FRI. NOV. 7- Post-Election Fallout

Amidst a jump in jobless claims and terrible earnings across an array of industries, the stock market has now suffered its worst two-day decline in both the measures of the S&P 500 and the Dow since the stock market crash of 1987. Oil fell to a 19-month low as well. The $1.2 trillion loss in American stocks in the last two days has been breathtaking. The superlatives are endless with the exception of one. Namely, it has been the worst two-day start for stock prices bar-none following an election in the history of the American stock market. Mind you, these two days follow a huge rally for the market yet it clearly shows that the verdict of the market so far is that a lot of the hope we optimists have may not come to fruition. The worldwide economy is clearly in trouble right now and the balm of the Pelosi stimulus package seems like a band-aid which will do little for the economy- just as the first stimulus package did very little for the economy. Thus, it is apolitical as all politicians seem to be in a giving mood right now. With all of this said, the market is focusing on the problems of the economy, but is clearly also worried about what exactly we got in our president-elect economically. There is much uncertainty surrounding Obama’s thoughts on the economy much less his team of economic advisers. Clearly, however, these worries are not good for the market. So, two thoughts: first, the long-term ramifications of the rumors of what Obama wants to do are not liked right now by the market. But, second, for day traders- uncertainty is arguably worse than bad news. The sooner that Obama announces his plans and his team, the better for the market…which will likely spark a rally no matter what as stocks discount whatever is going to come out ahead of time.

Foreign markets rebounded overnight...this likely portends what will happen here today. Selling pressure ebbed yesterday afternoon and the jobs report seems to be factored in. There will likely be a sell-off at some point today, but with eveyrbody expecting the worst, the worst may well be already under consideration...so, look for an A-B-A2 to the upside...if the market is not up by noon though, it could get quite dicey this afternoon.


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 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified


Good-

NVDA- good earnings

VRSN- beat on quarter slightly

FLR- great earnings and raised guidance…amazing I nthis environment

ONXX- good earnings

FSYS- phenomenal numbers

DLB- good earnings

INT- terrific earnings

SD- decent earnings

TBSI- good earnings

FWLT, TUP – on “Mad Money”

LFG, FNF- LFG being bought out by FNF for .993 shares of FNF

Bad-

PCLN- beat on quarter, but warned on year; however ,warning not as low as whisper number

DIS- missed earnings and warned of slower bookings

QCOM- missed quarter and warned

GNW- bad earnings, canceling dividend and share repurchase program

IRF- bad earnings

BKD- finished near low amid rumors of liquidity crisis

PLD- closed near low

SVR- no bounce in closing near its low as well

DFT- same story; closed near low

LVS- very weak yesterday amid rumors of default

EXM,DRYS among dry bulkers which closed near lows

HIG, CI- down tremendously after last week’s gains…will likely bounce if market bounces

STP- among the weakest of the solars as it is now down almost 40$ in three days; looking for bounce here too or a break thru 12 if market opens higher yet solars weaken

WFC- share offering will be at 27

GOK- very weak

DPTR- among the hardest hit of the smaller oil stocks

RGC- among the entertainment stocks breaking to new trend lows

MOS, POT – fertilizer stocks have done nothing but decline since the election

GT- the once venerable tire maker broke to a new trend low yesterday
Earnings:

FRI NOV 7 BEF

AES AYR BAM

BID CGV CPN

CTB DISCK ED

EIX F GM

LPNT MIR NAT

RRI S SRZ

SSP TTI WIN

WR XTEX XTXI




Good luck today.

THURS. NOV. 6 - Thinning The Herds

Something to note amidst the volatility of the last couple of days is one very striking feature: the rallies have been massive and the declines just as bad- but on low volume. Volume for the Monday-Wednesday time frame was the lowest for a three day period in several months. Why is this? First, prices are in the middle of a range. at Protrading Network, we aim to only trade stocks that are near their highs or lows. Well, many stocks have bounced off their bottoms, but are now in no man’s land thus nobody knows what to do. Second, many hedge funds have blown out and those still around are afraid to put on major positions. They do not want to get hurt nor do they want to take any chances of further impairing performance this year…plus, they are trying to conserve capital should investors ask for withdrawal. Third, we are coming out of a major news cycle and into a holiday period. Earnings season is gradually winding down. The election is over. The period of bankruptcies every day in financials is over. Thus, there is not a lot to trade on. And fourth, we are gradually heading into the holiday season. Historically, trading slows in November and December from the frenetic pace of October and everything is sticking to form here. For day traders, this makes things every bit as choppy- but much more illiquid. Stocks can go up and down a lot faster – on a lot less volume. Thus, it all goes back to the same theme- preparation and discipline. We are entering a phase in which prices are going to move fast still, but with less and less shares so mistakes will be that much more punishing. The plus though is that the volatility is there so do your homework, do not do seemingly random trades in the middle of the day, and you’ll come out OK.

Markets overseas were drubbed overnight on the heels of the declines on Wall Street. With CSCO warning today and the interest rate cut factored in, expect more of the same...should be choppy with downside action in the techs and mixed elsewhere. There will likely be a rally at some point ahead of the jobs report, but trading should thin out this afternoon again as entities do not want to put too much money into things ahead of the big report tomorrow.

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 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified


Good-

WFMI- earnings OK, but raised needed capital through equity investment

ATVI- good earnings

SUN- smashed earnings

EXM- good earnings

UM, DUK- lukewarm mentions on “Mad Money;” Cramer liked both but said he’d hold off on buying both for now

OMG- good earnings

Bad-

WFC- undergoing a 10% dilution to raise capital…not that the stock will fall 10%, mind you, but something to watch

CSCO- wretched guidance

DOX- terrible earnings

FCN- abominable numbers

MDR- terrible earnings

THQI- horrible earnings

CRL- terrible earnings

CXW – bad earnings

LFG- horrible earnings

MNT- bad earnings

NWS- earnings warning

LVS- despite strength in MGM, LVS closed on a low…could be pretty good A-B-A2 to downside with horrible news in LVS as the company may well default

OEH- continued weak; looking for short thru yesterday’s 8.08 low if it opens higher

CLNE- declined on a failed California initiative. Could be short thru 7.20

CNB- liquidity concerns; may be short thru 3…particularly early in morning

EQR- helped lead property stocks down

CBG- another REIT which closed near a low

PLD- closed very weak; watching for potential significant weakness today

GS- downgraded

JRCC- terrible earnings

HK- poor earnings

BX- bad earnings



Earnings:

THURS NOV 6 BEF

ABV AN ANSS

ARD ATPG BR

BRL BRS BX

CCOI CEG CLR

CRZO CVC CXW

DPTR DTV EP

FLO FTO HK

HOS HUN JRCC

KEG KG LAMR

LXP MFC MIC

NDAQ OMG ROCK

SE SFY SNH

TEL TEVA URS

VCI VRX WMB

WNR


THURS NOV 6 AFT

BYI CBG DIS

DLB FLR FRP

FSYS FTI GNW

HANS MVSN NDN

NFG ONXX PCLN

PCR PDLI PSA

PXP QCOM RMD

RRGB SD TBSI

TS VRSN


Good luck today.

WED. NOV. 5 - Post-Election Redux

Election Season 2008 is finally almost over. As of this writing, there are four seats left up for grabs in the Senate and six races in the house. The Senate is now controlled by the Democrats 56-44 pending the results of those four races with the Democrats in control by a 79 vote majority in the House pending the results of the six remaining races. Thus, as of this writing, things played out almost exactly as most polls and pundits indicated they would. So, should the results be greeted with the same euphoria as on Election Day yesterday? Nope. In the longer-run, all politics aside, nobody can argue that the rise of power like this for the Democrats is good for the investor class. Capital gains taxes will likely rise, marginal tax rates at the top will rise, and any economic stimulus package will blow a further hole in the deficit…even as we realize that markets historically have performed better when a Democrat has been president than under Republican leadership. Of course, the best periods tend to occur when a Democrat President is in power with a Republican Congress versus Democrats in all branches, but we digress. In the immediate-term, it is likely a case of ‘buy the rumor, sell the news.’ The markets have had a tremendous run over the last few days. Everybody seemed to be waiting on everyone else to sell yesterday; when that did not happen, the markets rallied. But, there is no immediate-term trigger thus day traders wake up in an even more dangerous environment than normal today. A subtrend within a trend. The bull run albeit on low volume has been for real these last few days; people could buy dips at any time. So, harking back to yesterday’s piece, have a set strategy for what should be today based on the results with intense homework to postulate your opinions to formulate proper trades all the while realizing that if things are not going as expected, the countertrend moves can be quite powerful as well so money can be made no matter what happens. For instance, if you expect solar stocks to rise today yet they open down, rally to unch, and sell back off, a very nice negative A-B-A2 can be in play. So, again, do your homework and be ready for anything.

Overnight, markets in Asia rallied but European markets are down across the board. State-side, the U.S. market should open down. One of three scenarios will likely play out today. There could be some ‘buying the dip’ off of the initial decline which would spark short covering in many sectors in which the political landscape is now more favorable. Or there will be an A-B-A2 giveback today. Most likely will be the ‘in-between’ choice with the markets opening down, trying to rally, failing yet a dearth of selling pressure fails to push down prices so we stagnate in choppy ground in negative territory much of the session.


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 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified


Good-

STP, SOLF, FSLR, SPWRA, ESLR, LDK, TAN- among other solars that net-net should benefit from an Obama administration. Have had huge run-ups recently, if they open higher looking to short any of them, particularly before 8AM ET.

SCR- closed at a high

KGC, AEM- among the many gold stocks that have had a huge run in the last week; looking for profit-taking, but will follow gold

ENOC- closed at a high; if it opens down or near unch, looking to buy thru 9

GPCB- closed at a high; want follow-through and would buy at 2.75 or higher if it opens down or flat else A-B-A2

TTEC- looking to buy thru 10.30 after closing near its high

SPLS, CAT- mentioned on “Mad Money”

CLWR, S- merger approved

AKAM, BRCM, VRSN- telecom stocks which may benefit from Obama administration; should be relatively strong today

WTW- good earnings

AMMD- decent earnings

AGU- great earnings

RL - good earnings

Bad-

LVS, MGM, WYNN- casino stocks notably weak last couple of days; looking for more weakness

AHII- closed near a low after posting terrible earnings; looking for a short at or below 2.60 if it opens flat or higher

XOM- among other big oils; due to decline after nice rally

PXD – poor earnings

XTEX- broke down a bit more; looking to short 9.60 or below if it opens higher

BDX- bad earnings

MBI, ABK- atrocious earnings

DVN, RIG- bad earnings



Earnings:

WED NOV 5 BEF

ABK AGU BBG

BCE BDX CMS

CNP COCO CSE

CTSH DLR DUK

DVN FCN FWLT

GGP HLS HSIC

HSP IACI KIM

KWK MBI MHS

MMC MT PCS

PQ PWR RIG

RL RRD TAP

TWC TWX UPL

WW XNPT



WED NOV 5 AFT

ACLI AINV ATVI

AVB BEE BEXP

CCI CECO CRL

CSCO CUZ DOX

ECLP ENS FIC

GDP GXP HTX

LEAP LFG MDR

MNT NFP NFS

NWS OKE PNM

PVA SHO SUN

THQI TX VMC

WG XCO XTO





Good luck today.

TUES. NOV. 4- It's Election Day...And?

The market marked time yesterday waiting following the end of the fiscal year for mutual funds on Friday and ahead of the election today. Today may well be a bit more volatile as entities position themselves for tomorrow and thereafter election-wise. Let’s lay out the three main schools of thought here. First, if Obama won in a landslide, one of two things would happen in the big picture – speaking philosophically- for the next couple of weeks. Either literally nothing would occur as so much money has been earmarked for the bailout or Democrats would aim for New Deal II as he’d have a mandate in the Senate which would not allow for filibustering. Sectors such as healthcare, solars, and fertilizer stocks would perform well while defense and oil stocks would suffer. The market would likely trade a little lower by the end of the week. However, in the longer-run, worries over tax policy would abound as well as nervousness over inflation. Second, if Obama won, but not in a landslide, which is the scenario priced in, trading would be choppy yet somewhat directionless as, again, this is expected. The third scenario is a McCain victory. It is hard to say ‘status quo’ would rule the day, but at a minimum, there likely would be no further expansive legislation and sectors such as oil companies would do well as McCain would be much less likely to tap the reserves. In the immediate-term, stocks would likely rally initially, but eyes would be turned toward the streets as there’d likely be a lot of civil unrest which would likely disturb the stock market greatly. Now, as day traders, it matters not if any of the aforementioned predictions come to pass. However, every individual day traders simply must have a plan for trading and be quick to react if wrong. For instance, if one expects UNH to open sharply higher if Obama wins by 8-11 points and the Democrats control 60 Senate seats, and UNH does open up a little but looks to go negative, stop thinking about what should be and short UNH through unchanged. Basically, have a mental plan as to what should happen, be ready to change on a dime, and realize that day trading is not the same as long-term trading. Be very flexible yet prepared as post- election days tend to be very good for prepared day traders whereas those unprepared tend to have one of their worst days of the year.

One more note addressing today specifically as opposed to the whole focus of ‘tomorrow’ in this piece- the market tends to trade as one thinks it would on election days – quietly but the sectors acting in accordance with what the general belief will be for the outcome so for today, the market will try to price in what it thinks will happen yet the same rules already described apply. Furthermore, the market despises uncertainty so good or bad, the fact that the election seems to be over before many people vote is a good thing for the marketing the immediate-term – no matter who wins. But, if, say, solars are screaming and suddenly reverse on rumors McCain is coming closer, short them after the run-up. Basically, have a mental framework and do some homework these next two days so as to be prepared.

Prices throughout the world are up overnight- no matter the market. Look for a very strong open today followed by a very difficult trading environment as it will be very choppy, rumor-driven, and illiquid. Be careful and rely on your homework.


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 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified


Good-

MA- great earnings

HIG- very strong yesterday; if market firm today, an A-B-A2 to upside with a particular focus on yesterday’s 16.84 high a likely focus

PRU, CI- will likely follow in HIG’s wake

V- will likely follow MA; if MA opens higher and V approaches unch, however, it could make for a terrific short play

FSLR, ESLR, SOLF, STP, LDK, SPWRA, TAN- solars up anticipating an Obama victory; will be in play all day today and will move with the rumored results in all likelihood as the day progresses today

AKRX- good earnings

AMLN- largest shareholder wants to push to enhance shareholder value in some way

DE, TRH, TRA, AVAV, KBR, THC- among others, all mentioned on “Mad Money” last night

ADM- good earnings


Bad-

GHM- atrocious earnings

HLF- bad earnings

GS- weak all day yesterday; if market weakens, could accelerate down

XTEX- closed near a low; very weak…looking for follow-through

LFG- huge reversal yesterday; will be very volatile today

MGA- poor earnings

MVL- raised guidance for this fiscal year, but warned badly for next year


Earnings:

TUES NOV 4 BEF

ADM AEE AMSC

DF DNR EMR

EXPD FE HCP

HNT HOC HW

JEC JOE LPX

MAC MGA MVL

MYGN NI PNW

RDC RTI TDC

TEN UNT VNO

WTI XEC



TUES NOV 4 AFT

AMMD APL BRE

CBL DEI EQY

FCH HCC JKHY

ME NHP NSR

PPL PXD SGY

VTR WTW




Good luck today.

MON. NOV. 3- So, Who Is In Charge Here?

On Friday afternoon, in a 2PM speech, Fed Chair Bernanke sought a ‘government backstop’ for the mortgage bond market. Keeping all political speak out of this, how much more bullish can this be for the stock market? Yes, it absolutely indicates that clearly Bernanke and other Fed officials are scared. Yes, the moves does smack of some degree of desperation. It also is the final straw in a hypothesis many have been trying to propose: the government is going to do anything it takes to halt this financial crisis in its tracks. Nobody id discussing the long-terms ramifications of all of this and we will not either; however, in the short run, well, last week was the best week for the stock market in a generation. The old parable ‘don’t fight the Fed’ has been taken to a whole new level. Will it work in the long-run? Nobody knows with any certainty. But for day traders, the entire game has been changed. Rather than guessing which company will next fail, we now ponder things like how high Las Vegas Sands (LVS) can soar on nay given day. As holiday season approaches and volumes fall a bit, realize the environment/parameters at work here and trade accordingly.

The markets are amazingly quiet in the early going, but the upward bias continues ahead of the election. Prices throughout Asia were up 1% to 2% with Europe mildly higher as well. Wall Street will likely be relatively calm today as most big institutions are positioned already for the election and the mutual fund fiscal year has come and gone. So, look for relatively choppy trade all day with less volatility than in recent days…an old-fashioned Monday in November just before an election.


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 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified


Good-

LNG- very strong Friday; looking to buy at 3.75 if it opens down

JPM, BAC- rallied sharply on close; should open down. If they do, looking to buy both at unch or a touch higher

STP- closed at high of day on imbalance; if it got there, would buy thru 17.50 ala ICE on Friday (look at the ICE thru 87 as a comparison for educational purposes)

LCAV-up on major short covering on Friday

MERC- strong all day Friday; closed near a high

AXL, MTG- rallied on short covering; rally may well continue today. If it opens near unch, looking for A-B-A2 to upside

FIG, TTM, AGM- all upticked dramatically on close; looking for these to be similar to the STP plays above. Set-ups likely won’t materialize, but if they do, they will all be good

CVI – among the small-cap energies catching a bid; looking for more strength today if oil strong

PLA- almost doubled on Friday; may be short squeeze here

MRO, BWP- on “Mad Money” Friday night

OSK- beat for quarter, warned for year, but has adequate capital

HIG- claims they should have around $2 billion in net capital by year’s end

BIDU- announced buyback

SOL – secured additional credit

GT- good earnings


Bad-

CTV- closed very weak; looking to short thru 14.55

XTXI- in some degree of trouble as they are raising money; looking to short thru 9.75 and/or some type of A-B-A2 pattern

VISN- posted bad earnings Thurs night; stock closed near a low in falling significantly Friday

TE- oddly weak on Friday; looking to short thru Friday’s low of 11.45 should it open higher

EK- this too bizarrely weak amid the rally last week. Wonder if it really cascades down; will short below Friday’s low around 8.95

DRYS- missed its earnings slightly however will likely be up as it appears they will weather the financial crisis




Earnings:

MON NOV 3 BEF

AMT ASF AYE

COL DRYS DVA

GAS GT MFA

OSK PEI SPG

SRP SYY


MON NOV 3 AFT

ADP APC CRK

EOG FST GHM

HCN HLF JCOM

MA MHK OTEX

PBI PFG PL

PLLL PPS SM

UDR


Good luck today.