initially and look to weaken, short FNM in particular thru unch as it had a very high close yesterday due to an imbalance. Will almost without a doubt be the trade of the day if it sets up correctly..particularly pre-open.

PETM – solid earnings

ABK/MBI- very strong yesterday; if they open down, buy thru unch

JRJC- good earnings

Bad-

DELL- terrible earnings

SIGM- warned on earnings guidance

MRVL- warned on revenue guidance

FRPT- restating earnings

RIMM- trading lower amidst reports as to exactly when its new Blackberry will be released

No earnings of consequence today.

Good luck today.

www.protradingnetwork.com

ProTradingTrading - Upgrading (Friday, Aug 29th)

Please be informed that Protrading Network Trading will be upgrading our back office technology on Friday, August 29th to better serve our customers and improve the speed and integrity of our platform services and reporting. This process may cause interruption for some of our live traders. So most of us decided to take the day off from trading for one day only. Demo users will remain funcitional, but the chatroom will not be very active as most of the key players will not be logging in. Feel free to call us at 1-323-374-5565 with any questions.

We thank you for your kind patience and understanding,

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THURS. AUG. 28 THOUGHTS

A trading range is the difference between the high and low prices of a stock or market during any given period of time. Trading range markets are the hardest to trade because prices are continually fluctuating, but never really going anywhere. It is akin to a sports team who is supposed to be either really good or really bad for the season, but finishes up winning almost exactly half their games. Different people have different expectations in awaiting a move, but the team is merely mediocre rather than extraordinary one way or another. This is the exact situation that the market is in now. Worries abound such as whether FNM and FRE will survive and whether oil will rebound. Hope also abounds with features such as people thinking FNM and FRE will survive and a thought process that oil has topped out. The more variables in the pot, the longer the timeframe. Thus, it is important when doing day trading to maintain the ‘day trading’ mentality and go with what works rather than how one feels about the macro picture.

Markets throughout the world are generally higher – both equities and commodities. The tone looks to be very strong though with FNM, FRE, and MBI doing very well pre-open.

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-

MBI- major contract; ABK should follow. BUT BEST TRADES WILL LIKELY BE DONE IN BOTH BEFORE 9AM ET so be careful AFTER 9AM.

FNM- management shake-up; FRE should follow

MW- good earnings

ENER- good earnings

TIF- great earnings

JAS- great earnings

GEF_ great pre-announcement of earnings

DSW- good earnings

Bad-

SHLD- poor earnings

WSM- bad earnings


THURS AUG 28 BEF

DSW .10/353M .37/389M .77/1.46B 1.09/1.61B

ENER .16/77M .26/88M .01/251M 1.48/441M

GCO .04/353M .55/394M 2.13/1.60B 2.46/1.71B

HNP ? ? .04/8.63B 1.33/11.84B

NX .37/238M .33/234M .88/847M 1.14/899M

SHLD .33/11.71B -.49/11.03B 2.34/48.14B 1.99/46.86B

TIF .54/720M .31/691M 2.83/3.27B 3.19/3.57B

VIP .61/2.65B .62/2.85B 2.06/10.24B 2.46/11.95B

WBD .98/772M 1.26/796M 4.48/3.16B 5.76/3.72B

WSM .07/833M .18/870M 1.32/3.75B 1.49/3.88B

ZLC -.57/449M -.87/376M -.27/2.12B .90/2.09B

THURS AUG 28 AFT

ARUN -.01/47M .01/49M .03/177M .17/221M

DELL .36/15.90B .41/16.66B 1.59/65.77B 1.86/69.62B

ESL .66/375M 1.06/414M 3.58/1.54B 4.00/1.66B

JRJC .14/13M .18/16M .73/59M 1.49/111M

MCRS .38/247M .34/245M 1.35/944M 1.60/1.08B

MRVL .21/837M .24/887M .96/3.46B 1.12/3.94B

NOVL .05/241M .06/251M .25/959M .28/999M

OVTI .30/175M .38/197M 1.37/759M 1.41/824M

PETM .28/1.22B .27/1.24B 1.49/5.03B 1.70/5.40B

SIGM .39/59M .51/67M 1.85/255M 2.21/309M

WIND .08/88M .14/94M .49/372M .59/414M


Good luck today.

www.protradingnetwork.com

WED. AUG. 27 THOUGHTS

Red Lobster. Olive Garden. LongHorn Steakhouse. Capital Grille. Bahama Breeze. It is highly likely – particularly if you have kids that on a road trip or even in your hometown, you stopped off at one of these fine establishments. Many people cannot afford a place like Peter Luger’s or Morton’s Steakhouse to take the kids for some steak so why not go to LongHorn? For those who have never been to any of these restaurants, they are all owned by Darden Restaurants (DRI) and all of the places are family eateries. While they don’t serve ‘fine food,’ they are a ‘step above’ the likes of McDonald’s (MCD) image-wise if nothing else thus with more variety at a Capital Grille than a Burger King, people flock to these places. Or at least they used to do so. One sector that had really not been affected tremendously by all of the market turmoil has been the restaurant sector. DRI actually traded at its high of the year as recently as two weeks ago. However, yesterday, the company indicated that growth for the next 12 months would be nonexistent with same-store growth forecasted to be down slightly. The conclusion one can draw is rather scary; consumer spending is in fact truly slowing. Consumer spending is what keeps the American economy thriving. But if people are willing to get a Big Mac over going to Bahama Breeze, it shows that discretionary spending is definitely being curtailed. For us day traders, it is more fodder to put in the back of our minds. While the next earnings season will not start until mid-October, the earnings warning season will start shortly after Labor Day. And it will likely be a brisker than usual time for warnings particularly since many companies will want to get their bad news out before earnings season when many solid companies report good results. Thus, it makes since to warn when everyone is doing it rather than standing out. It is certainly a feature to watch after everyone gets back from the beaches next month.

Markets worldwide are quiet. Everyone who is around is watching the track of Hurricane Gustav, but more relevant today is the fact that economic data out this morning was good. Furthermore, FRE and FNM are up because they are benefiting from the wide spreads in the recent coupon offering; they should lend support to the broader market for the bulk of the day.

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-

BGP- good earnings

FNM,FRE- benefiting from spreads on their own securities from recent auctions

IPII- Gustav play; their primary business is as a construction entity on the Gulf Coast

MNRO- on Cramer last night


Bad-

JCG- poor earnings

SOLR- bad earnings

AMLN- several people died during one of its drug trials

SOLF- warned on outlook

CEGE- horrible news at a trial as someone died; the company now has no product

MAT- won some money in its lawsuit with Bratz, but not as much as they wanted

GS- being investigated by New York State for its relationship with Fidelity

Earnings:

WED AUG 27 BEF

BWS .06/589M .68/687M 1.37/2.43B 1.68/2.59B

DLTR .41/1.08B .42/1.08B 2.43/4.64B 2.68/5.03B

PTR ? ? 10.52/145.31B 13.41/185.28B

SOLF 1.48/1.25B 1.42/1.35B 6.31/5.14B 7.98/6.80B

TLB -.33/532M .23/546M .20/2.17B .54/2.26B

WED AUG 27 AFT

GA .20/72M .21/77M .83/298M 1.02/388M

JAS -.66/403M .33/496M .94/1.96B 1.25/2.06B

MW .70/555M .53/511M 1.63/2.10B 2.02/2.21B

SEED ? ? .19/79M .28/95M


Good luck today.

www.protradingnetwork.com

TUES. AUG. 26 THOUGHTS

Often-times during very light volume periods, particularly amidst times of decent price swings for the overall market, price movements can get wildly exaggerated even when there is little news flow. With that in mind, it usually takes some sort of spark to get a move like the one experienced yesterday. If one studies the whole situation a bit more, one will notice some strange nuances. For instance, Fannie Mae and Freddie Mac (FNM/FRE) both closed higher yesterday. Furthermore, big oils like Exxon (XOM) also closed sharply down despite the fact that oil was a bit higher. So, why were selected entities performing exactly the opposite of the way one would think they would do? It is because in volatile times like this with so many people redeeming monies from various funds, many of these mutual and hedge funds have to raise cash in order to satisfy the requests from their clientele. Many fund managers operate under the same mentality of the average investor- they exit winners out of fear of losing profits. Thus, on a day like yesterday when there were heavy redemptions going into a holiday weekend during a vacation period, fund managers selected to do things like cover their short positions in FNM and longs in XOM than take their lumps in long-term holdings which are going against them. It is much easier psychologically to take a profit than a loss. So what does this mean for the day trading world? It makes things harder- and simpler. First, ‘harder’ because things that don’t intrinsically make sense occur. But ‘easier’ because it becomes clear during the day what is occurring; when FNM and FRE could not go down on the day after having their debt cut, they stayed positive all day. So, the advice is to go with the immediate trend; if something does not make a lot of sense, it will tend to keep not making sense in an even more exaggerated manner in terms of the delta of the move.

Overnight, markets throughout the world were weak, down about 0.5% globally. Commodities are weak again as well. For today, look for thin trading and it will likely be choppier than yesterday as there is some good news sprinkled into the mix today.

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-

STSI- very strong yesterday

ELN, BIIB- positive drug news yesterday; may be follow through but if not, short thru unch

AET- pre-announced positive earnings guidance

APC, COH- big buybacks

TTWO- deal with ERTS seems to be getting closer

CLNE, MDRX – on Cramer’s show last night

Bad-

DRI- abominable warnings; same store sales down for quarter

COCO- bad earnings


TUES AUG 26 BEF

AEO .28/709M .40/778M 1.50/3.19B 1.67/3.46B

BIG .27/1.10B .18/1.04B 1.90/4.72B 2.06/4.77B

BMO 1.18/? 1.25/? 4.52/10.96B 5.15/11.75B

CHS .03/405M .07/411M .17/1.64B .38/1.70B

COCO .09/277M .08/283M .40/1.08B .55/1.22B

DAKT .17/142M .23/156M .81/597M 1.11/695M

SAFM .01/465M .19/504M .87/1.77B 3.51/2.07B

SFD -.04/2.87B .04/2.97B .80/12.69B 1.85/14.01B


TUES AUG 26 AFT

BGP -.29/783M -.57/734M -.22/3.56B .10/3.39B

JCG .32/338M .46/367M 1.71/1.49B 2.00/1.67B


Good luck today.

www.protradingnetwork.com

MON. AUG. 25 THOUGHTS

In real life, every day is important and worth living- good or bad. In the stock market, there are indeed opportunities on a daily basis, but there are certainly days that are more or less important than others. One of the means used to weigh the validity of a move is the trading volume on the day. Friday’s volume was the lightest of the summer. For perspective, the total volume in QQQQ (a device used to trade the NASDAQ 100 index) was 2/3 of the volume on the half-trading day of July 3. We won’t go into the topic of the direction of the market per se. Rather, the point to be made here fro ma day trading perspective is that it is the last week of August. Thus, you must be skeptical of any broader market move made on any given day because stocks can be padded up or down rather easily due to the dearth of participants these next few days. On Friday, oil prices retreated violently, takeover rumors were in abundance, and a myriad of other factors led to good gains, but it is also true that there was simply a paucity of sellers. Similar situations will be in vogue this week with little news flow so if there is a week of the year to be careful and watch that you do not overtrade, this is the week.


Reiterating-New code for the next few days 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 specified. If something is bad, assume either a buy thru unchanged or an A-B-A2 based on direction of the market unless specified



Good-

CF- will be added to S&P 500 index

HSNI, IILG- spinoffs of Barry Diller’s IACI; both very strong last week

STP- continued strength on great earnings; stock up 11 plus points in three days

FEED- pre-announced better-than-expected earnings

LDK- raised guidance

Bad-

FNM/FRE- debt downgraded by Moody’s on Friday afternoon

LEH- rumors of a buyout from Friday seem to be false

LVS- weak compared to other casino stocks; looking for bounce here as more of a swing-type play actually

APWR- earnings just below expectations
Not a lot doing.

Light earnings calendar all week; only two before hours and nothing after-hours:

MON AUG 25 BEF

APWR .20/63M .32/104M 1.14/377M 1.75/743M

YZC ? ? 2.33/? 1.82/?

MON AUG 25 AFT


Good luck today.

www.protradingnetwork.com