FRi. OCT. 24- Be Very Very Careful

One of the wiser things uttered one of the traders at Protrading Network uttered are these words: “When in doubt and in a losing position, sell everything.” This seems counterintuitive to how most people are wired. Namely, when entering positions, most people are convinced that they are going to be correct. That better be the case else why enter into said positions? However, there are many times that one will buy a stock at, say, 20 dollars a share in being convinced the stock will go to 20.50 in minutes. Thirty seconds after entering the stock at 20, the stock remains at 20; at this point, a little doubt begins to creep in. Particularly with the volatile markets, if a stock is not acting as expected in the time frame expected, act on that first sentence in this paragraph with one modification: sell half of it. This way, if it works out, you still have some. However, much much much much more often than not, particularly in a case like this, it will not- and by at least doing something to act on that seed of doubt, net-net, you will save yourself money. The most powerful knowledge/force any trader has is his own instinct. Use it over all else; when you have that sickening feeling of doubt, rather than freezing in place, act on it and reduce your risk else the possibility of massive losses in this horrid environment is much greater than in normal circumstances.
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The stock markets across the world were ravaged overnight with prices across the world down 7%-10% in most major bourses. Trading in places like Germany were halted for a time with Russian equity trading suspended indefinitely. The fund panic selling discussed here a couple of days ago is in full effect. There will likely be a bounce off of the open. That bounce must gain traction. If it doesn’t, this may be the beginning of a cataclysmic and unimaginable event for the stock market over the next few days.

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-

CLF/ANR- CLF warned, but not terribly…due for a bounce so if they open down, looking to buy in an yrally

BNI- beat earnings

CB- decent earnings

DECK- great earnings

SYNA- great earnings and boosted outlook

WDC- good earnings

DV- good earnings

AFL- decent earnings

CYBS- beat earnings and raised guidance; due for a bounce

VAR- good earnings

KMP, DMND- on “Mad Money” last night

VDSI- up strongly on good earnings Wed afternoon; look to buy it thru 10 if/when it pokes thru there

CELG- up strongly on good earnings yesterday; look to buy it thru yesterday’s high if applicable

CPO- beat and raised guidance


Bad-

WFR- warned on earnings, but stock traded higher last night. Looking for A-B-A2 to upside off of open if market rallies or a short thru unch

JNPR- warned on outlook

WOOF- poor earnings

LVS- very very weak yesterday; if it opens higher and particularly if market weakens, short thru 8

STP- In a weak solar sector, this is the weakest…want to short it thru unch if it opens higher

CUZ- another REIT which closed weak

COO- closed near its low

IR- warned on guidance

ITT- warned on guidance



Earnings list:

FRI OCT 24 BEF

CPO EXC FO

GCI HRZ IR

ITT OSTK TKR

TROW UST


Good luck today.



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THURS. OCT. 23- So, When Does The FIscal Year End?

Halloween or perhaps the approach of Halloween may well cause the advent of more than a few tricks for the market. The key reason for this is that most mutual funds base their fiscal year-end on October 31. Most people do not know why; here is the reason: mutual funds are required by federal law to distribute, prior to December 31, the net capital gains realized through October 31. The federal tax law actually imposes an excise tax on amounts not distributed by said mutual funds. Thus, this leads to one thing that happens every year much less one thing new to fiscal 2008. What occurs every year is window dressing. Funds do not want to show losers on their accounts yet they also don’t want to show losing positions. Thus, what often occurs the last few days of October is that winners are sold to lock in performance whereas the losers are propped up to lessen the decline. It is all one big game which has gone on since your friends at the Fed decided this was wise tax policy. What is different in calendar 2008, however, is that a lot of investors want to cash out. They just do not want to be invested anymore- first it was the ‘smart’ money like the Blackstone Group (BX) which debuted at the height of the hedge fund frenzy. Then, it was the hedge funds which have caused massive havoc with all markets. Finally are the plebians who just cannot take it anymore and/or have been margined out. This is where we are now. So, the markets will vacillate wildly between now and month’s end on the forces of mutual funds trying to shore up their performance yet everything and everyone else conspiring against them.

Markets throughout Asia were pummeled which followed through to Europe. Futures initially were very strong overnight but have come all the way in. With no major news out and worries abounding, look for choppy trade. There will be more selling at least initially. From there, there will probably be a small rally after the thrashing of the last couple of days. After that, keep your eyes peeled to bonds, oil, and the dollar for direction.


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-

AMGN- beat and raised guidance

BIDU- beat, but lukewarm guidance

ADS- solid earnings

NE- great earnings

FFIV- great earnings

CTXS- fantastic earnings

CMG- good earnings and announced a buyback

TSCO- good earnings

BG- raised guidance

NOV- good guidance

BMY- solid earnings

DO- beat earnings

DOW- CEO steadfastly optimistic

FLIR- good earnings

LLL- good numbers

RTN- beat earnings

TRA- amazingly good numbrs

WCC- beat and raised

ALXN- beat and raised guidance

POT- good numbers


Bad-

AMZN- atrocious earnings warning

ALL- terrible earnings, but stock bounced a little after-hours…may be strong today if market good

LRCX- bad earnings

NTRI- warned on its outlook

DDR- continued weak; if it opens higher, looking to short thru unch otherwise A-B-A2 in either direction

ISIL- missed earnings

STX- terrible earnings warning

LXU- painfully weak; looking to short through yearly/daily low of 8.20

WFMI- closed weak

FMCN- followed through on Tuesday’s poor performance with more downside yesterday

SGR- closed just off a multi-day low

TXT- closed near a low

WYN- closed at its low

AEM- stunningly down almost 50% in days; looking for an A-B-A2 reversal if commodities bounce

BDK- warned

HOT- warned

JCI- warned

UNP- disappointing earnings

PLD- warned




Earnings list:


THURS OCT 23 BEF

ALK AMTD AVT

BC BDK

BG BHE BMY

CBE CCE CELG

DLX DO DOW

ECA ECL ELN

EME EQT

ESI ESV FLIR

GR HOT JBLU

JCI JNS KMT

LH LLL LLY

LTM MO NCR

NCX NIHD NOV

NYT ORI PCZ

PDS PFS PLD

POT RGC RSH

RTN RX SO

STI TMO TNB
TRA UNP UPS
WCC XEL XRX



THURS OCT 23 AFT

ARBA BNI BUCY

CAKE CB CMO

CPX CYN

DDR DECK DST

DV ELX EMN

FII IBKR IM

JNPR MCHP MPWR

MSFT OLN PKI

RIO RMBS ROP

RVBD SNV SYNA

TRMB VAR WDC

WFR WOOF YRCW

ZMH AFL BEN

ARG AFFX EMN



Good luck today.

www.protradingnetwork.com
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WED. OCT. 22- Volatility Continues

And this blog post is the antithesis to yesterday’s post (to an extent). The one corollary which must be emphasized about the hyper fast trading is…it must only be done in a hyper-fast market. Yesterday was a busy day by standards of, say, the early summer market in terms of range and volatility. However, the moves were not quite as vicious therefore the hyper-fast 20-30 cent plays were not as prevalent. More importantly, one cannot simply be buying or shorting stocks based on prices or numbers or volume points just ‘cause. There are several factors which go into trades when the market is calmer: news flow, the technical pattern (i.e. near a breakout or breakdown), the market must be going in the direction of the trade you want to put on, and there should be a potential for making at least 20 cents in the trade. As the afternoon progressed yesterday, day traders continued to trade as they have the last few weeks with many losing money gradually as a result of scalping. Furthermore, people were chasing stocks without waiting for them to stagnate, i.e. buying and selling stocks which had previously moved a dollar or more in less than five minutes prior. Realize the market on a day-to-day basis that you are dealing with. If you fail to heed the market action rather than trying to beat the market, what will happen is that you will become a victim of that cold heartless market.

Overnight, treasury rates continued to plunge from Monday’s levels, oil fell, the dollar weakened against the yen further destroying the carry trade while strengthen against the Euro currencies, and equity markets worldwide got hit hard. Look for a horrible opening today; the dollar and bond market must stabilize today else it will be a terrible day for the stock market.


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-

AAPL- terrible numbers, but stock rallied last night; best trade in all of this way to buy it thru unchanged yesterday afternoon, but no recommendations here except to track it as a proxy for NASDAQ today

BRCM- fair earnings, but stock has beaten beaten down so looking for a bounce

CERN- good earnings

VMW – good earnings

CREE- good earnings

YHOO- terrible earnings, but stock bid because of thought that there may be a bidder lurking

CHRW- decent earnings

QLGC- good earnings

CMC- announced a major stock buyback

NUE, DUK- on “Mad Money” last night

SCON, GRRF- micro-cap stocks which closed near their highs; looking for an A-B-A2 to the upside in both thru yesterday’s highs

COH- looking for follow-through to upside; if it opens higher, looking for A-b-A2 to upside or short thru unch to downside

LMT- drubbed yesterday. Looking for A-B-A2 to upside or short thru unch depending on how it acts post-open

DDR- if it cannot bounce at the open, may fall apart; looking to short thru 13.17 if it opens higher and A-B-A2 to downside from there

ICOG- received gigantic settlement from BA- if you can buy this at 1 or less pre-open, do so

MCD- good earnings

NOC- beat slightly and raised guidance

GD- good earnings

Bad-

ILMN- great earnings, but weak last night- looking for A-B-A2 to downside or preferably a buy thru unch

CVH- abominable earnings warning

EW- bad earnings

SIAL –terrible earnings

RIMM- has been horribly weak for a spate now; if it opens higher this morning and breaches unch, it is likely a short and may well breach 50

ERTS, FMCN, PCAR, NIHD, CNQR- among several mid-cap techs that closed near their lows…if any open higher and go negative, they are shorts otherwise A-B-A2 short covering upside pattern

TEX- closed very weak; looking for more follow-through downside action

BA- bad earnings

FCL- terrible earnings and warned

KMB- beat slightly for quarter, but warned in its outlook

TRV- reduced guidance

BHI – missed earnings

R- bad earnings; warned

ATI- warned on future guidance

SNDK- Samsung pulled their bid; stock should get drubbed

APD- bad earnings





Earnings list:


WED OCT 22 BEF

ABFS ABI AMG

APD ARW ATI

BA BSX CFR

COP DOV EMC

FCL GD GENZ

HCBK KCI KMB

MCD MDCO MRK

NFX NITE NOC

NTRS PFCB PM

ROH R RYN

SEIC SOV T

TCB TRV WB

WIT WLP WYE


WED OCT 22 AFT

ADS ALL AMGN

AMZN BCR BIDU

CMG CNB CNW

CTXS CVA EQIX

FFIV FNF GRT

ISIL LHO LRCX

NE NTRI NUVA

OMTR OSIP PHM

PRE RAI RHI

RNT RRC RYL

SLM STX TEX

TMK TSCO WSH

Good luck today.

www.protradingnetwork.com
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TUES. OCT. 21- Compression Of Time Horizon In Trading

An added type of trade many day traders have been doing in recent days has been ostensibly a hyperspeed scalp. With the rapidity of the market moves and typical patterns of news factored in to the market (or not depending on who you speak to), different types of trades are creeping in for day traders as the VIX eclipses 80. One of these is to trade the major trend of a stock after a pretty significant countertrend move- particularly if there is a reason for the major trend. Let’s give an example in English- Gilead (GILD) posted great earnings after the close on Thursday. The stock traded up 4 ¼ points by mid-afternoon. From 2:15-2:25PM, the stock broke almost 1 ½ points from 45.15 to 43.75. Suddenly, a reloading bid came in at 43.75 and the Dow/NASDAQ began rallying well off of their lows. In this case, it is good to take a quick shot buy buying GILD around 43.78-80ish with an out the instant 43.75 bid left if it did. The stock was still well up and many shorts would use the opportunity to cover. So, basically, one would be risking about 8 cents to make 30-50 cents in a bounce with the odds in favor of said bounce. It is the type of play we should all be looking at as the simple momentum game is much harder to play in the afternoons in particular when the market is gyrating on no particular news. Thus, focus on new lows and new highs with stagnation, but if you get one of those types of deep contra-moves within a major move, it is something that one just has to pay attention to at this point.

Markets were mixed in Asia overnight with prices higher in Tokyo while down in Hong Kong yet universally higher by about 0.5% to 1% throughout Europe. Futures, however, are down state-side with oil down as well. Thus, look for some profit taking on the open followed by a lot of choppiness. There will likely be a continuation of yesterday’s rally at some point today, but the strength seems to be capped today by the ceiling on oil as well as mixed earnings guidance.

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-

MPEL- up in a weak casino group yesterday; could be continuation buy thru 4.60

POT, COP, XOM, DVN, RIG, SLB, MON, APA, NOV- among others, very very strong oil group yesterday; looking for A-B-A2 depending on oil’s direction

AXP- great earnings

BIIB- good earnings

COH- good earnings

MMM- good earnings

FRX- good earnings

Bad-

AMAG- down yesterday on FDA concerns; would look to short thru yesterday’s low of 31.30ish

DDR- very weak; 13.85 is multi-week low. If stock breaches that level, likely a good short

TXN- missed earnings and warned

NFLX- in-line guidance

SNDK- terrible earnings and no comment about the 26 dollar a share offer on table

MGM, LVS, WYNN- all weak yesterday; looking to short thru yesterday’s lows in all of them

BLK- poor earnings and cautious comments about future

DD- terrible numbers

LMT-bad earnings

WU- bad earnings

MAN- bad earnings

FCX- missed its numbers


Earnings list:

TUES OCT 21 BEF

AKS AME AXE

AVY BIIB BLK

CAT CE COH

DGX DD EAT

FCX FITB FRX

GNTX JEF KEY

LXK MAN MICC

MMM MNI MTB

NCC OMC OXPS

PCAR PCP PFE

PNR RE RF

SGP STT SWK

SY UAUA UNH

USB WAT WU




TUES OCT 21 AFT

AAPL AMLN BRCM

BSX CENX CERN

CHRW CNI CREE

CRI CYMI EW

ILMN INFN IVGN

NSC PNRA PPDI

PTV QLGC SIAL

TCO TMX TSFG

TUP VMW WCN

YHOO




Good luck today.

www.protradingnetwork.com
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MON. OCT. 20 - LIBOR Is The New Indicator

You’d never know it from all of the gloom and doom out there much less all of the ready-for-Halloween scary stories you’ve been watching on TV and reading in places like, oh, this blog space, but how many people out there realize that last week was the best week for the stock market in over 25 years by Tuesday (before it sold off dramatically thereafter)?! As usual, the market does anything possible to defy the beliefs of the majority so of course the worst week in 70-some odd years has to be followed by the best week in five years (despite the mid-week swoon). What caused last week’s rally other than the basic ‘stocks got cheap’ tagline? What happened was that the credit market eased. Barely (which will be the second theme of this article), but it is eased. Overnight LIBOR rates fell every single day last week which is an exceptionally good sign. The commercial paper market began freeing up a little as well. So, basically, it indicates that people and banks are lending again. Thus, the course of the next week or two during this busy time of the quarter- earnings season- is not the earnings for once. Rather, traders will be honed in the rapidity (or lack thereof) that the credit freeze thaws. If LIBOR spikes higher for whatever reason (particularly as some people assert the declines have been artificial as discussed in today's ("The Wall Street Journal" for instance), last week’s gains will be a distant memory by week's end if not well before. However, if the crisis eases, money managers will begin putting some cash back in while analyst’s pump out volumes of recommendations as to why stocks are cheap. More than ever, day traders must follow the macro while trading the micro.

Markets throughout the rest of the world rallied overnight as LIBOR continues to fall. Futures are up state-side and with no major news out there, the markets will likely maintain an A-B-A2 bias to the upside as the morning progresses. There was a late sell-off on Friday so with Europe in particular padding Friday’s gains, it would stand to reason that gains should hold much of the morning.

Trading will be tricky for a chunk of the morning. News flow is relatively light, volumes will be lower, and prices higher so the possibility is there for a mini-algorithmic slow and steady short squeeze. Thus, there is a relative dearth of ideas this morning yet the main thinking is that things will pick up as the morning progresses with a particular focus to buying real strength if the market maintains its backbone or selling what is particular weak in case the sell-off reasserts itself.

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-

CIT- very strong into close on Friday; looking for A-B-A2 if it opens above unch preferably using 4.85ish as an entry point above Friday’s high

WFT- good earnings

EDU- good earnings

HAL- good earnings

MRK, UTX, WSO, MDRX – all on Cramer’s show on Friday

Bad-

C- closed near a low quite suspiciously on Friday.

ITRI- could not get a bounce after Thursday’s horrible decline; would short below 57.10 if market weakens

WERN- exhibited a reversal Friday after posting before Thursday’s trading

PNC- notably weak among the banks; look to short thru Friday’s 57.42 low if market weak

TMK – very weak Friday; looking for A-B-A2 to downside off of open if market weak

Earnings list:

MON OCT 20 BEF

BPOP EDU ETN

HAL HAS LMT

MAT MMR NFLX

NVS WFT


MON OCT 20 AFT

AXP BRO BXS

CAVM EFX HXL

LNCR LOGI LRY

NBR PKG SNDK

TXN


Good luck today.

www.protradingnetwork.com
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