DJIM #11 2008

Despite the 400pt rally on Tuesday, we highlighted..bulletted what we thought was some kind of significance occurring that was of more importance than the rally. 

• One real concern is the BSC situation that must be resolved.  Good or bad to move on.  The financials, the market were acting too wildly on this stocks back today.

The next day the CEO of BSC appeared and assured BSC was fine!.  We might have not been around the Great depression, World Wars, past recessions that this investment bank survived, but we are here tonight in one piece to see it fall for $2 to JPM.  In so many ways the history of BSC puts todays financial crisis we're dealing with into perspective.  Build-A- Bear workshop ( BBW) even today trades at a Market cap of 169million,  BSC was just had for 236million.!!.   STUNNING developments in respect to the $2 virtually wiping any value of investments by shareholders  , but developments that had to occur this weekend or have more runs on banks because a crisis of confidence may have taken over.   Tonight the FED is proving to be adamant again on doing whatever is needed to halt the poisonous cycle by cutting the discount rate by another .25pts and created another new lending facility in efforts to boost market liquidity and bring some kind of stability.  The boys certainly are working overtime this weekend and last week, unfortunately their efforts are not going to be seen in the futures tonight. 

Emini S&P 1256.75 -34.75 -2.69
Emini Nasdaq 1675.75 -42.25 -2.46
Emini Dow 11723 -259 -2.16

We said 20minutes into the open Friday vibrations will be felt from BSC news. The market imploded soon after. Tonight many a mattress is feeling further tremors.  Tomorrow if panic sets in and there is no intervention, it will be tougher to play the fade and go against the down trend.  It actually may be quite dangerous if we go into uncharted territory..below Jan lows.

No biggie....day 2!

Despite all the negative earnings for a few cyclical companies , AA, AMD, the market showed little fear as it shrugged off an almost triple digit negative intraday move and then toyed with ending flat on the day.     Some corrective action is still needed, but some indices like the SPX just continue to be in a tightly held range.    Judging by the volume, both the Bull and Bear are acting like the news mongers they've become over the past months waiting for an excuse the run with the market either way.     Nobody wants to do anything it seems unless they get some hand holding in the way of bombastic news to guide them.    To us no news is good news and the only hand we're holding is that of our April hottie, our shadow/watchlist as it continues to lead us into greener pastures.   We could sit here all day, week and have what many are calling boring..ho'hum action while we all just profit here..it's all fine with us.     We've had plenty of nice moves in April and have pocketed many a gain, yet we are constantly coming back to our good friends.   Yesterday our friends even started to listen well after we alert noted a few may still shoot to highs into the close.  You really didn't need to do much all day and just catch the last half hour or even last 5 minutes with V, FDG, MELI.    These and a few others, mostly the shipping boys is where we're hanging out and to be honest are eager to get back in size on the steels etc.  The reason is our mouths are watering at the prospects of having this market rise.   Reason being is the financials are soooo' ready to lead us.   It's just a feelin', nothing really technical.    So, as all traders sit here, the Bears are waiting for recent history to repeat itself of the market sliding off these levels, hopefully hard on bad news, but we think they maybe are becoming complacent and will be in for some shock treatment.   

We're not going to go further today and jinx, you have the plays.  All we could say again is our mouths are watering, especially at the prospect of Bears foaming at the mouth shortly.  Uuuahh, we're getting nasty;)!.    Hey, if it doesn't happen, no biggie, we're happy with the damage we've done here recently and are not loaded to the hilt to take a hit if we don't get our way.  Hopefully, DJIMers' are feeling the same.  

...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!.

...April Shower?

On this last day of the month,  the market is set up for either an April shower or a blooming May flower to be it seems!.  It's that simple as once again we are at the mercy of a FED decision and to make it even more interesting a GDP number before.    As usual the days before a FED decision provide lacklustre, choppy tight trading as traders become hesitant to make any volume moves.    Today will be one interesting day, but of course as often happens something else is on the horizon to fuel more speculation and that is the Friday job report!.    Ahh, it never stops, does it?.      So, basically if you are constantly defensive and weary of all economic data, you might as well never trade in this environment the last year!.   The most important aspect today may be the reaction of the USD after the FED decision.   The USD has been gaining some ground on the Euro/Yen and what we are witnessing is gains in the Dollar index are causing a retreat from the commodity/materials sectors.   Yesterday, we had oil down almost 3%, Gold off about 2.5%, Materials overall -3.1%.    There is a lot of noise that a stronger dollar will cause commodity stocks to fall further.   We think this is just that in the longer term..a whole lot of noise!. 

On the other side of the trade yesterday, it was only the credit card processors, MA and V that provided any kind of excitement.  Both companies beat handily their estimates, but it wasn't until MA reported a 30% beat that V's under 20% beat gained interest after getting beat down in the previous AH session.  Looks like we'll have another nice Q to trade these names.

The last 48 hours, we've seen a flurry of DJIM stocks announce earnings... some like MA V FLS CMP X and FSLR today are reporting great numbers, but what you are running into is something called 'expectations', in some cases unrealistic expectations.    This makes trading these at first sight difficult and what you should only be doing is going with the trend after indication it's all clear or you'll find yourself having a lunch with a CMP to the 50ema or worse.     If we didn't think these were powerful EPS companies, we would not have been playing them for months.   The point is getting ahead of the herd as we've done and let others worry about playing these stocks immediately off the next earnings.

Okay...here we go!.  Strap yourself in....or will this be just more unnecessary hype we've had to go through?

A relief...

Going into the Fed meeting, we noticed that there was a certain kind of anxiety among the market participants.   It was almost as if people were expecting some sort of surprise from the Fed policy.   Instead, we got about as neutral of a Fed policy as you can get.    Everything is expected from this Fed policy statement and nothing more, nothing less.   This is the first relief.    The second relief on the day is the kiss of 13000 on Dow.    You can say that hitting 13000 is inevitable and no big deal.    To many, they just have to see it to be relieved, sort of.    What followed the Fed announcement was a quick trip to Dow 13000 and then a reversal of the earlier gain to eventually close in negative territory.     So basically, with these two reliefs out of the way, we can finally get back into the trading business in the days, weeks ahead. 

Heading into the day, we had added some commods the day before, we got a very nice bump up in the morning and as we said going into the week, we'd be selling any positions before the Fed decision if we pushed closer to 13000.  The long commods', short the dollar players didn't get what they expected in the FED statement to reverse that play.   In case this was to materialize, we sold out ahead and it seemed many did as well as the commods' reversed down shortly after.     Now that we have the Fed thing out of the way, we can think of looking for entries again.     What do we expect to happen from this market the next few weeks?   We expect alot of drifting with no meaningful move from either direction.     However, a market in drift mode does not mean that there isn't opportunities to trade.    Keep in mind, even if the market goes in drift mode, we can still expect a swing of several hundred points in either direction on a weekly basis.    This is unfortunately the nature of this market nowadays where big market swings can happen in a blink of an eye, relatively speaking.

Judging by some stock action lately, we are going to summarize some as follows.

Earning winners are still being rewarded and this is especially important for DJIM strategy.   We like the story/earnings of MA/V and think the pair is a very good barometer of market sentiment.    Of course, we wouldn't want to chase them at this point, but we'd rather get in on pullbacks.   Oil price isn't likely to fall below $100 any time soon with summer(strong demand) season coming up.    This will affect everything from solar plays, transportation, energy services and of course oil stocks.    When it comes to oil related plays, it's almost ALWAYS best to buy on weakness as oppose to chase on strength.   This is contrary to our strategy for playing small cap eps plays, but times have definitely changed and those plays are just not around.     As far as other commodity plays go, we are waiting for some of our plays/sectors to stabilize first.    A correction is still a correction, no matter how big or small.    Watch the CRX as we noted yesterday for this stabilization and potential bounce.  It looks as though coal stocks may have turned positive and we'd be keeping a close eye on plays like MEE, FDG etc.     We also continue to like shippers as they'd probably be played right into their earnings date.   Again, we'd prefer to buy on weakness.     We also like select tech companies which include most of the internet stocks as most earning reports suggest that they are somewhat "immune" to economic slowdown.     Basically, we are only playing the ones on our watchlist.

Bottom line, it felt we have reached the end of spring trading and summer trading is on its way.     Things will definitely get a little slower from now on and this is in fact an advantage to us because we will have more time to position ourselves.   We'll see what the remainder of the week brings, at this point we're not in a hurry to get back in size before the employment report and/or with the market digesting all of yesterdays events.

DJIM primary shadowlist

Our platform list at close Friday,

Symbol  News  Last Price  Chg (Prev Close)  %Chg (Prev Close)  Volume   Low  
     
AAPL          181.08      +1.08             +0.60              35,931,400   178.55  
AKS           65.72       +2.79             +4.43              2,719,400    62.73   
AXYS          56.20       +0.96             +1.75              203,200      55.49   
BDX           88.27       -0.97             -1.09              977,300      87.94   
BIDU          362.00      -8.00             -2.16              4,117,500    357.60  
BZP           21.65       +1.89             +9.56              1,300,700    19.78   
CF            135.12      +3.08             +2.33              1,860,300    131.18  
CLF           159.96      +5.15             +3.33              2,142,700    153.85    
CMP           66.40       +2.80             +4.40              738,100      63.86   
CTRP          67.87       +2.82             +4.34              1,426,000    66.03   
DRYS          90.75       +7.54             +9.06              5,310,500    84.50   
EDU           75.73       -0.31             -0.41              318,900      75.13   
EOG           127.22      +0.37             +0.29              2,975,400    123.92  
EXM           43.23       +3.17             +7.91              1,450,900    40.50   
FDG           63.50       +2.73             +4.49              1,318,600    60.78   
FLS           123.57      +1.49             +1.22              677,000      121.77  
FSLR          277.50      +14.15            +5.37              4,754,900    266.70  
**FXI           164.00      +1.84             +1.13              4,882,600    162.45  
GS            200.27      +1.22             +0.61              9,437,500    198.00  
HES           106.34      +3.88             +3.79              3,905,800    103.51  
IPI           44.75       -0.33             -0.73              2,972,900    43.68   
**IWM           72.69       -0.06             -0.08              58,836,700   72.24   
JRCC          24.16       +2.48             +11.44             1,095,200    21.67   
JST           38.91       +1.09             +2.88              83,200       38.00   
**KOL           45.23       +2.11             +4.89              197,500      43.01      
LNN           100.65      -3.09             -2.98              468,700      99.81   
LUFK          74.99       +0.65             +0.87              144,600      74.81   
MA            285.50      -8.44             -2.87              4,470,400    281.85  
MEE           52.81       +1.77             +3.47              1,769,300    51.32   
MELI          50.25       0.00              +0.00              554,100      49.80   
MER           52.72       +0.33             +0.63              20,350,600   52.08   
MON           114.51      +0.85             +0.75              7,392,500    111.72  
MOS           124.90      +2.35             +1.92              6,247,600    120.15     
MTL           145.36      +7.51             +5.45              1,172,300    137.44  
NS            53.45       +0.43             +0.81              138,300      53.16   
PCLN          126.37      -1.86             -1.45              1,621,600    122.87  
PCX           68.02       +2.76             +4.23              275,100      64.49   
POT           186.94      +3.78             +2.06              12,151,800   184.64  
RIG           151.71      +5.95             +4.08              5,817,400    146.50  
RIMM          132.52      +4.52             +3.53              18,962,400   129.48  
SCHN          87.79       +1.39             +1.61              508,100      86.13   
SOHU          77.89       +2.45             +3.25              3,110,300    75.00   
SOL           16.00       +0.38             +2.43              981,100      15.85   
**SPY           141.65      +0.53             +0.38              181,585,500  140.56  
TBSI          44.25       +1.58             +3.70              697,900      42.29   
V             82.95       -2.45             -2.87              34,162,100   81.00   
WLT           72.95       +5.24             +7.74              4,146,500    66.13   
X             157.06      +5.40             +3.56              4,373,600    151.24  

** denotes ETF

..what's the fuss, we were fuzzy on CPSL, CLR

Sure, the major market indices from highs to lows have dropped 430/ 73/ 31, DJIA/NASD/SPX respectively, in a 1.5 days, but we've had some of the easiest gains back to back thanks to alerts on CPSL and CLR yesterday.  Not only were they easy gains, they were continous throughout the day and excessively high giving plenty of potential to all of us at DJIM to get in on.  Oh yeah as in CPSL, we will wait to get back in on CLR.    The same can be said from the excellent Forum discovery of PDO from last week.    When things run like these, our greed does not get as excessive as the action does.     As far as we're concerned their moves couldn't have happened at a better time as the market rests and digests the move from March.    Rest doesn't always mean sideways action, it means pullback off a lot of profit taking when the run is excessive in a short period of time as it was now.   We noted before the trading day the market may rest more than a day it needed last week due to the fact Monday's reversal was the 2nd big one in the last 4 days.  It surely did as it fell at least 240/40 on the DJIA/NASD by 2pm.  The fall was precipitated by a break of the 12893 DJIA pointed out day before.  This was a technical retracement level and it had no bounce in it.   When this fails as in any support, you know you are going lower and should pack your bags and head for the bunker in the hills for the short term.   But, this wasn't even the case if you had your DJIM list up and saw very minimal damage at 2pm.   Basically what we were seeing was a disconnect between what we trade and follow and what the market indices were doing.    Maybe it would have been better if our commods' took a nice hit and they still may, so we could recycle back into our favorites.    If this occurs today..tomorrow, that's fine with us as we liked the action in stocks like RIMM and a few other techs on our list, even things like V that were hardly bothered yesterday and showed resilience while the market was dumped out.  We think if a bounce is in the cards very soon these types may offer the best short term upside trade as they would climb with the indices.  The commods' may not.  We'll see....

The market has clearly succumb not only to a beautiful move from March, but to record oil and a dead dollar rally in the last few days.  A lethal combination if you are in the wrong places with your trading book.   Fortunately, if your on the same page with us, the DJIM page, you should be well ahead of the game and use this action to start to look for a potential bounce coming.   The SPZ held up so far a few points off the 1415 noted yesterday, but it does not necessarily spell the end of this corrective trade as it sits near a lower trendline possible break.    No time to be a hero, just wait for a confirmation of a trend change.    The other thing to remember... is be selective always in your choices as we try to be on new stocks alerted. 

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.