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.

www.protradingnetwork.com

THURS. SEP. 4: Are declining oil prices now bad for stocks?

Remember how when you were a kid and wanted to eat as much candy as Mom and Dad allowed you to have on Halloween? Well, the good candy of course anyway! And the more you ate, the more you wanted until you hit a point where the next piece kinda-sorta made you sick? We are at that point now in the spread between the delta of oil versus stocks. Oil’s steep decline recently has been dramatically exacerbated by fund selling (as predicted in this space recently) and in turn, this is weighing on the stock market. Stocks of coal companies like Arch Coal (ACI) have been in near freefall for a few days now. Naturally, commentators are rushing for an explanation for all of this activity with the most notable marketspeak being that ‘demand for oil has fallen worldwide.’ Really? Is it that much different than it was, say, a week ago? The point for day traders is that while there is not necessarily a direct correlation between the direction of oil and stocks, it is fair to say that there is indeed next to no correlation right now. So, certainly over the next few days, one cannot say “Oil is down today; why is the stock market down?” Or vice versa. Instead, focus on selected beaten down commodities sectors for day trades as the selling and eventual short covering rallies will be particularly fierce.

Overnight, markets in Asia were generally lower; this trend followed through to Europe as the German DAX in particular is weak. Commodity prices are bouncing. With the oil inventory report due out today, there could be a vacuum to the upside; there is already a bit and any whiff of good news will cause massive short covering. Stocks will likely repeat their performance yesterday; choppy trading all around with no very clear momentum.

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-

NAV- great earnings; likely A-B-A2 to upside

BBT- on “Mad Money” last night.

CBAK- good earnings; looking for A-B-A2 to upside in particular

PSS- good earnings. Short thru unch, but much more likely A-B-A2 to upside

GES- decent earnings; stock not reacting. Short thru unch, but if it holds unch, looking to buy at open

STP- due for bounce after strong earnings a few days ago. If oil rallies, STP likely leads solars higher.

WMT- solid same-stores sales data. Looking to buy A-B-A2 pattern in particular

Bad-

LEH- several takeover rumors squashed; should be down today. Buy thru unch or A-B-A2 to downside.

GAP- closed weak yesterday; if it opens higher, looking to short thru unch.

CIEN- abominable earnings- looking for A-B-A2 to downside off of open

JOYG/BUCY- both sharply lower yesterday. If they receive a few upgrades and are holding around 10:30AM in particular and oil report strong, buy them both. Ditto for others in genre like ACI, BTU
TOL- beat on quarter, but will not discuss guidance. Looking to buy thru unch or A-B-A2 in weakness off of open

TEX- warned very badly; likely A-B-A2 off of open

TPP- share offering at 29. Should open below 29. Looking to buy above 29 as offering should keep it down thus if it does not, stock will likely have some short covering.

THURS SEP 4 BEF

CIEN .37/254M .39/265M 1.63/988M 1.77/1.15B

JTX -.69/4.47M -.75/4.10M 1.52/300M 1.72/319M

TOL -.19/764M -.14/682M -1.55/3.07B .56/2.20B

UTIW .27/1.24B .36/1.35B 1.11/5.08B 1.33/5.63B

THURS SEP 4 AFT

ADCT .26/389M .25/381M 1.17/1.52B 1.32/1.60B

COO .65/285M .70/292M 2.29/1.09B 2.70/1.20B

TTWO .54/381M .19/350M 1.83/1.50B 1.58/1.48B

ZQK .21/544M .29/616M .86/2.25B .93/2.38B


Good luck today.

www.protradingnetwork.com

WED. SEP. 3 THOUGHTS

Something not really being discussed at this time which stands to dramatically impact the oil market would be the ascendance of Sarah Palin to the Vice Presidency. There are several major roadblocks to this happening of course with McCain given only a 38% chance to win the election on Intrade at this time much less a tough Congress. However, Palin is very much in favor of opening up the reserves in Alaska for drilling. Thus, this will be in the back of the minds of oil traders for the next two weeks and will likely be mentioned frequently in the media- particularly if the polls show the race tightening a bit. This is one more wrinkle that day traders should pay attention to as it could play a part in impacting the oil market which will in part impact equities.

Overnight, markets throughout the world were generally lower as Asia extended its declines and Europe played catch-up to the U.S. Oil was down again as well. Markets in the U.S. will likely open down again; look for a tighter and even choppier trading than yesterday.

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-

MDVN- receiving payment from Pfizer in collaboration with MDVN’s Phase III trial for its drug. Should be very much higher.

ABK- announced the state of Wisconsin will allow company to operate again

ALXA- positive phase III results

X- upgraded

Airlines- strong at least initially on weak oil

NCS- good earnings

SNDA- good earnings

CLNE- on “Mad Money” last night

Bad-

LEH- owns a 28% stake in a hedge fund that is going belly-up. Stock trading lower pre-open; if it gets positive, will likely be trade of day – pre-open only

JOYG- bad earnings

WFR- warned on earnings

CAG- warned on outlook

FRX- abominable drug warning

DCI- poor earnings

WED SEP 3 BEF

ISLE -.04/294M -.13/288M -.32/1.16B .08/1.17B

JOYG .88/884M 1.10/989M 3.29/3.36B 4.47/4.00B

SNDA .51/115M .52/122M 2.10/476M 2.46/565M

SPLS .21/4.69B .43/6.61B 1.45/23.33B 1.72/27.45B

UNFI .30/865M .31/879M 1.13/3.32B 1.37/3.69B

WED SEP 3 AFT

CASY .52/1.55B .46/1.54B 1.48/5.92B 1.57/6.57B

GES .49/461M .66/528M 2.49/2.09B 2.95/2.43B

HOV -1.56/713M -1.37/817M -9.56/3.37B -2.27/2.50B

HRB -.35/378M -.39/423M 1.66/4.59B 1.91/4.90B

MR .24/141M .26/156M 1.06/571M 1.58/842M

NCS 1.21/478M 1.20/495M 3.52/1.75B 3.42/1.80B

PSS .31/889M .43/864M 1.24/3.47B 1.54/3.58B
SAI .26/2.45B .29/2.56B 1.06/9.88B 1.20/10.61B

Good luck today.

http://www.protradingnetwork.com/

TUES. SEP. 2 THOUGHTS

One of the conversations late last week around the office centered around the fact that leaves were already falling from trees. Another observation was that it is football time! Schools are back in session in the New York area today post- Labor Day. And there was actually a nip in the air a couple mornings during the weekend. Yes, it is autumn. Everybody comes back from the beach and goes back to work (except for a few stragglers who stubbornly enjoy the golf courses which are suddenly empty). And suddenly the tone and pace of the market changes, something akin to the feel on the first trading day of the year. There is a surge of energy as everyone is ready…but for what? In general, news flow remains light after the Labor Day holiday (no major earnings today, for instance). Therefore, everyone is looking for things to do and waves of activity around nothing events can often occur. Thus, it can become a fun week to trade, but a period in which one as to be particularly quick at the trigger. The action will pick up today, but use that extra adrenalin with precision and care as it will be a dangerous atmosphere for day traders.

Markets throughout the world fell yesterday, but Europe rebounded overnight with Asia down still more. The main story, of course, has been the failure of Hurricane Gustav to cause widespread havoc thus oil prices are sharply lower (over $7/ barrel as of this writing). The markets will open higher today. If markets stay higher (as they likely will), it will be a difficult day trading day because prices will level off and churn. If the financials reassert their downtrend, there will be a lot to do. Unfortunately, with no rush to buy commodities, the first scenario seems much more likely.

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/ABK- looking for continued momentum

LEH- more takeover rumors

BDSI/SIGA- both way up on Friday; would love A-B-A2 to upside if possible

IRBT- announced $200 million government contract

Airlines- very strong on weak oil prices


Bad-

Solars- weak on oil prices

Almost no news flow. Again, certainly a day to be very careful day trading.


No earnings before-hours; only one after close.

TUES SEP 2 AFT

DCI .61/604M .60/584M 2.12/2.22B 2.44/2.44B

Good luck today.

www.protradingnetwork.com