FRI. NOV. 28 - Half- Day After Thanksgiving

On this Kid’s Day at the NYSE in which everyone is encouraged to bring their kids to work, let’s reflect not on what we’re thankful for, but rather why the market is open today. The market is typically open for half days on the day before Independence Day, the day after Thanksgiving, and Christmas Eve. There have been selected days in which the market has been closed full-days as well. Namely, the market closed for several months during World War I, a stretch of days on and off between 1928 and 1930 in which member firms were allowed to catch up on work from the heavy volume of that time, and on days in which there have been funerals of presidents. Most recently, the market was closed for four days during the horrible 2nd week of September in 2001 following the terrorist attacks on American soil. Although there is nothing in the official stock exchange guidelines, there is indeed an unwritten rule that the markets not be closed for more than three days in a row so as not to allow for an order build-up and/or exacerbate a move should there may be a major news event. Since we have to be here, it is important to note that many days after Thanksgiving have been major trading days for the markets. One of the more recent interesting post-Thanksgiving sessions occurred in November 2000 after the election results were announced on Thanksgiving night. Days after Thanksgiving are typically ripe with illiquidity, but also bring in many amateurs playing stock market thus exaggerating moves that much more. So, although it seems quiet out there, be aware that in this unusual year, this could be an unusual day with sharp movement all the way up until the 1PM ET close.

Markets in Asia and Europe rallied net-net the last couple of days, however Europe turned aggressively lower this morning. Combined with worries over terror and the massive recent run-up, the markets are due for some profit taking this morning. Look for a down open, an attempt for a rally, and then choppy action for the duration of the shortened trading 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 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified-


Good- The following stocks have good news and/or a strong technical pattern

GFG- very strong; could be A-B-A2 thru 2.90

AGM- strong; looking for A-B-A2 thru 5ish

ATPG- closed near a high; looking for more momentum

RMBS- momentum continued; looking for more of same

IOC- strong close; looking for A-B-A2 thru 12.50

JRCC- momentum continues; looking for buy thru 11.90 on an A-B-A2

BAC, MER- BAC got formal approval to close their takeover of MER and aims to finish deal by end of year 2008

GHM- closed on its high; looking for more momentum

EOG, SWN- among the very strong energy stocks on Wednesday

JEC- gigantic up move in last few days; short squeeze likely continues otherwise A-B-A2 to downside

LUK- violently higher on Wednesday; looking for continued momentum today, particularly thru 19.50 if it opens below there

MIC- way up on Wednesday; looking for A-B-A2 thru 5



Bad-The following stocks have bad news and/or a weak technical pattern

PCK- may discontinue dividend as announced Wed. morning; looking for A-B-A2 thru 6

FRO- missed earnings horribly

CHK- needs to issue shares to raise capital; file offering late Wednesday afternoon…never a good sign to file an offering on the eve of a major holiday


Earnings:

FRI NOV 28 BEFORE

FRO


Good luck today.

WED. NOV. 26- Shuffling Of The Deck

The market had a sudden major reversal on Friday with the advent of the announcement of Tim Geithner as the next Treasury Secretary. Many traders mistakenly took the news as the reason the market rallied, but it goes much deeper. Throughout this entire crisis since the election, President-Elect Obama has tried to walk a fine line between stepping on President Bush’s toes and being a ghost. Obviously, Bush is very much a lame duck leader at this time, but he is still the leader. However, by staying very opaque, Obama created an image of not being prepared which helped to precipitate the decline in the equity markets. However, now that Obama is seemingly having daily press conference, it has helped lend an air of normalcy to the situation- regardless whether you agree with Obama’s politics. Yet, all of this is not the root cause of the rally. Instead, and it may well be ephemeral, there is finally a feeling of stability because there is now a widespread belief that the U.S. government will do whatever it takes to stabilize the system. Now, mind you, there are limited resources that even a behemoth entity such as the Federal government can lend out, but in the immediate-term, there is this feeling that everything will be OK. It may well not be. Bank of America (BAC) may well be the next domino to fall. Problems in Detroit at General Motors (GM) and Ford) aren’t going away. But, right now, we’re in a bit of an air pocket. It is very notable that Citicorp’s (.C) common stock actually rallied due to the different structuring of this particular backstop. It is also notable that just yesterday the Fed announced they will repurchase up to $500 billion of MBS’s. For day traders, these are just more cards to throw into the deck. There are still many problems out there, but be aware that there are a few more positives in the here and now anyway which will likely make things even choppier than normal as we look to close out the year in a mere five weeks.

After the aforementioned relatively optimistic column you just read, well, the news today is not good. Very notable yesterday was that the dollar was crushed against the yen, 10 year bond yields hit levels not seen since the Kennedy administration, and oil back down 4 dollars a barrel. This morning, markets were mixed in Asia, but solidly lower by 2 ½% in Europe…and this BCE news will help nobody. Futures are holding up OK (amazingly well) at down ½% as of this writing, but it is very likely not going to last. Look for some profit-taking ahead of the holiday with dwindling volumes throughout the day. There can be a disconnect between stocks and external factors around holiday time, but the tone today looks to be fairly overwhelmingly negative.

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- The following stocks have good news and/or a strong technical pattern

LNC- very strong yesterday

LTM- closed on its high after a stake disclosed by an institution

DHI- noted its cash balance was fine yesterday morning; stock closed near top part of its range

DLTR- closed near a high after a couple of days of good gains as well as good earnings

CBRL- closed near a high after decent earnings

JRCC- has doubled in less than a week; in a good market, look for A-B-A2 through 10.50 as a trigger buy entry

KFS- very strong; if it opens down or unch, look to buy thru yesterday’s 5.55 high


Bad-The following stocks have bad news and/or a weak technical pattern

ZLC- closed near low after horrible earnings; looking to short thru 5.15, particularly if it opens lower

JCG- horrible earnings outlook

VRGY- bad earnings outlook

HRZB- a small bank clearly in trouble; closed near a low yesterday…looking to short thru yesterday’s 1.74 low

TNB- warned on its earnings

MBT-suffered a mid-day reversal yesterday; will likely be a pretty good A-B-A2 play at some point mid-morning off of the open pending market direction

NTY- broke to a new trend low; look to short thru yesterday’s 13.24 low if market is weak

BCE- deal to go private may not go through based on their auditor’s views

TIF- warned on earnings

DE- warned on earnings


Earnings:

WED NOV 26 ALL BEFORE HOURS

DE FRED NPD

TIF YGE




Good luck today.

TUES. NOV. 25- What Is "Real?"

A key point missing from the discourse about the downdraft of American finance is this: how much of the economic growth that took place in the last 60 years was “real?” The growth rate since the advent of the Kennedy presidency has been approximately twice that of the preceding 160 years. The United States has consistently run trade deficits for approximately two generations. Thus, when one really thinks about it, was the engine of economic growth the boom in Silicon Valley, the technological advances in industries such as defense, and, say, the mini-boom in ethanol or is it more due to the fact that the U.S. has been a debtor nation in which our consumers have bought too many televisions and other gadgets? There is not a doubt that advances in technology and efficiency in industry has played a substantial role in increasing productivity. However, the fact of the matter is that the rate of borrowing has been commiserate with the rate of growth. What this may well portend is that the slowdown we are experiencing may be much more deep and extended in duration than most economic slowdowns in the history of the United States. The biggest worry of course is that the lenders, i.e. foreign nations decide that the U.S. may not be able to pay them back and they reduce their easy credit. And the bad times continue. For day traders, this very macro thinking leads to one thought- don’t think about this type of topic during the trading day! It is impossible to guess a bottom (which for all we know already occurred) in the stock market, so why try? at Protrading Network, the focus is on the next two minutes rather than the next 20 years so instead of pondering deep concepts such as the one described in this entry, focus instead on what will happen in the imminent future else your mind gets muddled- and your trading losses start.

The Wall Street rally spread throughout Asia and Europe with markets up 3% on average in Europe and about 1% in Europe. Futures state-side are a bit weaker ahead of the final third quarter GDP report this morning. However, the huge $500b billion investment in MBS's by the Feds should give the market a good bid no matter what- something that should last most of the morning if not all day. Look for a little profit-taking, but the tone is good.

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- The following stocks have good news and/or a strong technical pattern

HPQ – company had good earnings and raising guidance, but did uptick sharply on close yesterday.

SBLK- decent earnings

CTRN- good earnings

DCI- decent earnings

SLG- very strong; could be A-B-A2 thru yesterday’s 16.31 high

BAC, JPM, USB- all very strong; will likely be choppy today, but kinda like A-B-A2 to downside if markets weak

APP- huge rally into close; should hold below 3.95…if not, buy above 3.95

SIFY- massive rally; may be more short covering…looking for buy above 1.75 the first time it gets above there if it does

JNY- on “Mad Money” last night

AFL, MET- among the insurers which closed near their highs

HPT, DDR, KIM, GGOP- among the REIT’s closing at or near their highs

Bad-The following stocks have bad news and/or a weak technical pattern

ADI- bad earnings

TWB- continued weak yesterday; like an A-B-A2 short thru 2.07

GS- issuing $2 billion of new debt

GCO- missed earnings and warned slightly

TECD- missed earnings

VIP- missed earnings estimate





Earnings:

TUES NOV 25 BEFORE

AEO BWS CHS

CSUN DAKT DHI

DLTR DSW EV

GCO HRL TECD

TLB UNFI VIP

WMG ZLC

TUES NOV 25 AFTER

BCSI BGP JCG

TIVO VRGY



Good luck today.

MON. NOV. 24- Sometimes, Bad News Isn't Taken Badly

On Friday morning, Canadian Solar (CSIQ) came out with earnings. What was particularly startling was that they were projected to have revenues of 270 million dollars next quarter yet they revised the guidance to $70 million to $85 million. One would think that on an outlook such as that, the stock would fall an extraordinary amount as the implication is that its business is evaporating. Yet, the stock actually closed higher on Friday. There are a few inferences to be taken from this action. First, for a day trade, this is the type of action – had the market been rallying, that we love to trade upon. Bad news comes out and the stock cannot go down? It is a fine example of the ultimate ‘buy thru unch’ trade- again, had the market been going with the stock at the time. Second, what does this tell us about the macro solar industry? We have a president who is very much in favor of solar energy with policies that should be good for the sector yet the company is telling us how bad business is. The implication therefore is that not only is the economy bad, but the decline in oil price has produced more than a commiserate decline in the shares of alternative energy entities. Finally, it is worth noting that the TAN (the Global Solar Energy Index) is down over 55% since the election. What this tells us is that the stock market seems to have once again moved ahead of the trend so to speak in that it anticipated the evaporation of business in the industry. So, let’s circle back to the first point: day traders must be aware of the technicals and the fundamentals when using the ‘common sense’ model. Many people had no idea why CSIQ was up (and would have been a terrific change had the macro market been going correctly). Many times, if one is short in a stock like this from, say, 15 a share, it is a case of ‘sell the rumor, buy the news.’ Be aware of an increasing type of this action on good market days in the future. Stocks have been beaten senseless. It is folly to pick a bottom, but it is not folly to realize that a bottom- even an ephemeral bottom- forms when a stock opens down on bad news and rallies…and as day traders, it is our job to be cognizant of such situations and specifically to be buying thru unchanged in a stronger market environment.

Markets in Asia fell slightly overnight as the C deal was not announced until the middle of the night. Bourses picked up in Europe with the exchanges there up about 3% on average. State-side, futures are skyrocketing on the C news. This seems a little premature, particularly after Friday’s rise. The most likely scenario today would be for some profit-taking to ensue with the averages in a mixed range after a first hour sell-off. If that sell-off does not continue, there is more to the rise than meets the eye and a A-B-A2 rise will likely take place albeit in smaller fashion than Friday’s A-B-A2 as called in this space.
.

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- The following stocks have good news and/or a strong technical pattern

MMR, DPTR, HLX – among the smaller petroleum companies that had huge rises

C- traded up after-hours on vague takeover rumors, but then in the middle of the night last night, the government announced a bail-out deal. In theory, the deal should be dilutive, but stock up…a great trade would be if the stock breached 5 (as it was over 5 overseas) to short it anywhere below with a target of unch and an out of 5. May not totally work, but there will likely be a great trade there at some point- particularly at 7AM ETish if it should happen

XOM, CVX, SLB- among bigger petroleum companies that had explosive rallies Friday

FE, ETR, FPL- utilities help lead the charge with the petrols

AU, ABX- gold had one of its biggest percentage jumps in history on Friday; these things exploded…could be a bit of a reversal today, but certainly A-B-A2 thru Friday’s highs (19.70ish AU, 27.30 ABX) is in order too

ACI, BTU, MEE- coals strong too

X, NUE- steels closed at or near highs

DNA- Avastin passed a phase III trial for breast cancer usage

CBRL- good earnings

Bad-The following stocks have bad news and/or a weak technical pattern

GE- filed mixed securities shelf

TGT- rejected REIT plan proposed in that they are not going to split themselves up

CBE –warned after-hours on Friday

HA, ALK- bucked the huge uptrend at end of day Friday in closing near lows; look to short thru Friday’s lows on both if they open above them (HA 3.50 and ALK 18.57)

EAT- also underperformed terribly on Friday; looking to short thru 3.90ish

CELG, ALXN- closed in middle of ranges, but notable that select biotechs did horribly


Earnings:

MON NOV 24 BEFORE

CBRL CPB VAL

MON NOV 24 AFTER

ADI ATW CTRN

DCI DY HPQ

NUAN SBLK



Good luck today.