All geared up...

Basically, there's an equal consensus that we are setting up for either a big down move or a big up move.    The problem here is that nobody is willing to put lots of capital down to bet on either direction.     Not yet, at least!   The way this market has been trading, you realize it wont be a slow grind up or down.  Before the open, we said, "...we may get more of the same and that is consolidation action taking place early in the week." and that is exactly what we got as the major indices traded in a narrow range.

If we want a rally, we have to pay attention to the financials.   We have said often before that this market can not rally without the participation of financials and we saw that last time around.    As you can tell from today, if it wasn't for the financials, we'd probably be up by triple digits.    The ones who are currently on the sideline waiting would probably jump in as well if they see a better behaving financial group.     However, this subprime thing just doesn't seem to get old day in and day out.   For DJIM traders, it's the same.    Until we see financials move up as a group, we wouldn't want to chase anything aggressively.     For now, it's best for us to wait for something to happen before deciding to act.

Of course, if sitting in front of the market and doing nothing doesn't seem to be productive, so there's always the entertaining Solar plays and as well as the Chemical/Agri. group and the new group (coals) we intro'd in DJIM #5.    We are actually astonished by the behaviour of Chemical/Agri. as many of the popular names got some life today and could be setting up to challenge its old high soon.     Again, if this market is in a firm rally mode, we wouldn't hesitate to chase MOS POT MON in sizes but due to the lack of true direction of this market, we'd stay to trading small sizes. 

CMP, a potential fertilizer' play noted in Alerts section xmas time came out with excellent earnings AH's, unfortunately it had a nice pre run today already and so tomorrow may be more difficult to move.

Coals, again this group performed well led by ACI and JRCC in the cheapie category making or being at NCH's.  ARLP, NRP , CNX fared well as well.  MEE and FDG lagged today. One thing you notice about the group is all the stocks don't move in stride.  This could change if this sector becomes more of a momo group as the others did.

Solars had a very decent day today and you can either attribute it to the rise in oil price or the anticipation of a great FSLR eps report.   In either case, we'd only make intraday moves with the solar names because of their inconsistency day to day this earnings season.    The FSLR report carries pretty heavy weight on the overall sector and we surely remember what happened to many solar names when FSLR reported last time.

Bottom line, we want to stay light at this juncture and wait for more clues before jumping into a trading conclusion.    There's quite a few earning reports this week and a key retail sales number to be released mid week to possibly entertain us.

..Kiss of death

Okay..it 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.  Red..how 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.     So...now 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.

DJIM #7 2008

It's just simply getting very technical out there.   Although headline news may dominate the movement of a particular trading day,  the overall movement of this market is becoming more range bound with the underlying downward bias still holding.    Things are tightening up on the technical side and we feel a move is coming sooner or later to break the latest range.   The more likely scenario recently has been a break to the downside and a test of last week's low just under 12100.   However, we may get some surprises judging from the futures trading at the current moment that coincides nicely with Fridays reversal led by financials after a BBY warning and weaker NY Empire number, Michigan sentiment.  Is the market starting to price in some of the bad Eco data?.  Well, we'll definitely know after this weeks data. http://www.nasdaq.com/econoday/calendar/US/EN/New_York/year/2008/month/02/day/18/daily/index.html

Quite a few earning reports and some economic news dominated the pace of trading last week.   Even in this recession fearing trading environment, we still have market participants speculating on earnings reports/guidance to the long side.  BIDU FSLR PCLN and even the CMG, we noted before the Friday open as a possible trade after the initial sell off.   This goes to show that speculation money is still out there.    This is definitely good news if your trading time horizon is no more than a couple of days at a time and you don't swing with huge bets.   After all, this market is only rewarding those with a quick trigger and a neutral mentality.

At DJIM, we are sticking with our recent theme of "long the good eps winner on weakness and short the crappy plays on strength".    Fading the strong market move in either direction until a major trendline gets broken should remain the theme.    Basically, this market has been trading between 12200 and 12700 over the last three and half weeks and we feel one of those level will get broken eventually.  The SPX is about mid point in a narrowing range for the last 17 trading days since Jan lows. 

For now, we are trading both sides of the market so we don't get completely left out when a strong move occurs in either direction .    What we aren't willing to do at this moment, is to commit large amount of capital to bet on any one direction.    If you want to minimize risk in this kind of environment, you just have to accept the fact that you have to churn to make a living at this point.

Chemical/Agri.  the reason we keep mentioning this group on a daily basis the last while is the fact this is one of the few sectors that is still trading near its 52 week high range.    With some names trading at a very decent P/E and a majority forecast of strong growth the next couple of years, we'd still be pounding on the long side of this group when opportunity presents itself.    You really don't have to trade every single name of the group, but to trade the ones that represent the sector best like POT MOS MON CF etc.

Solars, we'd remain very selective in this sector and pretty much stick to the saying "what's good for FSLR is only good for FSLR".    Trading a solar play that has a great outlook is less risky than trading those that don't.    If you are long those solar names that were being dumped on their earnings report, you'd likely suffer more pain once the sector pulls back meaningfully.  Citgroup upped a German solar to BUY giving a favourable outlook on the sector today.

Coals , just like we said the GS downgrade could play havoc and also produce more opp's to buy the dip.  Some like ACI, MEE took it on the chin, well actually it was a low blow. We all know most stocks in a particular sector, even if not included by name in a downgrade suffer. One that did not is FDG.  After trading it here now for a few weeks, we'd have to say there is more involved here, as in strategic possibilities.  We'd stick to FDG , MEE and JRCC for a more volatile cheaper play.

Shippers, the recent surge in DBI index, as well as earning anticipation have caused many popular names in the group to move a substantial amount off their recent lows.   After a couple of key name's reports late last week, we noted to be careful with the exuberance especially off DRYS big sounding beat.  We feel the run-up may need to consolidate for a while, especially after the fade witnessed.

ILMN, CMP continue to show strength. FSL is coming back to be picked up again.

If the Footsie(FTSE) can use todays strength which evolved from the banking stocks prospects later in the week and carry it over 6000 by the time we get started tomorrow, we could see a nice follow through on top of the futures we see now.  Qatar also said it has $15 bln it wants to put into Euro/US banks over the next year.  Some financials would not be a bad idea to trade. GS, MER etc. 

You have our respect, Mr. Market...

It just feels too easy that we would be starting a strong rally from such an auspicious beginning late Friday.    Sure, news flow has been pretty positive as of late with respect to the bond insurers.    But, they are only positive with respect to themselves really at this point, the bond insurers.    What we have today is definitely a divergence of force going a separate way.    On one hand, every single strong and good play we've talked about on the site for the past few weeks were doing some fancy upside moves, corresponding to the index action.   On the other hand, everything else just didn't seem to catch this 189+ point drift.  Poor AAPL RIMM BIDU, where's the momo in all of these?. Only FSLR continues to provide some fast trading action.

What's good about the unchanged rating of these bond insurers is good for some of the parties involved, namely the financials.  But they had other things weighing on them early and only started to move late after selling off Fridays upward move.   The financials are not done writing down more stuff.    In the morning,  Goldman Sachs noted that all of the major brokerage are in for a writedown of between 1 to 12 billion dollars this quarter with Citi leading the charge.   We definitely have heard this song before roughly three months ago.    Only difference between then and now is that we are in a much more difficult economic situation this time around.

Leadership in this markets rally is still very narrow.    Basically we are only concentrating on a handful of stocks and they are the same names you are probably sick of hearing by now.   Truth is, we'd like to start play some other names without having to chase those names that have become extended today.   New closing highs were always something we used to add pieces to as part of our trading methodology near the close on index action like today.  Now the market is such that you need to take the profits before they evaporate.   Unfortunately, nothing else is really coming up on our scans to turnover into.

Tomorrow, we have some key economic number to be released and they are PPI and Consumer Confidence index.    A disappointing number from those two would definitely cast a shadow over the recent rally and it wouldn't be a surprise if the market gets smacked down hard.   We've pointed out the importance of the Eco data this week and so we all should've been thinking of taking profits off by close to avoid some breakfast spillage.    Technically, you can say this market has broken out of the wedge and we are up from here.     But seriously, we just can't imagine many more positive catalysts down the road once this ABK fever wears off.     We have lightened up most of our long positions today and will be eyeing the economic reports to determine if it's worth to get back in for another round.

Plays that are working....

Agri.-Chemical,   trust us, even we are sick of seeing them POT MOS etc. going up and making new high every other day. lol   The truth is, the higher they go, the smaller the risk/reward and more cautious we get.     Ever since the group's break out on Feb. 12th, the group has not been tested to the downside.    It means that we have not seen any kind of meaningful pullback to warrant much more upside.     Sure, these names can move off a 190+ Dow day, but we all know that those days are still far and few between.     We are trading them still but with a much reduced exposure at this point.

Coal-Steels-Metals-Oil, you can't seem to have an up day without these commodity plays.    The ones on our watchlist FLS CLB FDG MEE and CLF HES are two more we've recently added... all had a good day.  Even our rock salt-potash play, CMP keeps making highs.

Biotechs like ILMN ZMH off here showed some strength as well.   Remember, we try to concentrate on earnings and most making NCH's today from DJIM were selected off their last reports/guidance this Q. 

Bottom line, although this market is rallying off ABK news, you still can't underestimate the power of a near 200 point rally.    Traders could use this as an excuse to chase stuff that was working well, regardless the relevancy.    Tomorrow will be a real test with the economic reports and if this market takes the reports well,  it's likely that this rally will continue a bit longer.

Anyways, today played out to script from our morning intro to the day.  The 'concrete' news came and it turned into a real drama for the shorts.  The financials were the beneficiary, GS and MER moved back up 6 and 3 points respectively and we didn't get the momo stocks participating.  Hopefully you didn't jump in as there was no confirmation of them wanting to play just like on Friday.  Basically, it came down to holding the stocks followed here for the past few weeks to carry the load.   And yes, the futures lied again as they set a negative/flat tone before the open.  They started to pick it up nicely in the morning before the news came rocking down.      Tomorrow is a mystery. 

Two different market...

Nope, we are not talking about two markets in different geographical locations here.   Lets face it, we have one market here that's been running in total bull mode and the other one that's basically in complete disarray.     The bull market is obviously the commodity market.    This is the market where the sky is the limit it seems.    There's no need to fear to buy on dips or on strength.    Chances are, a week or two later, the price will be much higher than you bought it for.     The other market, which is centred around the credit crisis and is now spiraling out into the rest of the economy.   Everything that's not commodity related, basically belongs to the other market and things are looking just bleaker by the day.     As a trader, there's this thought constantly running through your mind every day.    How much stronger is this commodity market going to get and how much weaker the other market is going to get?    Well, it seems things are definitely running in opposite direction between these two market.     Commodity prices just keep inching higher and the new 52 week high list is dominated by resource stocks on a daily basis.    On the other hand, we have more write downs and guide downs expected from many companies that are set to release their earning report in the next couple of weeks.    As little as a week ago, we were even naive enough to think that we may be able to break out and start another bull trend.     Well, thank god that 90% of our watchlist is made up of commodity related plays.  Other stuff is mostly composed to gauge the market sentiment and trade only when the mood is right, such as the banks, high beta techs lets us know we've been playing the right hand.

Today's big story definitely belongs to PBR in O&G.   The potential discovery of world's biggest oil find in last 30 years has caught everyone's attention.    Remember, we played a big find here with PBR before, well this one is potentially many times that size.   This made traders chase both PBR and HES.    Of course, nothing is proven yet and there's no details of any concrete data.  Nothing is conclusive here so consider this a specualtive trade understanding the herd will go in either direction depending on the noise this story makes from now on.  HES has been mentioned for a while here and PBR has been on and off for a long time.    To see that most if not all the other oil plays finished well, we can only conclude that the oil excitement is far from over, even at this pricey level.  ATLS an early play at DJIM made new highs , FB upgraded with a $81 tgt late last week so it's back here for a trade.

The coals were showing good strength and we added a new name we've been eyeing PCX (Patriot coal). PCX recently aquired one of the largest and lowest coal producers in C. Appalachia and its reserves on a combined basis will be around $2bln.  Since this merger PCX is getting attention and is becoming discovered slowly.   We're not saying this will become a profitable discovery like CMP has been here in the Ag-Chem sec before the herd, but with coal still running we need spread our wings.  FB also raised its tgt to $86 from high 50's.  Also, we'd look to MEE very soon as the chart looks to be setting up. 

Another group which has an astonishing movement lately is the chem/agri.    We absolutely "hate" it when the group gaps higher and strengthens up throughout the day.    As we said before, buy dips or strength, you can do no wrong.      Of course, it is extremely difficult to build up a large position on these sort of plays but as long as you are not being totally left out, it's all that matters.

We have a busy earning week this week with a number of "important" companies releasing reports.   It'll be definitely entertaining to see how this market reacts to their guidance.   A few pre-announcements even if not from any real heavy hitters were announced yesterday CRS-CROX-NVTL and should be in the back of many minds now in respect to the possible pain this EPS season from all sides..big and small.   Even lower expectations should be spreading out to other parts of the market after these lemons.   As far as trading wise, we are currently only sticking to the commodity market which is the most plays on our watchlist.   Bottom line, no matter how much noise and fluff some reports may give us, we have to be totally aware of the fact what's the real bull market out there.

GE who?

Short term memory.   Isn't that just the beauty of the markets and specifically earnings season!.   Just last Friday the global sky was flying and the noise of GE was vibrating into our eyes and ears for the next 72 hours, now INTC supposedly has solution for everything and anything and GE was just a bad dream.    Not to put a damper on things, but let's not get the bubbly out just yet!.    Sure...there are many a trader bludgeoned this year with an infatuation with tech and we welcome them back to bid up the market.   Hey, we can't eat coal and steel all day and every day so we'll help them out today, it's the least we could do with their beaten up techs.    But..today is only today as we don't really trust the lot and we need to really have them show us the money day in and day out this week.   Just like GE never happened, INTC maybe quickly forgotten if its brothers and sisters don't play fair the rest of the week.    Our strategy ain't changing overnight, we'll follow the herd and slice and dice the high beta's stocks  AAPL--RIMM--BIDU etc. for the moment, but we're not changing our diet that has been very, very good to us all.   You wanna see earnings!, wait till our stuff like the steels give guidance, it will put INTC's #'s to shame.    Anyways..on to yesterdays pre-INTC trading day....

Coals, this bunch seems unstoppable.  All we have to say is "look to MEE very soon as the chart looks to be setting up" and the damn thing explodes to over $50 even after gapping some. lol.  The good thing is these guys give you more than one opportunity a day as they slide down and give an another opportunity to enter in.  The same goes with PCX, if you didn't catch any of the previous days move it's all good cause you had a very nice chance to get some cheap yesterday.  FDG, WLT we like them all and whichever coal dips right is the one we are favoring at that time.

Solars,   with oil spiking to 113 it is no surprise to see these moving up.   Earnings are around the corner, SPWR corner is tomorrow and we are anticipating their numbers to dictate a lot of the action in days to come.  So we wait to dive deep, but it doesn't mean we're not dipping in our toes.  We did that with a fresh face yesterday in SOL for a few reasons.     We liked the supply contracts, we like the fact if the sector is heating up a 10million IPO name breaking out to a new high will get attention from traders.  It also has a pretty darn good IBD number and even if we haven't played this IBD $15 game for a long time, a solar that is eligible for IBD is hard to find!.    So, why not SOL to be in print!.    Too many continued to play the 15 dollar game at IBD for months now and it was a futile game.  What you need is not just a rating, you need the stock to be in a hot space!.    Maybe TITN was the last we recall and that was only because it was in the right place at the righ time (Ag').  We were quite aggressive buying it up yesterday.

A note EBAY is reporting tonight and so we were toying the idea around of MELI busting a move. 

..off to flip the pages of reports..the rush is starting with MBT, LUFK, CSX ...

...jus' like summer

Mondays trade resembled a summer's trading day.     Not only was the weather too hot where we are, but the volume on the indices was full of nothing but smog.    It was low and it might've taken a little effort for many to see through it and get a read.    After last week big gains, we were looking for some profit taking and corrective action to come in Monday, we'd have no problem with that!.   Instead what we got early was a nice report from ACI to help push all the other coals we've been covering here, most to NCH's( new closing highs)..JRCC, FDG, PCX, MEE, AKS, WLT.    In our view, this coal action was just a bonus following Fridays and an excuse to take some profits.    It's not a surprise to see great reports from this sec' this Q.    We've been buying this sectors stocks a lot on dips the past Q as they seem to provide some of the best around before making a nice recovery.     At this point with many reporting earnings, we were thinking we'd be getting this opportunity as they sell off on the news.     Unfortunately...the way they traded into the afternoon we were starting to think we'd sold too early this time around.     Considering, we began covering this sector when JRCC was in her low teens and yesterday hit high $25's, it is never a bad idea to sell a group and regroup.    The action in coals was in other commodity stocks as they all benefited from higher crude and metal prices, which offset the impact of weak financial stocks.     We did see pretty good action in the big 3, we trade here from the tech/internet sector, RIMM, AAPL,BIDU.     All in all, what seemed like lacklustre day too many a trader was nothing but as we all can see yesterday by the DJIM watchlist, shadowlist.   Those visiting DJIM can find the list on the next few pages of the Journal or a smaller favorites list just by looking at the Charts section where you find a few other stellars making NCH's,   CMP and V

Oh yeah let's not forget on of our most recent plays, SOL which had a great open climbing to almost $19 bucks.  Not bad for 5 days work from $14.   Again, keep looking to add and/or buy-back on dips as has been the strat.   As long as oil is roaring mad, solars should play along.

Some may have been upset we didn't get follow through gains after Friday, some on the other hand may have upset we didn't get a pullback. Even though we are expecting some sideways to consolidate the recent gains, a pullback would be welcomed here so we may pick up back some of our beloved.   But, by the looks of things a pullback is not going to include our niche of stocks anytime soon and so we maybe S.O.L!..lol.   In other words, in conclusion, we are pretty light as far as positions are concerned now,  but are itchy to start buying this market up once again!.

..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!