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DJIMSTOCKS- since 2006 - Toronto, Canada/ London UK

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Entries in JRJC (4)


Inevitable retreat...

Perhaps your watchlist still showed quite a few greens and it made you wonder if this market can continue last week's performance.     To us, when the major indices pause at the resistance, it's simply either standing on the side or start considering shorting the broken (crappy) names.    Either way, today is clearly not a day to enter or chase any new longs.   Sitting on your hands day as far as pulling the trigger on new trades.   We just continued to do what we did a lot of Friday and that is take positions off the table today in anticipation of further consolidation.

To be honest here, we aren't impressed by this particular earnings period thus far and winners have been far and few in between.    Obviously the chemical/agri. group has been the most consistent in terms of earning but we just can't say the same for others.   It's basically an exercise of finding oversold stocks that can come up with a not so bad report.    In addition, despite the fact many well known names have been beaten down going into the earning, they'd still get hammered after a lousy report.     This week we have the CSCO report to deal with.    Actually, we'd rather not look forward to its report because we still remember what happened after CSCO's last report  in early Nov.  

In any case, we are going to be very light on the long positions and only start dipping into names at levels that we are comfortable with. 

Right now, we are due for a pullback and that's the bottom line.    You might be attempted to buy on the first dip but we think it's wise to wait a couple of days and scale in on the purchase.     In the current market condition, there's absolutely no rush to buy anything  because it just doesn't look like this market is going to challenge highs any time soon.

Chemial/Agri.   This group (MOS POT TNH...) is of particular interest because most of them closed at or near the day high when Dow took a triple digit drop.   Had the market closed green or showed strength, we'd have no doubt to chase them.    However, even the best group can succumb to a pullback when the overall market is weak.     It would've been great if we can reenter some of these names at the level a week and half ago, but we think realistically the best entry point is probably just a tad over 50 ema.

Solars, we are actually surprised that some of the most popular names have held on to their gains today.   Again, other than day flipping, this group is still in the beaten down category and there's no need to get excited about them yet.  Coals, continued their move.  Another name we left out is JRCC in the under $20 group.

Bottom line, we might have just finished a bear rally here and the bias for many traders is still a downward market.   We have to be very disciplined here in choosing the plays and decide on an appropriate strategy.    So far what's been working is to buy the dips of strong(good) stocks on selloffs and short the weak(broken)stocks on upticks. 


..Kiss of death wasn't that bad, but Batman And Robin testifying did enough to rehash slowdown concerns and consequently bring a big red day on Valentines day. fitting!.  The duo did not rile up any new concerns, but after being up 4 of 5 last days on Nasd and 3 straight on DJIA/SPX, it was probably inevitable we have a pullback.    Unfortunately,  it doesn't look good when the only real gains came on Wednesday get grinded down almost in full the next day.    Simply... if you've got financials and tech leaning to the downside, your hands are tied and the outcome is predictable. heading into a 3 day weekend,  we are left with options expiration day to deal with and it's probable volatility and the usual Friday profit taking.  On the hand, maybe we got that out of the way yesterday and the Buls and Bears can just fight the 12400 and the SPX 1351 and let the market go into the weekend in some kind of peace.    Anyways...not to dwell on the big picture as it drives us all bonkers, lets deal with possible trading opp's for Friday considering our emphasis is on EPS trading and we have a few reports to potentially trade...

DRYS,  you gotta love a headline of a .47 beat, it sounds wonderful doesn't it!..One thing never to forget is to put this in balance. What we mean is this is a only a 10% beat and you have to consider what comes up on the CC as this co' doesn't  headline guide.   The company seems optimistic heading forward, but that we get from the report headlines and will let the market decipher early on if we want to play.  One thing we also need to watch is the BDI in the next few days because it has the tendency to go up 3-4 days straight days and then do same thing down.   Now it has been up 6 straight days and is up against the 200sma day.   Unless there is exuberance that you can swing a trade intraday today, we'd probably hold off holding these into the weekend.   One shipper that we have added to our watchlist is GNK after its report.  Many good things in its report and it is probably much better for those that want to avoid the volatility of the 3 main shippers we've traded here..DRYS, TBSI, EXM.

CMG, one of the big momo stocks of '07 became one the biggest short % stocks as well.  This provides a potential squeeze opp' at any time following the beating it took AH.  Look to maybe flip this today.   CLB followed by FTI could be potential early on trades with less volatility.

Amongst the beating yesterday what survived were the coal stocks.  Most strength was in the 2 big names we like FDG and MEE, which closed near high of days.    The cheapie covered here is JRCC and hit a high of 17.80 intraday high.  At this point with the markets the way they are we'd rather play the more liquid names with their institutional money.   A potential pisser today is some tier1 firm has downgraded the group.  If traders takes this seriously, we'd seriously look to add on the dip as earlier in the week

We've had a few nice EPS names going strong the last few days toying with highs.  CMP, ILMN, FLS.  The thing is this market wastes no time in taking away profits and it is very hard to even hold names like these through.  This is something we all deal with and should decide after DD if these plays are worth holding longer term, no matter the daily swings.    If you have the patience than you see this has been rewarding after introduction here.



...are we there yet, dad?

Honestly..the best lead we could give into tomorrows performance is to get a good nights sleep, brew a big chug of coffee by 830 am and just in case position a mickey of Jack D', Jose or whatever is your fave beverage in your desk drawer for later.     It's gonna be a helluva ride and most likely not just one way intraday and nothing less than triple digits.  We expect violent swings and actually would be disappointed if they do not come.   To predict what may happen would be insane, the possibilities are endless tonight.   The anticipation just got louder today as the Jobs report has collided with the SPX breaking to 1304.  Its amazing how often the ducks line up in the most opportune time.   Well today's flavor of day in TA' was this SPX close, tomorrow it might be 12000 and yesterday it was the wedgies.    It changes everyday as to what is important and is quite tiresome and gets confusing to the casual trader.   If we stick to the most simplistic, its the 12000 to 12800 range we've been keeping here to. 

Coming into the trading day, we said in part ..." Now the Bulls are left wondering what bailout will come for them without these rallies to save the downticks into the pit!."  What we were alluding to is that as more subprime fallout occurs and because the monoline fiasco gets pushed to the side now, where would a rally originate from to help the financials and therefore the market.   Little did we know they would drop so many bricks at once this premarket.   We had foreclosures, disclosures, delinquencies, failed margin calls, distressed selling at UBS, MER amending..blah blah.   They should've just gapped the market to closing levels instead of grinding.   But that's too easy, its the grinding the takes traders money away as itchy fingers make you jump in and then slowly rot you away with another leg down and then another and so on.   Anyways, the point was there is no saving the Gasparino way now.

Despite the day unfolding this way from the open, we had some nice moves from the mornings watch.  Unfortunately, this market continues to be made for ones with big bladders that can capitalize quick the gains in a CMP, BPZ, which got erased fast or the very patient nerves of steel ones who could have stuck with the CMP, FDG, JRCC calls here from its first days.    We also started to like the action in POT/MOS today once again.    So, not a wasted day and we'd stick to names highlighted this morning in case an opportunity to fade a move comes tomorrow or otherwise.  

Will we get there?.   Town of Capitulation?.   The truth is we'll probably not know till we've driven through it and then look back, we'd just settle for a gap down tomorrow and take it from there...or a surprise induced moon shot to just relieve the tension for now ....Good luck and we'll keep in touch during the day...


DJIM #26  2008

Really, nothing brilliant to say to kick off the week...everything we do or are looking to do is in the past weeks Journals' least!.  It's been a tumultuous first half, the noise of doom is becoming louder and we're still standing tall while the DJIA sinks 1200 pts this June alone, making it the worst performance since post 1930.   Bottom feeding is not our game, if we're going to spread our money out in this market, it better put in a few 2-3% day to the upside first.   Till this seemingly impossible feat other than for techincal reasons...we live by the last words here and so should all.   Some charts of our fave group stocks are up..not show the potential of another leg up on breakouts...

Oh yeah, a short week gives us employment numbers on Thursday, just in time to potentially throw out the kitchen sink.  May just be a volatile 4 days!.

A few notes early morning can't hurt some of our groups...Arcelor Mittel, world's biggest wig of steel may have sights on RTP now, also MT has increased stake in Macarthur coal and PKX wants 10% in same, Lehman also upgrades PKX to overweight...JRCC acquires more reserves in hot Appalachia area,  Deutsche raises CLF to $150 from 115.   We've discussed all these types of possibilities the past little while...reserves, stakes, estimates climbing.

  • The market, majority of sectors have no positive catalysts, the Shales (exploration & production), the Steels, the Coals....DO!.  It's simple, do you want to be where bearishness is contagious or do you want to be where bullishness is contagious?