DJIM #52, 2007

Believe it or not, DJIM has now been at it with the TraderJournal for a 1.5 years/ 5X a week.  As the year closes off, we wanted to especially thank all those who have stayed with DJIM since day one.     We hope all have enjoyed our journals, alerts-comments, and forum of DJIM as much as we've enjoyed providing them.  We'd also like to thank BT for keeping our plays updated with his chart work.  As the last journal of year 2007, we want to take this opportunity to look back on the past 12 months and as well as take a peak at what potentially lies ahead of us in 2008.   

We have to admit, that trading in 2007 has been a challenge.    It's a challenge not so in the sense that it was difficult to produce a profitable year.   It was a challenge because we have had back to back to back great years in 2006, 2005 and 2004.  

In the beginning of 2007, expectations were high among the traders but the results did not come close to what we had in the previous years.    At least, that is the case with DJIM traders and many other traders we know.    This year has been dominated with volatility.   At the end of the year, you can say it was a trend less year.  Stocks moved up and down in an exaggerated fashion along with the indices.     The most difficult thing about the market this year is that no trend lasted for more than a few weeks at a time.     We were constantly battling a changing trend where you literally didn't know what to expect some days you walk up to your trading platform in the morning or after lunch.  A few things are clear though, we know the exact cause of this volatility, the sectors that are getting hurt the most, and we are still not through to start a new year.

Shanghai surprises, Housing bubbles, credit crunch, massive writedown, potential weak consumer demand, potential recession......    you can see what we have to deal with heading into 2008.

Ok lets go over a few things that have worked in 2007 that may give us the headstart in 2008.

Solars, many agree that this is the year of the energy stocks.    As oil price crept up to $100, alternative energy stocks have been benefiting the most.    To many traders, solar stocks are the reason their accounts are in black this year.    It's true that this group has ran up a lot but earning side of things have been keeping up the pace.    At this point, we are 50/50 to give it the end of the run up prediction.   The key thing we are looking for is how some of the leaders in the group react to each others coming earning reports.    Yes,  this group can correct anytime now and they really should based on the way they have ran up.   So far, they haven't been able to crack the major trend line so we don't believe they would until something dramatically changes the whole group behaviour.

Earnings winners, other than the first few months of the year, the so called earnings winners from small cap land have been scarce, very scarce lately.    Many of the earning winners we noticed, however, come from the mid cap group where the action was the most fierce.   If this is the trend that continues into 2008, we are basically not going to argue with it and we'd put most of our effort into earnings plays from the mid caps.

BRIC plays, this is the area which has been shining on and off in 2007 and we think it'll continue this trend into 2008.    Lately, Russian plays have been very hot and we were pretty aggressive with them as you can tell from the number of mentions from nightly journals.   So far, we have just been playing MELI (Argentina- latin America)and PBR from Brazil and those two are currently enough exposure from that region for us.  

In terms of China plays, we still have a bunch on our watchlist and we are just waiting for them to heat up again.  A pre- Olympic fever may come.  The year of the Rat is ahead of us and the "New kid on the Block' of 2007 in the trader/investing community should continue to provide trading opportunities.

Going into 2008, we expect a lot of "more of the same" attitude from the market participants.   We have a Fed meeting coming up, FOMC minutes January 2nd and busy weeks of earnings reports just ahead of us.   The dreaded Employment report comes this Friday and could be a spark either way. Hopefully, most of us have relaxed enough in this holiday and we are back to focus on the busy trading in front of us.

250 trading days on the wall..if one of those days happen to fall...

...249 trading days on the wall!  ...yep, the market had a hangover, but we've got 249 to go....Sure the ' Happy' in New Year went away to many a bull today, a day when a chorus line of bad headlines ripped throughout the day.   What didn't we get today?.  We got a contraction in the ISM number, Semi's got the hammer on INTC downgrade, oil kissed 100 on geopolitical and inventory stockpiles decline rumors, potentially more MER writedown noise came as well.  The FED minutes gave some an exit move, nothing more as the swing up was battered soon enough.   So, just another -250/50 new skool day, seems nothing has changed from 2007, but then why should it on the first trading of '08?.    Market made no resolution to change its rhetoric.   Despite the negative tone, the names and niches we've been following here surprised with an effort and a half.   This action might just go hand in hand with a nice bounce Thursday from these oversold levels. 'Oversold' is very subjective and differs between many any eye, technical ones as well.   The magnitude of a broad move may seem futile as the employment number might keep the easily scared away till after the report on Friday,  but we won't be surprised to see one anyways.  Either way a potentially big day is in the cards on Friday..up or down.   On to the niches that were going against the grain...

Thursday we will see what this late day solar move was all about.   We got a lot of noise premarket from supply deals, to guidance, to firms coverage, IBD ink on many a name including LDK, AKNS, FSLR, STP but most of the action that matters came around 320pm as SOLF, STP, JASO, FSLR got a bid into the close.  Going unnoticed last week was the Chinese gv't white paper writing that it will, 'vigorously' develop its renewable energy sources, add the oil spike and earnings coming and we should continue to get action here.

WBD had a strong day, including a strong finish closing at 136 at highs of day making it look good for Thurs.  VIP, we've noted allowing it to pullback recently before trying another entry.  It did as it backed up to 40 last session and closed near $44 today. Throw in MBT in the loop and you can see what we've been talking about the Russians showing resiliency even in the worst of days on the markets.

PBR, with oil making lots of noise, this giant has come to NCH territory at what just might be the right time for some follow soon to the upside.  PBR moves well off indices moves , not only when oil is spiking.   Another way we'd play this oil job is buying a move off 9ema which has worked very well with quality companies lately.  HES, at $98 is a play from that side of the track to look at. 

HRBN CMED SDTH noted midday.

MON'santo earnings release before open, keep CF AGU MOS and some POT near by.

Chemical reaction...

The trigger earlier was a nice report from MON, a report we noted to watch in the previous Journal with secondary plays in tow. Unfortunately, the market was just not able to gather any momentum outside of the oil, chemical and mining area.    Semi stocks also got hammered today but fortunately we haven't had a semi stock on our watchlist lately.     For what it's worth, most of the stocks on our watchlist had a decent day.    So what can we conclude from the action today?   You want to be trading the stuff that is still working.

Tomorrow's job report, assuming it's decent, should provide some relief to this market in our opinion.    Market is really in need of a bounce and it wouldn't surprise us if it shoots up because of a bullish job report.    Basically, this is what we meant by  "more of the same"  trading environment starting the year.    Just when you think we should test the November low, we may just get a hard rally over the next week or two if we don't break Nov. lows.

Regardless, lets look at some of the stuff that are working today and recently....

Chemical biz, as long as the earnings are exceeding the expectation, there's no reason to believe  this run-up is over.    The group (MON, AGU, CF, MOS, SYT, TNH...) had a big year in 07, it's looking probable that the group can carry the same momentum into at least the early period of 08. SYT, is a new name we tossed out into the mix and it didn't disappoint closing at highs.

Solars, the one thing we have to remember is that we shouldn't get too greedy with some of the volatile and speculative names.   It doesn't hurt to take some off the table and reload when things are calmer.  Thursday was definitely a day for the cheaper alternative energy plays as AKNS HOKU DSTI etc.

GU, this is a play we are putting on our active watchlist and started a position earlier today.  Briefing mentioned it after our note by throwing it into a mix of the names above.   We think this area may deserve some more attention now that the oil price is hovering around $100.    Based on its action today, we think it has caught some traders attention and we are hoping that the momentum will pick up from this point on.

SDTH, this one can trade in a volatile fashion but it does feel that its trading path is going higher.    You can take advantage of its swings to trade around a core position.   Friday is the day that will determine if it'd be added to IBD100 or not.    In our opinion, you'd want to buy dips regardless what happens tomorrow and remember this is not a one trick pony as in being a pure IBD play only as it is in the AG/Chem mix of names.

China plays, it seems some of the Chinese plays like CMED HRBN  have been doing really well recently. Throw in the IPO name VISN as well now. We are also keeping an eye on some of the older favourites WX, EJ, STV, EDU just in case they get a bid too.

Friday is likely going to be a very busy day and we'll be looking forward to it.  Today was a day you wished the market closes at 1-2pm, hopefully, today we're not wishing it never opened after the report comes out.

DJIM #1 2008

Who would've thunk it that by the time we put out DJIM #1 of 2008, we'd be down between 4 and 6% on the major indices for the year .  Add the 10% off recent highs for the RUT and we have a mess on our hands.  An incredible week of headlines..ISM, FOMC minutes, employment report leading the way to a one sided week as the techs, small caps continued to fall for a 6th straight trading session.  Our methodology was always to not hold stocks into their earning reports, now 2008 is shaping up as a year where we might never hold anything at all into an ISM #, and especially payroll number!.  Imagine that!.  Talk about a daytraders market, a long term investor will see any gains generated quickly on a gap down like we saw Friday in this environment.   This will be a difficult market to move around in, the nervousness has really set in and it makes the credit crunch we've traded through look like child's play now.    Simply, the hype during the week to the payroll report led to something all feared, but there is no use to moan and groan and analyze here.   There`s enough media outlets to harp on the events and possibilities it holds.   We have to look to the very short term possibilities this week.    This includes a very technical bounce scenario that even has the Bears thinking a recovery of sorts is inevitable now.  How long it lasts if it happens is any ones guess.    Examples are The NASD comp, if you draw a trendline up touching  Feb-Mar, Aug bounce levels, the DOW you can go back to March, Aug and early Dec and do the same,  the SPX on its 400ma you can see the bounces Aug and December. The volume late last week suggests the panic has not set in.  Selling positions on Friday`s gap down could have been a losing proposition as it was day 5-6 of losses for the indices with technical bounce levels setting in.   The desks will finally fill come Monday as everyone gets back to work and many will start to see bargains in front of them.    Another possibility that can scare any Bear is the FED giving a surprise rate hike before the scheduled meeting as in 2007.   This market needs some intravenous therapy and it won`t be a quick fix unless the FED surprises, otherwise it will be a slow drip of help that could include technical, earning surprises etc.   Maybe the techs will get some help from the CES fair hype this week. 

As of now,  we are not going to change our trading methodology and what we have traded with success while the odds of recession grow.  The time might come where we have to look seriously at Golds, Oils, Widgets or consider shorting seriously, but in the meantime there are niches that we are familiar with that still have momentum in`08.   This inc. Chemical-Ag sec.   There are many things we can rally off and retrace back.  We need to see a start of it early this week.  Let`s wait and see...

It may get worse...

From the Indices, one wouldn't be able to see the kind of stuff that was going on in this market today.    If it wasn't for some timely program trading and short covering near the end of the day, we would've for sure closed near the low of the day given the look of things.    The story of the day is that many growth stocks, especially the well known ones from last year,  were getting hammered today.    Yes, we are talking about the Solars, the shippers again, and some growth oriented tech stocks.    Even the invincible chemical stocks looked shaky intraday.     This is of particular concern to us.    If the growth stocks are broken down with the short term trendline, what else have we got to look forward to as a retail trader?      As a trader, if the short term technical signs turn very bearish, we aren't going to give the stocks any time to work their way out of it by holding them.    We bail and we avoid them.  This is our way to control our risk with the long plays we trade.    The strategy has done a good job for us for many years so it's not going to be any different this time. 

Basically, market is at a point that it needed to test a new low.    Naz has already taken out the November low and there's no telling where it's going to bottom this time.   Dow and SPX are barely hanging on from November low and we feel it's just a matter of time before the low gets taken out.    As a matter of fact, we'd prefer to see it happen sooner than later to get the inevitable out of the way.   Therefore, what we don't want to do at this point is to get sucked into a probable short lived rebound.    A rebound is not a rally and we have to distinguish the two.  A rally can last few days to  weeks while a rebound can quickly turn sour as we have witnessed intraday today.   For us, we have time to wait this out.     Ideally, we'd like to see some more panic selling that take us to a new low the next short while before this market finds a good footing.

Solars, this sector is definitely having a poor showing today with most if not all the plays breaking down.   Now, whether some plays closed at the day low or not is irrelevant and don't get sucked into thinking that this sector is reversing any time soon.   We think the only thing that can save this sector is a potential stunning earning report (guidance will be most important) from some of the sector leaders like FSLR STP SPWR JASO...    Again, even with the breakdown of this sector, it doesn't mean that some of the plays wouldn't get a pre-earnings runup.   We feel that the safer strategy with this group would be day trading them on a good day from now on unless the group is back near the high.

Again, this market is going to be tough if you try to trade against the trend.    Many of the plays on our watchlist can pullback enough that they'd never come back.   It's essential to wait out the selling first and then see which plays are still attractive once things settle.   There is going to be a lot of events this month from the economic, political front and as well as the earnings front.    It's almost certain that we'd get some good opportunities later on this month.    For now, we just have to make sure that we remain careful and disciplined for the next few days.

cheers, 

..need to pull a 'Hillary'

Seems every morning the bulls have a glimpse of hope as either the futures indicate a good opening and/or we get a move higher early on.  Unfortunately, any hope is soon relieved and the indices start to sink sooner than later.  This is being repeated over and over again and all it does is make the bulls lose confidence.  This makes it easy for the Bears.  Considering we follow the small caps one thing we watch carefully is the IWM, yesterday the high of the day came at Fridays gap down high and there was no follow through higher. The next obvious step was to start looking at IWM's lows (low 71's) and if it was threatened it would break lower and it did to 70.   Considering the beating of growth stocks Monday masking the indices action as we noted, there is/was no belief we could have gone higher.  It makes no sense that we would with what is going on the day before in our favorite plays in '07.  All that was happening was these stocks were having bounces off a terrible day and were nothing but sucker bets at this point.  What you have to do is look around at what is still happening and that is a domino effect was in progress as more growth stocks were getting slaughtered.  If the bounce in the JASO's of the world was a beginning of a rally, why were stocks like ISRG, CMG still getting hammered?.  We need to see consistent action in the growth stocks, if some are still taking a fresh beating you have to ask which might be next?.  This is something we fear that a hot group like the Ag-Chemical shoe is yet to fall.  If MOS blows guidance today, we might just get this happening today. Considering there is plenty of institutional money in this sector with many of the stocks over $100, it would be pretty ugly if MOS gives any signs of a slowdown.  If they give a rosy outlook and don't move higher and/ or give up premarket gains later in day that would also be a bad sign for the sector.  Wouldn't you want to take money off the table if you were given a gap up in this market with one of your stocks?.  We only have to look at yesterdays words from AT&T that hit the market to understand what a negative word company related can do to the rest of the market.  It doesn't take much and in reality its nothing we haven't expected.  It's just the market is incredibly sensitive as of Friday.

Simply, it is easy to get suckered in now, especially if you are frustrated sitting on your hands. Just do it though until a clear trend change occurs.  So we repeat..we have to wait this out!.  What this market needs is to pull a ' Hillary' Clinton and cry a bit to pull off a comeback it seems, in the markets case this is called panic selling. A sob job!

*As earnings kick off what is essential is to not look at the headline number for the Q 'only' and jump in, but wait and see or hear the guidance. This is about looking forward now!

A Rebound?

After many days of intense selling, we finally got a bounce today. We noted at 250pm the bulls have come in to battle, this became evident as the action seemed to change after we skidded to the August lows on the DJIA/ NASD.  The DJIA/NASD moved up their entire 146/34 positive points for the day from this time and finished strongly giving us what we wanted to see.  This is the sort of action that marks the first process of making a bottom.   Don't get confused, we are only talking about a tradable short term bottom here at this stage.    The possibility of a turbulent market remains very high at this juncture.   Fortunate for us traders, we really don't have to plan months ahead for events that may or may not materialize.  As we noted heading into the weeks action, "We have to look to the very short term possibilities this week.    This includes a very technical bounce scenario that even has the Bears thinking a recovery of sorts is inevitable now.  How long it lasts if it happens is any ones guess.".   With the way this market has been trending, it's probably more advantageous just to deal with the days ahead as oppose to start thinking months or even weeks ahead.

Lets talk about the days ahead!    With today's rebound, there's no doubt many traders are jumping on the gun and calling it a reversal thinking a bottom was formed.    However, in our experience, the more severe the preceding selling, the less likely a bottom would be formed in just one day.  The shorts will be lining up to refresh their positions if this move continues.  If you have been bottom fishing this market the past few days, it's likely that you are still hurting prior to today's move.    In case you are still heavily long, we think it's best to reduce some exposure during the next day or two of trading if given the chance, especially those positions that aren't quite following the overall market direction.

Can we take advantage of this rebound still?   Of course we could, we wouldn't want to be left out with so many stocks trading a dozen points off their day low.  Many hammers on beaten down charts were formed and these stocks should continue.  Definitely short covering was a key ingredient in many of the stocks forming a hammer.  The key here is to stick with those stocks that are performing with the market move.     We are talking about the world of AAPL RIMM MA GOOG BIDU here as always.    You can throw in FSLR as maybe the first and/or only solar play we would trade on a good day.    Most of these trades are going to be treated like day trades with a tight stop.    We just can't afford to think that this rebound is going to turn into a multi day rally.   If that ever happens, we'd adjust our strategy to suit the markets condition.

AA officially kicked off the earning season today and we have many market impacting stocks to report the next while.    Because this market has been beaten so bad lately, a couple of good reports from some key companies can cast away the shadow of recession and prove that the global market is still sound and healthy.  Behemoth, Dupont (DD) of the Dow gave some hope early on off their report.   A combination of good earnings reports and a friendly Fed can really take us out of this recent slide and it won't be long before we know what to expect. (btw...Bernanke takes the podium today, but it may be wishful thinking anything will be revealed of substance).   Ironically.. today's reversal came as a few gurus started calling the close yesterday the beginning and confirmation of a Bear market, it was also the 'unofficial' kick off to earnings day, a season that could leave that call hanging.  We'll see soon enough...

Bottom line here, the rebound today is far from injecting confidence back into investors' mind regarding the big picture, but it is an expected and welcomed relief.   We'd trade small using tight stops and reduce any unwanted merchandise you have left during the pop.     We'd be disciplined about our play selection and let the market show you the setup.

A few things from today...it was kinda scary to see our words regarding the MOS report coming to fruition early on.  A nice report had it to $96 in premkt and then a gradual turn down before riding to $80 by noon as they proceeded with the CC.   TNH, MON all joined in for a quick $10 buck bath.  Yeah there were hints of panic, but considering DD's report fell on the same day it might have saved their bacon as they reversed before the rally in the market even took place.  Hopefully, our note had some eyeing this sector with opp's to go short and/or long intraday.

..what was that?

Somehow we just can't get excited about anything we witnessed in Thursday's action.  Actually, it was quite disappointing despite a +117/13 indices showing.  

If this is how a bottoming plays out, we're in for a rocky ride as the action was wilder than ever.   The day had no flow, no conviction you'd like to see on day 2 of a potential reversal in the making as the market simply ran up and down with the news flow.  The news flow, included the telegraphed rate move by Bernanke did nothing..nada...zilch for the stocks in our universe.  The late day BofA/CFC news did nothing either for our niche and that was the biggest disappointment.   Simply, we'd hate to see where the market would have ended up if it wasn't for the 'house'cleaning proposal of CFC.    The result is any confidence we had was squelched for the time being, maybe not for others as they see Thursday as a solid follow through day technically, especially considering the indices were down a pretty good chunk during the day.  We might seem greedy, but if we don't see growth stocks/ sectors in our niche performing along..we're not happy!.  The indices performance masked the underlying goings on in our view.   The day just reaffirms everything we said the day before in respect to how we are dealing with the prospect of a bottoming coming off Wednesdays action.  The AMEX news is really no surprise, especially after Capital One's bomb in the morning.  The market should be relieved a lot of the trash (CFC) and potentially next WMutual is being taken out literally to the curb.  The house needs a cleaning to boost confidence.  If it can't look past the inevitable news coming out of the 'consumer' card companies..we're in more trouble.  

In conclusion on TGIF day, we first need to see the market shake off the AH's Amex news at some point and not give us a 250/50 down day.  Secondly, we need to see some life in our niche after Thursdays disappointing day.  In the good old days, our niche would be in play after a dull day in which it did not participate.   Guess..it would be too much to ask for in this environment..lol..Okay, if we get pieces of any of the above today then we could go into the weekend on a mildly positive note.

DJIM #2 2008

Get ready for the battle ahead!   The coming week may give us a tradable short term bottom, if the weeks barrage of Eco#'s allows.   With financial companies like C, JPM, WFC, MER.. reporting, we'll have another in depth look of how things are unfolding with this sector.    Chances are, more write downs will be announced by the financial companies but the stock reaction may actually be positive.   Why?   Most of these companies have dropped quite a bit since last quarter in anticipation of more write downs and it isn't a surprise anymore.   We think that some of the financial stocks have priced into more write downs.    Also, with the recent buyout of CFC from BAC and new investment from sovereign fund/investor into Citi, this sector may just seen its bottom, for now.    We also noticed that during Thursday and Friday's poor market showing, financial companies have even managed some good gains.   This is a sign that the sector is bottoming.   Of course, this is still a process that can last days but it does look encouraging.    Bear this in mind, we still aren't going to go out and shop for financial stocks.    What we feel is that the stability in the financial sector can provide stability for the overall market.   Hopefully, any short term downside risk is limited at this point.    This is why we pointed out on Friday that despite the fact we dropped to near Tuesday's low, aggressive pressing of shorts at this point could be dangerous given the events that are coming up in next week.     Basically,  what we are feeling is that there's more favourable excuses/catalysts to trade up than down in the coming week.

Besides the financial stocks, we have a number of market impacting technology stocks reporting this coming week.    Believe it or not, with the way some of these technology stocks have been dropping, it's as if all those companies will report a big miss and forecast negative growth for the coming year.     Yes, that sentiment is a little too extreme.    So again, we think the potential trade is to the upside from this earning period.   We are looking for key reports from the likes of IBM INTC to give us some clue.

Given some of the heavyweights reporting this week, it doesn't mean that we are going to go all out and bet on huge upside movement.   We are simply going in with an upside bias and trade aggressively if things do turn out the way we feel.    However, keep in mind that this is still a very turbulent market and if things don't turn out the way we like, then we still have to do the right thing.     So, be there and be prepared and let the market do the talking.

Our playlist isn't changing and we'll focus mainly on the hot sector at this time(chemical and agriculture), with names like MOS MON TNH CF CZZ and SEED COIN on the more speculative side of trading..  We'd be playing a combination of big ones and speculative ones so we don't get left out on either.    We'd also play the market betas like AAPL (MACworld coming up) RIMM BIDU in case if the market rallies and/or some techs report favourable numbers .   Again, this is not the time to find a winner before everyone else.   This is the time to play what everyone else is playing when the direction is in our favour.     

Jan 15   PPI, Retail Sales    Jan 16 CPI, Industrial Production    Jan 17  Housing starts/ Building Permits/  Phily Fed/  Initial Jobs claims   Jan 18 U of M confidence

... a IB'Machine market

Coming into this weeks trade, we noted this market is looking for positive catalysts to move it higher and we got a good one Monday premarket ,  IBM!    Funny thing is, IBM was  probably dying to pre-announce a good number because its share price has also been under tremendous pressure lately.    This is IBM's way of saying "you've been selling our shares for the wrong reason"!   ($28.9 billion and earnings of $2.80 per share versus analysts' expectations that called for revenue of $27.8 billion and earnings of $2.60 per share).  Ok, so what's good for IBM is pretty much good for everyone.    You can argue that it's a technology oriented company but since it's a big part of Dow,  it'll just about lift everything up.    Certainly, the technology sector benefited the most from the IBM news and most of the betas names (AAPL RIMM BIDU etc.) followed with decent days, yet a few of them traded within a small range after gap and didnt give the usual payoff intraday trade.

This is the exact sort of scenario we've been talking about and looking for to help the market get over its hangover.    Good growth forecast from the corporate front can put that much needed confidence back into the investors' mind.    Now we are that many points away from last Tuesday's low and this whole process is what we called "marking a bottom"!     In the days ahead, we are also going to hear from many financial stocks which will provide an even more important clue as to how this market will react and trade to their news.    IBM's news today merely set a tone and it's far from over that this market will get super bullish.    If this market rallies again off earning reports from the likes of C or MER, then we are safe to assume that we have some good basis to build up a rally during the next little while.     Also, in the technology front, INTC has a bigger impact than IBM when it reports this week and it's guidance will be closely examined.  Still as of today, we have a flood of ECO numbers this week to deal with that will either salt the roads or make them slippery once again.

Where to play?

Just because the overall market is in a good mood, it doesn't mean all stocks will rally hard.     Again, as we have been saying for a long time, we have to stick to stuff that is working and play the right kind of stuff.    If you didn't have any Chemical/Agriculture stocks in your account, you would've probably under performed today.    We are not going to go through all of the plays again today as you can easily check for yourself from the top gainer list.  But, we did add an extra name to the DJIM 2008 trade list that is connected to this sector just after the opening bell..FCSX

COIN-SEED, these two cheapies went in opposite directions today, but you could've locked in profit in both early on had you gotten some on Friday.    As far as COIN goes, the volume is extreme and it doesn't look like fun is over yet. 

FCSX, this morning heads up in the $47s turned many heads as it shot to mid 52 on a record volume break out.   There was the earning beat, but a major component of the trade today was noted, " commodity risk manager...."  The perfect day for a company whose business consists of... Sixty percent of their clients are in the agricultural industry. And corn prices have been highly volatile and at record levels due to the demand for alternative fuels.  This not a new name if you check out IBD. It was #6 this weekend 98comp 99 eps 98 rs.  If the move was missed, it is probably best to wait for a pullback.

SDTH, this play has been basing and consolidating and we believe it's inevitable it'll try for that $15 IBD 100 level sooner or later.     We are willing to buy on dips and accumulate. 

APEI, this closely followed DJIM stock chart popped up on a IBD page this weekend and we'll take it for this little known IPO. A little discovery in the form of volume is all it needs. 98 COMP 98 EPS 94 RS.   Remember this has only 7mln shares OS and of course fewer in the float. 

..slippery when wet...

Frankly, if INTC reported a bullish forecast we doubt it would have anything close to the reaction IBM caused just hours before.  Reason being the market road showed there was dangerous curves in the making all day.  We underlined the ECO numbers heading into the week, the importance of them was overwhelming. The possibility also existed they could mute any positive earning reports from the big corporations.  This remains the case as we still have a plethora of economic data to be released this week that could drain this market even further.  The tap was opened by the PPI/retail, the flood ensued..."Still as of today, we have a flood of ECO numbers this week to deal with that will either salt the roads or make them slippery once again".   Simply, any walk up the hill was flooded and iced!.   Slippery when wet it is going to be even more this morning following INTC #'s and as the case with anyone living in a winterly climate, you'd know not to come out and try to drive through the mess outside.  In the trading world we will exercise this and not come out and play.  We're going sit on the sidelines and will only watch out the window, even if the skies clear some it is very doubtful we'd exercise the option of getting in on what is most likely another futile attempt of a rebound rally.     Any rebound in the short term will be sold off and we think it will be just another opportunity for the shorts to load up.  It is unimaginable to see where this market can get a leg up as of this morning.    The banks with the help of C and potentially more writedowns cooled any bottoming action for the moment.  The retail figures released showed the consumer has been screwed back to 2002 as numbers have not been at those levels since.   Geez, even Jobs couldn't pull a I'Rabbit out of his hat at AAPL.   Then finally AH's INTC crushed hopes of living on the hope of earnings getting us out of this mess.    So what's left that could get us back, even if for only a whipsaw move up?.  Well, we noted this a while ago and yesterday this became an almost inevitable outcome and that is helicopter Ben giving the market a rate ease before the end of January.   Still ..after yesterdays hammering this notion doesn't have the same flavor now to us.   A market going to hell feeling that flushes the market to much lower lows might the only way to go now!.  A smackdown is needed and one at the bell off INTC is not going to be enough.  Maybe the CPI can help add to it. 

There is no reason to moan about the bloodbath in individual stocks, but it never hurts to remind ourselves of what momo stocks are all about. The rides up have been incredibly enjoyed, but to stay in love with them and live with them when they have lost steam is a nasty divorce in the making where you are most likely to end up holding the bag.  This was everywhere yesterday in momo stocks of the past year or more.  The lights went out on solars as 10% plus losses were all over the place. The poor shippers had a big drop in their BDI index and sank!. The Chinese stocks fared not much better, nothing was more proof of a momo stock killing than the reaction to one of our biggest momo stocks of the past 2 years as the EDU classroom had the kids yelling fire as they ran out of the classrooms.  All this on a headline that didn't read that bad....Reports Q2 (Nov) earnings of $0.10 per share, excluding share-based compensation, $0.02 better than the First Call consensus of $0.08; revenues rose 50.9% year/year to $32.6 mln vs the $30.7 mln consensus. Co issues in-line guidance for Q3, sees Q3 revs of $42.1-44.2 mln vs. $44.22 mln consensus.  This just serves as a reminder here now as to what we have said and that is don't chase the headline, let the market show you the way first and if there is a CCall, either trade some before and get out as the call starts or jump in after unless you could follow the minute ticks while the call occurs to get a feel. 

Also...be careful of firms coming in today reaffirming their belief in the solars as an example.  They've been doing it almost daily since their highs.

Anyways...better to be safe than sorry at this point.  If you're not a daytrader or if you can't monitor your plays all day.. it is best to sit out. Definitely holding overnight is not a option as it stands now.  Take a breather.

Dubious action....

By looking at the final box score, you'd led to believe that market didn't behave so bad given the potential carnage caused by Intel.   On the contrary, we think this market missed an opportunity today to mark a tradable short term bottom.    Yes, the rational thing would be for this market to get sold off hard on the Intel news.     Ideally, we'd be sold off hard enough to cause some panic and a meaningful and powerful reversal ensues to mark a low point short term.   The morning had more momo stocks down 10% than we've seen in recent memory. A bunch of them from every sector we have followed.   This was a golden opportunity for more panic to set in!.  What a bummer it turned out to be!...What we think happened today, however, is some brutal action that tricks(sucks) more people into the market thinking it's a bottom.    If we had another half hour to trade, this market would for sure close down triple digits again.

The financial group rallied today and normally we'd cheer for it.    But lately, cheering for financial group has been nothing but costly for investors who'd believe the group would lead us into a rally.    We think a combination of over sold covering, anticipation of a surprise Fed rate cut and some rotation from tech sparked the rally in financials.     Unfortunately, this kind of speculation is so short lived and we just can't trust it any more.    As a matter of fact, financials didn't help any other sectors today.    We had chemicals/agriculture group try doing another day of heavy selling.   Yes, we want this!...last week noted....."We need to see consistent action in the growth stocks, if some are still taking a fresh beating you have to ask which might be next?.  This is something we fear that a hot group like the Ag-Chemical shoe is yet to fall".   This was a start as many were down 10% plus to go with the another 10% plus down from the solars early on.   If solars can do it 2 days straight, we'll take the Ag's doing a trip down...slowly or getting it over with quick and deadly drop.  That is really the last group of strong momentum stocks that have been broken during the last couple of days and realistically it should be as every other momo group to get us to real reversal potential.   Right now, cash is the king. 

At the beginning of the week, our thesis was that companies like Citi and Intel might help to stabilize this market.    By middle of the week so far, we know neither one is helping and they are actually helping on the opposite(down) side.     We as traders just have to be flexible to decipher events like these and do what we considered as the right thing.    We are saying "no thanks" to the dip buying at this moment because technical signs are showing more downside in the near term.    Perhaps, the best thing for this market right now is for everyone to agree things are bad and sell off to a level we can work with.

Bottom line, if there's no panic, then there's no dip buying from us.    We are preserving our capital and will monitor the events closer than ever.   When the sentiment does get to be extremely negative, a tradable bottom will be near.    At this point, it's not quite there and we just have to patiently wait. Unfortunately,  we are running out of potential market bad news to this.  INTC was a perfect catalyst, instead we got a half ass rebound again that was sold off into the close.  If this flush doesn't happen soon, we are stuck with this market dripping and dripping down with false daily moves.  This is excruciatingly painful and before you know, you are at wiped out in more than one way and you know what we mean!.

...the flush

The headlines will be rampant tonight, tomorrow morning and into the long weekend.  We'll save the 10mth lows, 17th month lows speak.  What has happened in about 2 weeks of trading in 2008?.  How important is capital preservation?.  Let's see just a replay of 2008 so far!.  A full 11 trading days of it that has literally blown almost 11mths of market gains.    http://www.youtube.com/watch?v=WofFb_eOxxA

The purpose of our site was and is to provide commentary, methodology of doing and being in a trade(s) , the market.  Sometime in the early stages we started tossing email alerts-comments as an addition.  Some took this too far and blindly chased without doing any homework, but with the market firing on all cylinders it was easy to just jump on a train and rob it nicely.   Maybe fortunately, it is this group of so called traders that have been slowly getting removed from this market.  These are the first to crumble.  The plumbers have gone back to concentrating on plumbing, the teachers to teaching, the housewives back to 'wifing just like in those post bubble days.   Unbelievably, we've gotten a few complaints about not giving alerts on stocks in the past month or so!.  Sorry, but whose butt are we supposed to pull them out of in this crazy market?.  Besides, we weren't built on this.   We have a track record of 5 years or so in the online underground trading world, we've done the grunt work and were on the 'growth' train from the beginning and sometimes from the first minute on a DXPE, BTJ...BOOM...and so on and so on.    Well...times have changed!!   

You see the same subprime mess, ECO numbers as we do and the time has come to things differently, maybe.    One of them has always been the possibility of going into cash, capital preservation.  This is nothing new to our strategy, we've done it plenty of times before.  It's always been around but it's never been more important than these past few months and even more the past few days of horrible losses on the indices.  Hopefully, we've saved you a buck or two this week by sitting quietly.   This doing nothing is tremendously difficult for anyone doing this trading jig full-time as they always put candy in front of you and you get sucked into a play or two.   Why do you think we have so many false moves intraday, even the the biggest technical shorts are waiting for a rally and are dipping in as we see on so many blogs day after day .   Does this mean we needed or need to change to a Bear, a short sale idea site?.    Absolutely not!.   All you really ever needed was the Journal the way it is, our commentary offered many plays we didn't like any more and said why.  That's a short if there ever was one from us.  When were we off the Shippers and let you know, as one example?.  October? November?.   We know a few of you just short whatever stock and /or sec we stop discussing and following on the Journal.   That's cool with us and actually quite smart..lol   Too bad its always been hard to find shares to short for many of our plays or we'd been at it for years now.   Recently, we've talked about the fear the AG'sChem shoe was yet to fall.    We had day 1 on Wednesday, glimpses of it before on MOS's earnings day and before Thursday's open said a day 2 in a row was very possible.  One look around the losers list Thursday and you see TNH POT MOS MON etc. doing another 10% plus down days.  We've talked about panic setting in, something we want to wash this market out with.  We noted some of these stocks were great to set this panic off as they were expensive, widely institutionally held stocks related to something we all can understand and that is commodities and everything that encompasses it.   This doesn't mean we were making bushels off this commodity sale the past two days, it just shows the idea, potential lead was there for you and us to use.  We simply don't short for numerous reasons, the big one is we never needed to.   Thursday.. we finally got some panic, market volatility with the VIX spiking.  Will that continue into Friday?.  Probably not.    Despite the lower and lower market so far in '08, we have not seen this fear gauge move until today.  We may finally be on the cusp of what we need to bottom.   Say for a second that we are almost there, maybe we even start to bounce if there is some 'stimulus' and something to go with it ...maybe even the reports from multinationals GE-IBM will give a boost and short covering into the long weekend.  This will curb the VIX for now and give us a green day.  Not exactly what we wanted as of the close Thursday.

What would have been the point of turning this site into a 'short fest' of ideas and then switch back to what we do best sooner than later?.    Simply, if you wanted short ideas there were plenty, it is all in how you work and interpret the Journal.   The premise behind the Journal was to show how we think as traders, there was enuff to pick out to short if you wanted to play that way if sitting on cash is not for you.   Now...if this market bloodletting continues much longer, we have discussed and are open to changes we would make to deal with the changing and challenging environment..a Bear market.  For ourselves and therefore the site.   Until that day or until we are certain of a bottom to rally off for more than a few hours..we will promote cash is king.  We don't want any Gizmos' cats as members.   Let's just be ready to pounce with money in tow....

..UGLINESS

We must learn to live together as brothers or perish together as fools.
Martin Luther King Jr.

 Bloodletting has hit the world markets...

....SHANG -5%  HANG -5% BSE (india) -7% FTSE -5% DAX -7% Brazil -7  TSX -4%

...the long awaited gap down to flush?....FED intervention seemingly inevitable in the morning?...

...the possibilities are endless of the scene to be played out Tuesday

DJIM #3 2008

-60 SPX, -76 Naz 100!   Oh yes, this is just the current quote of futures trading.    European market and Asian market were both hammered on Monday.  Continuation is evident in some markets already.  The SHANG has seen 4575 half hour into trading.  These are the facts we have to deal with when the U.S. market opens for trading tomorrow as of tonight.    Is it going to be bad?    Yes it will be!   Right now, we basically have the world's acknowledgement that U.S. may be going into a recession, or at least with the concession that the U.S. economy is slowing down big time.     They voiced their opinion by selling off the equity market as we slept on this holiday.

For DJIM,  we've been pounding the table to be in cash for nearly a whole week and this isn't any big surprise for us.   We've already had the SPX skid 5.4%, NASD 4.1% and DJIA 4% late in the week and now we'll get more.   What we wanted to see is some full out panic kind of trading and spike in VIX and we finally may get to see it this week.     Having a market potentially crashing is never good news, but it's definitely an opportunity for those who have been waiting for such an event.     Although nothing is for sure or certain at this moment, but one thing is getting clearer and more probable.    We are setting up for some panic selling.   Basically, if we don't panic now, there'd just be some more prolonged pain in the short term.   

Tomorrow is definitely going to be at least an entertaining day.    At this point, we wouldn't want to be too eager to jump into any trading conclusion on how tomorrow is going to play out.    We'd monitor a few things closely and decide if a setup is tradable next couple of days.    For now, keep a tight grip onto your cash and lets hope for some panic.