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Entries in PCX (6)


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.


...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!   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!.



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. 



..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?'s so much better than watching the market take its kicks!