A Sarcastic Pullback...

Maybe the market is disappointed that Microsoft was not able to pull through a deal with Yahoo, index traded down most of the day and ended near the low of the day.    So, market had a pullback, right?    Well, only if you aren't trading the DJIM stuff!    To all of us playing the DJIM market, today might as well be a triple digit gainer day.     From the beginning of the day, we were actually hoping and looking forward to some dip buying opportunity when we saw the softness of the index action.    However, it doesn't take long for us to realized that we better chase some action or else we'd be sorry for our inaction.  Are you following the $CRX we noted, support of 907 was regained late last week and today it gap opened 930!.  To put it simply, today's a superb day for majority of plays on DJIM watchlist.    We were very busy buying high and selling even higher.  Yesterday, we said the commods' will still offer the best bang for the buck on any given day....did it ever this day!   It is really hard to imagine what some of our plays would do had this market been in positive territory.

Still, we are glad that this market has this much needed "pullback" occurring!.    To be honest, this market does have a little over heated feel going into the week.    One day worth of pullback isn't probably going to alleviate this overbought feel but it's a start.   It relieves much needed pressure for this market to pullback.     Our original plan was to use any market weakness to get in on some of our favourite plays but this isn't the case today.    Basically we know how this goes, when a sector is hot, there's nothing to stop it from going up.

MVL, we also added this play and consider it a story stock due to the Iron Man flick that made 100mln over the weekend.  Its first self produced film release.  This opening guarantees a sequel to go along with Thor, Captain America, Avengers flicks in the next few years. We've traded this years ago on the same sort of hype and recall it being a nice story mover.   It also reported EPS and all is swell, so it fits here.  Anyways, it doesn't hurt to look beyond the obvious plays and play something outside the box once in awhile.

Today's strength comes from pretty much all of the plays on DJIM watchlist.   Ok, there's really no need to point out the gainers one by one because one just needs to only look at the watchlist.     Coal group had a boost from of course the CRX, but also the multiple price tgts increases for WLT and a EPS report from the alerted ANR (yesterday alert) that popped in the afternoon nicely to almost $58.  This is the group we liked the most from commodity sector from late last week if you remember.    Oil stocks also had a big day because we had another strong showing from the spot market.    Basically, it pays to buy oil stocks on weakness.

Today's the day which proves what happens when you trade the "right" kind of group.    Tuesday we have the CSCO report to watch for but we think Cisco hasn't been a factor in a long time.    But as we see with MSFT/YHOO, the market will use any excuse to either sell or buy up a day.   In any case, we are sticking to "buy weakness on a slow performing day and chase strength on strong performing day" with respect to our plays.  

..What can we say?

Things are just peachy, you can't say it any other way if we're all on the same DJIM page!.   As the trading day kicked off, the indices gapped lower and so we got more of the pullback we were pulling for here.  On the other side, our side, the $CRX was gapping higher signalling our commodity laced list was going to be just fine for possibly another day.    Slowly, but surely the list was getting crowded with green in the morning and we were getting 2 for the price of 1 special.    A pullback to ease the effect of the recent rally, an opportunity to test supports and eventually give us more plays than just the commods' in the days ahead.    In the meantime, we're riding the commods' to what can be a test of recent highs in the $CRX 970's and eventually possibly switch over to the rest of the market when/if the commods' are running on fumes with cash in hand.    But, we're not waiting for fumes, we're taking profits on strength as this carries on.     It could be the best of two worlds if the $CRX stalls ...out of one area and into the another to catch another move up somewhere else.    Maybe the stock planets will line up this way, maybe not...   The SPX ran a successful test of the recent break point of around 1397 and end of day was knocking close to last weeks highs.  So, technically its all fine and dandy.    We already knew CSCO would be somewhat irrelevant this Q,  MSFT proved the mkt was only concerned by what some still consider wrongly MSFT peers...IBM, GOOG, RIMM.    The only thing that mattered is that CSCO report would be clean and on the surface it seems that way, judging this book by its cover might be enough to get through this and the fact CSCO isn't the holy grail,  but if you look under the hood every primary driver of this company is experiencing slower order growth.    Oh well, not our problem to decipher, we're just going to react to the markets voice and take it from there.

Let's not forget the importance of any trading day and that is take your gains, slice and dice, do whatever you need to pad the accounts.    Not everyday is gonna be a SuNHY day!.. The good thing is no matter how extended some of our listed puppies feel, we've had new plays to toss out that are giving potential points galore quickly the past few days....ANR up to 5 (ANR, likely to become #1 coal here...alert section)( SNHY 5, MVL 2+ in just hours.   There's nothing like a hit and run when you beat the herd and get in early, you then sell to the herd and regroup and get ready to buy a pullback...recycle

a few blurbs this am ......strong eps from a few of our recent O&G plays...RIG, XCO and CLHB.  CLHB on the surface looks best opp', but remember being the first in a stock following eps could leave you stranded on top if you buy the gap.  We're just reading the shiny surface (headline) here, not whats in the report or 9am cc.     The shippers could be worth a strong look today.  SOHU cut at Deutche to hold.  Funeral reception for good ole buddy, SNCR is at 930am.

DJIM #19 2008

It is what it is!   Some market participants have chosen to cash out going into the summer.  You can blame AIG for the pressure on Friday, but what you really felt is that things will start to get slower from this point with volume marking one of the years lowest days.   In other words, we're not really worried about the market's performance/ declines last week, we think this is all the normal course after a significant breakout.   For those of us that love the market action more than any other gig, we are going to stick around low volume summer or not.    Simply put, this is where we belong!

Now that the earning season is over for big caps, what do we expect going forward?   Of course, we'll have quite a few small to mid cap companies reporting and we'll definitely keep an eye on any new opportunities.    Last week, we had some good reports from ANR, SNHY, MVL, PCLN, all should continue to provide nice tradable opportunities going forward.    As well, you can add ENER, MR to the DJIM shadowlist to go with the ANR SNHY MVL new entries.  As far as the big picture is concerned,  we are continuing to stick to the same theme.     This might sound boring that every week if not every day we have basically been talking about the same theme.    However, until the day this theme no longer works, this is the way it's going to be.    Right now, these commodity plays are just invincible.    Despite the fact that many of these commodity plays have ran up so much, there still seems to be more to come.

Coal, not only are most companies we follow are beating the current quarter handily, they all have indicated in one form or another that the demand for coal is only going to increase substantially for the next couple of years.   Some of the companies have already increased the pricing for their product and the pricing pressure is only going to get better.   If you compare this sector to other commodity sector, coal plays have ran up the least so we think this is the group with the safest upside potential.

Oil, nowadays, the talk is not if we will get to $150 Oi, l but when we'll get there.    You can't help thinking that if we have really entered a new inflationary era due to the ever increasing commodity prices.    Generally, consumers are wealthier now than 5, 10 years ago and this is especially true for those developing countries.    The demand for oil is definitely off balance these days because most of the crude was consumed by industrial countries a few years ago.    Nowadays, even the developing nations are fighting hard to secure new oil source.   We simply have to accept this as a fact and deal with it.   We like some of the oil plays especially when they were being sold off on minor pullback.  An exploration  play like BZP is in a perfect position and we'd expect in the weeks ahead for it to increase its reserves numbers which will push the stock higher.

Steel, have you noticed that despite the so so earning reports of some steel companies, they continue to make new highs on a weekly basis?    This is almost as if every commodity sector is tied together.   Raw material prices are going higher thanks to the recent years of global economic boom.    For those who have never been to the China or India or Dubai.. you'd have no idea how fast things change over there.   Steel companies have pricing power, period.    Again, same as the oil plays, a lot of the steel plays are prune to quick pullbacks and we'd love to do dip buying in this area.

Shippers, we believe it's entirely possible that these plays can eventually try for last year's high.   TBSI kicked off with a very good report and it was rewarded with some good reaction.    We feel the difference between trading the shippers this year compared to last year is that we are not afraid to buy on pullbacks this time around.

Solars, it is hard to believe,  but some of the solar plays have made new highs recently.    Not all solar plays are equal though, plays like SOL, CSIQ, FSLR, ENER are getting more momentum than others.    In the coming week, we have CSIQ and SOL reporting, so we'd keep an eye on these two's reaction.

Bottom line, besides the obvious commodity plays, this market still rewards those companies that achieve great earnings.    We have a handful of companies to work with on our watchlist and we have quite a few choices to work with on a daily basis.   If this market is going to behave the way we think it's going to behave this summer, this might just become one hot summer for all of us. 

Solid..

Anyway, you look at it....The trading day was solid and it doesn't include a disclaimer as in little volume!.  We've been alluding to the fact volume is and will deteriorate heading into the summer and so we can't put much emphasis into the volume day to day now.    In other words, a +130, +42, +15 is a nice rally, nothing less!.   Last week as the indices declined, we headlined, "Not worried" and heading into this weeks trading..."In other words, we're not really worried about the markets performance/ declines last week, we think this is all the normal course after a significant breakout".    Today's performance did nothing to squelch that belief with the IWM/RUT back at resistance with the potential to create a significant breakout.  The SPX back at the psychological mark of 1400+ is where we want to be while the NDX leads the market.  At these closing levels on the IWM NDX is where you want to see volume kick up to create a talked about breakout.     If we don't get the volume breakout the Bears will do their best to diminish the move.   Considering the way we've been grinding up, we just may continue to do so even on a breakout.  lol.  A slow burial for the Bears is just fine.  Maybe a few put a gun to their heads already as FDX, MBIA stories rebounded.

Nothing extraordinary to add today as all the recent alerted new plays continued to make new highs.  We are speaking of the SOHU ANR, SNHY, MVL, and even the BZP which we nudged a few times last week.    In the meantime if this isn't enough points pocketed, we have other tradeable opportunities stepping up as in RIMM and ENER.    As we said yesterday RIMM is long term again in our view.    It wasn't just the intro of the Bold device, it's the RIMM plan at analysts day that sparked a lot of interest.      If you were around AH's, you may have caught FLR with us for what is already a nice trade.   Management raised guidance to 6.25-6.55 from 5.10-5.50 on strength from all segments.  You don't have be a genius to understand this headline.     One sector though was priming up (Shipping plays) as shipping rate noise and as to why they are this high hit a few publications like FT.    Wow, what a shocker, we've only been writing about this scenario since DRYS was in the high 50's in March-April. 

Oh yeah, doesn't it feel like the sleeping giants are about to roar once again! .  Maybe its just withdrawal we are feeling from the Chemicals-Ag, steels, but with $CRX keeping its head up...who knows, we could be playing hard again very soon.

The premise behind DJIM has always been based on earnings and even in what is the worst of eco times supposedly, we are full of plays riding this methodology.

DJIM #22 2008

Over the weekend it seems many were saying the 4 day shortened trading week was much ado about nothing with not many stocks to chase.  That's true if you are judging this market by the DJIA.   Here, we are not as the concentration on commodity stocks continued with two big days sandwiching one not so.   That's fine as it presents the chance to recycle your favorites over and over again.   Also, quiet important was that the market was mending itself after the previous weeks fall.   We said be patient and let things settle down heading into last weeks trading and that is just what we got.    The healing process is most evident in the IWM as  it seems to have confirmed its breakout over 73 after a test.   We also had the NDX confirming the earlier breakout over 2000 by putting in a nice week.   It's clear from these broad indexes there is a big game going on between Oil vs. Tech.

Heading into this week the playground for DJIM remains the same.  The only differences to note week to week now is which commodity sector is best to trade at that particular time.  Example of this is just as we were once again becoming cautious on the Solars important subsidy news surfaced out of Germany premarket on Friday which made solars gap up at the open.  If this news comes too fruition, we will have all the time in the world to chase these stocks over the next Q as the news is quite significant.   One thing we wont do and didn't do is chase the gap open we saw on Friday, instead we are just moving up this sector up our trading ladder and we'll keep a closer eye on the stocks here.    We'll keep saying.." Out of all the commodity groups, coals are still showing the best technical with steels a distant second".    The amazing streak in the coals continued with DJIM's bushel of ANR, PCX and FDG making new highs on Friday.  MS has put ANR on overweight and FBR has put PCX as a top pick at their firm this morning while raising estimates on the whole sector.   We can only ask what took you boys so long?.  Always better to be early to a stock party isn't it or be stuck scratching your head if PCX is now too expensive at $108.   It was profiled here April 15th in the low 60's.

Really nothing has changed about what we'll most likely continue to trade, hell why would we!.   Until, we'll just pluck at a few new plays here and there as they emerge like on Friday with PVA, which even after a gap open managed to pull off about 4 pts after our alert.   We simply liked the idea off going back to the 'WELL' after our CLR play and just waited for the right time to alert.    If you want to get into the tech fever, we think the only stocks you need to trade are the RIMM, AAPL, BIDU, SOHU, GOOG.   If you want a few DJIA stocks, there is nothing wrong with concentrating on V, MA.    It's all there on the Shadowlist simplifying what we should be looking to trade depending on what area of the market is moving.   Have a good week!

**NOTE-  We added a direct link to the DJIM Shadowlist on the navigation column that you may enjoy.  Scrolling over names allows you access more info and you can change all charts to daily just above the first 3 charts.  We will update every week or two, until use new names from Alert, Journal to add until.

Best defense...

In this market,  the best defense right now is to go offensive on things that are hurting this market.   Contradictory?  No!    By following many news headline and comments from the financial web sites lately, you'd come up with a sense that this market is heading lower, much lower.    This indeed is putting a lot of traders into a cautionary stance with respect to this market.     However, when you look at the action from many of our plays on our watchlist, you'd have a different feeling all together.     No, we don't have a secret list or a "Glengarry Glen Ross" list, every play on our Shadowlist is now well known in the trading community.  We just happen to pick those plays out early and compile them into a trading list.     Recent unknown names including PCX, ANR, CMP have become darlings to the trading community.   You have to understand, many of the plays on our list is the reason why the economy is hurting.    The increasing raw cost of goods is driving up inflation and price increase is being passed along at every level, and ultimately at the consumers' end.    If consumers refuse to spend or spend less, then there goes those profit projection of many well known public companies.

How about that block trade of MA at the end eh?   Is that a paint or is that a paint and a half?    In any case, we know now that there's someone willing to chase plays like MA at that level with that kind of money.     The point is that stock market will always exaggerate even our wildest expectation.    Basically, what we mean is that when a stock or a sector has a good story behind it, do not ever underestimate the power of those money chasing it.     As of this moment, we can say that no analyst in this world has a true price projection for any of our coal plays, or steel or most other plays we currently cover.     For analysts from MS or FBR to be bullish on plays like PCX, ANR yesterday is no different than us getting bullish on these plays two months ago.    Frankly, we thought some of these commodity plays would be done by now, price action wise.   Obviously, someone else has different ideas!.  There are dozens of upgrades a day and we don't give the majority a second look, we definitely don't put them in the Journal unless we feel there could be an effect, as we did yesterday with the coals.   Unfortunately, this action might have given these names a toppy feeling.  This was a 3rd big day out of the last 4 trading days. 

We haven't really added any different variety of plays to our list in a while and there's a reason we`re not doing so.  Simple..  Why mess with it?   Many plays on our list are still getting a 10% gain on a weekly basis and if you happen to catch a couple of nice dips, the gains might be even more.     The bottom line, avoid the beaten down stocks!    Although we are watching many index weighing stocks and financial stocks,  we are only monitoring them to gauge the direction of overall market movement.    If index weighing stocks do get more troublesome, you'd be sure that it will spread out to other sectors as well.    In that case, we'd expect to be in full "buy on dip" mode very soon afterwards.     This was the first trading week of June and it's starting out with a pretty lousy day.    For now, index`s such as (NDX, IWM) level held,  but we'd be eyeing the days low on the majors as a potential trigger for further downside follow through.   At the end of the day, we are sitting with large percent of cash on hand, most likely we'll be very nimble for the rest of this week until the Job report.   As we`ve noted recently,...

• There are better things to do this summer than blow it now, so be patient and be selective.     There is also a lot of noise around the Financials now that has an unsettling tone suggesting we may be in for some problematic surprises.    You'd hate to wake up to some surprise at this point.  We've all been through enough of those the past year.

This holds true more now as we started to see noise come out of the U.K system premarket.  Later in the day we got a S& P credit rating downgrade of financials. (LEH MER MS BAC JPM). What`s next, who`s next ....hhhmmm

..Doom and Gloom, yet Bloom

Same headlines, same story, same action, same end results!   Lots of doom and gloom for the market, yet our commodities plays bloom.   Morgan Stanley's earning pooped the financial market,  FDX cited US sluggish demand ahead,  RBS issued a global stock & credit crash with SPX falling to 1050 by September, all weighted on the market dipping the DJIA momentarily below 12000.    On the other hand, commodity sectors finished another cheery day and many of our plays notched a new closing high.    You either love it or hate it, these days!      For those that have viewed commodity market as nothing but a hedge have been missing out on the fun.    We have been often approached by friends and relatives who claim the "hedge" in their portfolio has been working well and thank god for them they are having a not so bad year.    The "hedge" they refer to is the kind of stuff that makes up DJIM's shadowlist.     To us, why hedge?   The commodity sectors, which may not be the traditional core holding of a portfolio, is going through a run-up of a lifetime and you simply wanted to just use it as a hedge, we ask?  Why?   Maybe, this is what separates a professional trader from an "educated" investor.    Instead of investing "into" the future, we traders simply try to take advantage of the current demand and supply imbalance.

Oh yes, our DJIM leaders had another great day with 22 hitting new highs, some closes were unbelievable PCX ANR.

A few firm notes of note Wednesday....talking about coming late to a party..but, maybe not as we said the other day, "It's better late than never".

Coals,  Stifel raised estimates for coal expectations of US coal miners, MEE raised to $123 from 73 was included.

Shales, XCO, raised to $40 by Keybanc is one of the top 3 Shale plays in our book due to acreage in area.  It is also probably the safest longer term hold if you want one.   This is due to its bigger size of outstanding shares which provides less volatility than the GDP, GMXR, HX may. PVA GDP, GMXR all raised by Jefferies to low $80's, HK to $49.  We already alerted BMO price ratings on Tuesday, we only signal up's/downgrades we think may be significant to days action as we've noted before.   As you can see by the above, Shale noise is just starting as commercial development is inevitable based on results so far.

Steels, the earnings report outlook from CMC, we think bodes well for US steel producers ( X )to produce record EPS going forward.

Again, watch $CRX as indicator here intraday direction.  Also, if selling starts at any point this week watch for 955 to hold to avoid any further down action. 

Cheers,

..dirty 4 letter word..

You gotta like it when CNBC is highlighting DJIM stuff months later as "coal is cool" this morning.   As for yesterday's action, it was really no surprise that coal had a pullback.   It was inevitable after this recent kick up.   The dirty 4 letter word CNBC is using this morning is coal and it ain't going away as long as crude is on the mind this year.    Didn't we just say if you really want to get down and dirty have some coal?.   Actually, it was around these parts months earlier as you know.   Considering, we profiled coal as possibly the next big trading thing in early February, we welcome any pullback after seeing many introduced here double and triple since.   We've been selective in choosing a few, JRCC has gone from $14 to 50's, FDG, MEE have run nicely and we discovered PCX and ANR in the $50's.    Again, don't fret the action Thursday, just get ready to saddle back up one day soon, but don't do it guessing a bottom unless you are a full-time trader and can move around intraday.   We noted yesterday at 10am with $CRX at 976 a stall may occur for profit taking.   Well, it did as the $CRX fell to 961 by close.   Watch 955 as an level of interest noted yesterday to either bounce or exit.   Remember, we can't say sell or buy for that matter for obvious reasons..we can only lead and say what is on mind.    If you're trading these day by day, you may have used the alert to exit a few names in the commodity area and go clean into the weekend.   But,  if you've been holding a few for weeks it's no really big deal as you've generated nice gains.  

Anyways, a lot of noise this morning in the markets and it's time to start the weekend.   We noted a few stocks we're in yesterday. ENER and SCHN because steels held ground yesterday

We will do an in depth write up on the Haynesville Shale play we introduced recently this weekend.   There are more than a few plays and you'll have to decipher which fills your needs best as there ones to trade and some you may want to just tuck under your pillow.   As with coal this play ain't going away and in months they'll be saying Shale is dirty 5 letter word.    

Have a good weekend.... Anybody watching and enjoying Euro Cup soccer?....it's so much better than watching the market take its kicks!