DJIM #21 2008

Cleary, market participants were calling for some much needed cooling from this market and they acted vigorously last week.    What started as an euphoric begging early on in the week turned into some ugly selling toward the end of the week.   This time around, even the mighty commodity plays did not escape the brunt of selling.   Ok, there's really no need to dig for the reason why and how it happened.    When things move up too much and too fast, it's only natural to cool it down.    At the beginning of the week, we were very cautious about some of the plays on our screen as the action seemed very climatic.    This basically put our stance into day flipping mode only as oppose to building positions slowly.   You can have all kinds of excuses to sell off this market but we think the biggest excuse from last week was to lock up some juicy profit.    For some players, it's also time for some much needed vacation.

What we really hope for in the coming weeks is for this market to slow down and take things half a step at a time.   Nobody wants to deal with either an 800 point gain or loss within couple of days.    We believe things will get slower from now on.    Right now, we have many talking heads coming back to talk down this market given the action from last week.    Everything from housing crisis to financial trouble to weak dollar are once again surfacing all over the websites to haunt the market participants.     This is simply fine with us as this will keep this market in check for the next little while. 

The playground for most of us though, is still the commodity sector.    We aren't going to repeat anymore because until the dynamic of the market environment changes, we are sticking to this theme.     In terms of buying on pullback, we are willing to give the plays ample time to sort themselves out.    Basically, we are more inclined to buy on the turn as oppose to jumping on any uptick.     Yes, we may miss the absolute short term bottom but we are ensured that we'd get in on a strong and meaningful turn.   We are keeping all of the plays on our watchlist and we will alert when entry opportunities present themselves once again.    In the meantime, we are eyeing the index levels as they are near the support and see if they firm up the next couple of days.   

Hope everyone had a nice long weekend...be patient now and let things settle down...

...quite predictable now

Last Thursday..."..we are getting into oversold territory and it's not the end of the world.   Do consider selling some though into any rally.   Waiting for Oil price dips is what the market will most likely wait on to pounce and bounce.    It just might become too predictable and we'll start to see volatile days trading off the price of crude.    Geez, that sounds like subprime stuff all over again,  if we get close to that volatility".

This is exactly what we saw today as a substantial downward move occurred in crude ($-4.71).  The drop and roll scenario played out as lower oil brought out buying interest in the afternoon to close market around highs.   We don't expect this or any near term move to last further than say $125 Crude, so we'd ride the bounce tide until.     Tech was the strength...finally!.....On Friday....we noted....."This would be a blessing as nothing witnessed Thursday gave hope of a reversal.      Maybe it's wishful thinking, but it's the only thing we can see happening Friday to initiate an intraday trade.      Despite the modest green in the major indices,  we were hardly impressed with the NASD pulling off a +16.   Reason is the action in AAPL, BIDU, RIMM simply continued to suck even after the big stumble this week.   Considering we always use these stocks as a measuring stick of sorts on the market, we were disappointed and left wondering wazzup?."  

Okay, we got what we wanted post Memorial weekend not before, as the momo techs performed.   Shouldn't really be a surprise considering there was not much money left to play as of pre-holiday Friday.    These are momentum names we want to be looking to trade, intraday, short term before we consider the commods' as of now.    Today leading the NASD (+1.5%), RIMM, AAPL, BIDU were all up nicely and we 'll throw in V  off the NYSE as the stocks off our DJIM list that fit this trading theme.  Throw in SOHU too.    As of now,  we don't see a catalyst or even one in the very near future for this market to do anything but bounce here and then stall from last weeks oversold state.   Unless we can get a catalyst to out play Oil and summer boredom, we will most likely come down to last weeks lows soon enough.   Keeping this in mind, we'd be selective and keep positions small.

As far as we're concerned,  we are getting what we want here!.  We've had a great run with our commodity stocks and now we are getting a NICE pullback as the $CRX has fallen from the 1029 to 969 close today.    These are the same levels at 960-970 that we said on May15th in alerts was eyeing the 1000 mark.   The fall in shippers has continued, but finally found support from the 50ema for DRYS, TBSI.."....buying on dips doesn't mean trying to catch a a bottom, buying a 15% dip and knowing a trend has changed is different than now catching a bottom at 20%..we just always prefer to know a trend change has been confirmed and go harder than nibbling in".   We have seen significant drops in these stocks since discussing them in the forum last week.     Unless, you are trading full time and can flip fast buying these would have been unsettling only a few trading hours/days later.    The reason we are pointing this out is we all have to play it cool now and not let the malaise in the market take us down with it.   It is difficult to sit around, watch and not jump in on things such as seemingly over extended dips.    So, as of this trading close,  we have no reason to think the commods' are ready to go up just yet!.     What we'll do now is we will let the $CRX dictate any reason to get back in even if only for a quickie.   Remember..morning or intraday $CRX  seems to lead and we should have plenty of time to get in on a steel, coal..whatever.    The doldrums are no reason to chance now and blow the rush, including your profits, we've had from the mid March run.    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.

...a tad frustrated...

We can't make buy and sell decisions for our subscribers,  but what we can do is lead and hope most follow the drift.  If succesful in the past from doing so,  you'll continue to shadow DJIM.    Hence, Shadowlist and Alerts, Journal etc.   Our site is different from others, we put it on the line daily as not many do.    Our language has to be one way and we do have do mince our words in Journal and Alerts to some extent.      If you don't get yet it,  you'll never likely will.     We do what we do and we can only go so far without being Advisors.     Please read the disclaimer at the bottom of our Journal pages from the last 2 years.        It hardly means we are always right,  but we do what we say and you just might have to learn to read between the lines.     The reason we say this is we get dumbfounded by some comments as yesterday showcased,  but we are also pleased some get it as seen in response.     We want everyone to succeed from our site as this is not about us!.    What some still don't get is our question... if you don't get it or are new to DJIM...email us and we will walk through it with you.   We've done it in the past and we'll do it now with our subscribers.    If there is a question about if we do what we talk, we can prove.   In other words..walk the talk!.    We have our managed accounts, which include some members of DJIM that can confirm we trade what we say and also say we've produced 70% return since last summer in the worst of times.

We said in the morning...."As far as we're concerned,  we are getting what we want here!. We've had a great run with our commodity stocks and now we are getting a NICE pullback as the $CRX has fallen from the 1029 to 969 close today.    These are the same levels at 960-970 that we said on May15th in alerts was eyeing the 1000 mark"....

We got we want want and we aren't alerting a potential bounce in Alerts at 10 o'clock to waste an email or post.    We don't waste space unless we think we need something to be considered amongst us all.    Right or wrong, we had a change of pace from morning Journal and we spit it out early.    This could be the time!.     You know what "showing some bounce" is and you know what sec' could go and everything it falls with.   We can only lead and if we thought a reversal is potentially there finally, we alert and that is what we did.   " A heads up of sorts"..are the words from the forward in Alerts page.     We've said enough that the $CRX will tale and it did as everything under the commodity sky boomed during the day.   The only ones who didn't notice were the puppets on CNBC as all they reported was a flat and boring day..all day.    It was incredible as our shadowlist lit up like a freakin' christmas tree after 10 as they kept talking Oil mumbo jumbo.       It's irrelevant if we held positions into the close..money is money and if a X goes as an example from 171 to 176 in a few hours after an alert, you take the almost 3% as a walk off Home Run.   That's a lot of points and easy points.    If FDG ( a COAL!) is mentioned, it's an option as is every other coal stock we have profiled if chit moves.      ANR, PCX , MEE ...blah blah.    That's why a shadowlist, a watchlist to know what to trade.   You make the decision, we can't on your buy/sells.   Any coal stock after 10:00 am would have been a winner!.     Simple.   We really enjoy writing and have made a great a bunch of friends over the years on the net,  if someone doesn't get it yet or how to approach.....please email us and we'll help.    We doubt we have given any stocks that are down in 2008 and if your balance reflects a poor year....we should figure it out together and see what's the problem.   Yeah, a little peeved just because we want all to succeed here.     It's simple as that!   If you didn't catch the BIDU, FDG..coals,  X, you need to figure out why you didn't.    The market was a mess up according to CNBC all day,  it wasn't here.   That's all and honestly don't give a damn what today brings after yesterday.   If you have a comment, we welcome it to our email.  

Not the best kind of showing...

When you look at the final box score, you'd swear your book should've performed at least half decent today.   However, unless you are concentrated in a few and selective plays such as MA (increased guidance), V, GOOG etc., this might as well been a down day for many of us if we didn't take profits from the big previous day run.  Toward the end, it looked like the bounce in the markets which started couple of days ago may start to lose some steam as profit taking took over.   Excluding some market beta stocks, most of the plays on our watchlist were under pressure the whole day.    Of course, this is evidenced because of the heavy exposure in commodity sectors on our list.   If you see $CRX down over12 points at the open, you know what will likely follow next.  The stocks.  The one particular sector that looked really worrisome to us is the solar sector.     Sure, you can say that the solars are capable of bouncing back in a big way on any day and any time.    We are however, at this point, remain very cautious on this sector. 

Note-There are positive reports this morning on German subsidies and so FSLR is getting a boost premkt so far.

On the other hand, the reversal of crude oil ( 5% intraday slide) in the morning put pressure on many commodity plays.    It just seems whenever crude goes, the entire commodity market goes.    This includes oil, ships, steel, coal, chemical, solars etc.    Does it sound strange?   We have pointed this fact out a while ago that every resource play is tied to oil directly or indirectly and one way or the other.      Out of all of the commodity groups, coals are still showing the best technical and with steels at a distant second.     This doesn't mean that we are writing off all of the other plays at this point.   It simply means we are focusing more on the group(s) that have the best technical.     Given today's decline from many commodity plays, we'd like to see if they are going to hold the low from last week.     In our opinion, last week's low from most commodity plays will hold and we'd like to see that as a short term base to build our trades on.   Hopefully, we'd see some convincing action next day or two before stepping back into some plays.

Dell's earning is hitting in AH's and this no doubt will give a positive tone to the market in the early morning.    In the technology front, we still really like SOHU RIMM and to the less extent GOOG.    We'd love to buy some more on the dips but those dip opportunities are very short lived and we only end up regretting afterwards if we don't take what we get.     This is a short week so we can assume that some players are not even trading this week and we'd get some better action next week.    

Bottom line, as long as the financials hold and the overall market does not spiral downward much further, we will have some good trading ground to play on.    Also, when you have plays like MA/V popping madly once in a while, trading won't get boring this summer after all perhaps.

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

nutty...

We'd prefer to go to a ride park than go through the up and down swings with market so far this week.   Some may say the almost seemingly miraculous recovery late is a good sign, as far we're concerned a -100 day is -100 day!  Down is Down, yesterday just engraved in our minds to stay cash at least till Friday's possible employment trade.     Some triggers for further downside went off and this includes the $CRX that we use to gauge the commodity plays here.    We may have been only a few hours early in our last commodity Alert and last Journal when we said the 'toppy' feeling is in the coals.    Those were some nasty reversals in our favorite coal names and a short term top might have made in the morning.   It's unlikely these stocks will break to new highs while the market goes through some turmoil.  Considering, we've been living off the commodity stocks, we're not going to go elsewhere just to trade.  (This includes going long Ag's-Chem for more than an intraday swing unless we see continuation this week).  Remember..solars recent big day, not much has happened there since.    We had something like 11 stocks off our list hit new highs during the day, we want to see them duplicate this feat before we chase them again.

Oh yeah...the market and oil going in the same direction,  Lehman buying shares in the open market to prevent a free fall in their stock before issuing shares makes for a slippery playing field we'll avoid. 

Low Drama...

A pick up in volume, doesn't always translate into wicked action.    Today was one of those days where the volume seems heavier than average, but the stock action is overwhelmingly boring.    Of course, if you are heavy into the financial stuff, you actually may have had a couple of wild days in a row.     For those of us who are following the commodity plays, beta plays, today was not the day to get busy.    Basically, as we pointed out a couple of days ago, we have gone into cash mode to wait for entry.     Until this market gives us either some better action or better opportunity, we will be staying mostly put.   Lets run down a few sectors here for the heck of it...

Beta stocks, these include RIMM V AAPL MA GOOG SOHU..., other than SOHU (a nch today), everything seems to be in a consolidation phase here.    We want to make sure this market is able to hold the recent downside momentum.    There's really no point buying beta stocks now if this market takes another leg down off any potential bad news from the financial sector.    Playing this group is actually easier than the commodity group because all you have to do is to follow the main indices.

Coal, out of all of the commodity groups, this the group that's first on our buy list when it comes into range.    Lets face it, ever since the group's break out in the beginning of May, the group hasn't really had any pullback.    Right now, we'd be concentrating on PCX and ANR mostly but others like MEE, FDG, JRCC... can all fit into the profile.   So, it's a matter of personal taste in this case when the time comes again.

Steel, we have to admit, this group did have quite a run so far so extended consolidation is understandable.    We aren't sure how much more juice this group has left if another breakout takes place so we'll take other things into consideration when it happens. 

Oil, the ones that are discovering or proving more reserves are definitely faring better than others.    PVA CLR GDP types are holding much better than the rest of the oil sector.    If crude oil reverses the recent slide, we'd like to trade these more.    Believe it or not, even though crude price has dropped nicely the last few days,  we are still above $120/barrel!!

Agri-chem, this group is back onto the radar and a couple of them are nearing highs again.   This maybe the first commodity sector to turn to when a commodity reversal is evident.   Right now, we are only looking at some of the well known names from the past such as POT MOS CMP MON..

Solars, we just like to avoid this group at this point especially when FSLR is out there skiing in the Alpine.  After last Fridays gap this group has done very little with the German subsidy rumor.  As we said, we didn't chase the gap or look to buy until the news comes to fruition or something else fuels this group.

Yes, we know market action is kind of slowing down, so we have to be more prudent when it comes to choosing plays and their setups.   Bottom line, we'd rather miss an "opportunity" than getting into a potentially dangerous setup.   After today's data, the Friday's employment number may not be enough to give Bulls or Bears any leverage, instead we may get a play intraday on Thursday if the Financials don't cause more havoc.  The $CRX has fallen to the 50ema quickly (980 to 943 this week), we'd love to see it slip some more and after do an intraday reversal to spell a short term end to the downside.

Secrets of trading revealed!

SSSShhhhhh...don't tell, okay?.  We're working on the home version to get out on the market before Xmas.  What is it?.  Maybe you've figured it out by now, why else would you guys still be here!.     Well, we could all do it this weekend and we could all add to crazy U.S buyer who just doesn't know how to quit and stay out of the mall,  off the streets according to the retail numbers.   It's simple...get the board game of 'Wheel of Fortune' and tape over the spinning wheel and its individual dollar values with commodity stocks off DJIM's shadowlist.   Replace the $500 with POT, the $1000 with X...etc..you get the drift!.    Yep, that's the secret and all you have to do is keep track of the $CRX before you close eyes and spin away!.    Of course, it would also help if you read the DJIM Journal and pick up on things we are watching for or anticipating wishfully such as in yesterday's final paragraph.     All week we were anticipating not doing much before the employment report, but that all changed due to some precursor data to the report and so we said."..instead we may get a intraday play on Thursday..".  Add to this the idea of traders fascination with 9ema, 50 ema and you needed to understand the cliff diving $CRX was at its 50ema and needed to be watched closely..." The $CRX has fallen to the 50ema quickly (980 to 943 this week), we'd love to see it slip some more and after do an intraday reversal to spell a short term end to the downside.".     Simply, we just try to lead by giving our perspectives, our thought process to the next trade in the Journal and if you only want to live off our alerts, you're missing the purpose of DJIM.    To us it's a Diary and even we go back and read our stuff so we don't stray from we were or are feeling and doing.    Call it a bunch of 'post it' notes to self.    Anyways, we just had the biggest rally in over 2 months with anything from the Retail to the ECB comments to $ strength to initial claims to an Obama rally or is it really just Hilary finally giving up as the reasons.    Who knows, who cares!.    What matters is these ducks lined up and mother duck $CRX was sitting on 50 ema and the belief employment numbers may only surprise to the good side.   Interestingly, a surprisingly very good report may now get the reaction we don't want and the market will sell off due to noise of what the FED will do next.  Be careful if you left profits on the table, it never hurts.

We'll leave stock specifics to the weekend edition of our Journal after we monitor today's action and get a clearer picture of what the rally really means to the market for the days ahead.    For now, we're on the hunt for ice to get through what will be a scorching hot weekend by the lake over here. 

If you click on the shadowlist and change screener setting to new highs, you'll see about 8 off our list.  We'll update the link over the weekend, but it's pretty obvious the only names that should be added are the shale plays to go with PVA...HK, GDP 

Have a good one, all

DJIM #23 2008

Lets just say the past week ended in a pretty gruesome fashion.     When both the economic worry and surge of crude oil hit you in the heart, pocketbook there's really no chance this market can be bullish in anyway.     In any case, this market might have just over reacted a bit over the Friday's news.   As traders looked to a modest job losses number, the attention turned to he unemployment rate which jumped quite a bit.  There is two arguments to this as expected.   We think it's an aberration, reminiscent of the ISM plunge in February to 41+. The market overacted in regards to the employment situation, the big picture here is the job losses are holding up.    As far as oil price jumping over $10, that should not come as a surprise because we all pretty well agree it's going higher.   Simply, we think the market has underestimated the rising risks to crude oil demand.

Is this market in trouble?   If you look at the technical, we are really just a couple of days away from the March low, as far as DJIA is concerned.  However, both QQQQ and IWM are still far off the March low.   So in another words, the broad market isn't in as big of a trouble as the Dow suggests.    Of course, if you look at many plays on DJIM shadow list, it really wasn't until the last trading hour on Friday that some of the plays just gave up some gains due to the overall pressure and natural profit taking.     We think last Friday is more than likely a one time event.    Adjusting to high oil price isn't going to be done with one day and the volume isn't suggesting any sort of panic.    We have mentioned before that the likelihood of sustained high oil price is pretty high and the market will have to learn to deal with it.    In fact, there's an article in this weekend's Barron's that talked about the oil situation.    The same analyst who called the $150 oil price a few weeks ago from Goldman is seeing the peak price of oil between $150 to $200.    The one point he remained unclear though, is that how long the high oil price will stay with us.   

For DJIM, the focus on oil these days is very good for us.    The more media and analysts talk about the surge in oil price, it probably means more commodity plays will benefit as well.   Coals were upgraded again on Friday.   At this point, we have come to realization that some of our plays, including the coals may not give us a good pullback we had hoped for.    What we hope now instead is that some of our plays slow down so we can simply catch some on a pause.    We added a new play IPHS on Friday and we have noted that it held up extremely well despite the weakness of this market.    We are looking to add more in the coming week if it stays this strong.

Besides the Oil, spotlight will be on LEH this week to see how much they cut their leverage and what losses they'll report.  It won't be rosy, but if they throw out the kitchen sink finally, it 'may' help the financials in days to come.   In a low volume environment as we have now, we have the same ability to take a run to the upside just as quick.  Be prepared early in the week, if a turn comes it will likely be a pretty good one.  We definitely think volatile days not seen since early in the year are back for the short term.

The Haynesville Shale play is not going away.   PVA was only the first to release results and the market has responded very well.  Many more will and this will idea will remain in play as results will be catalysts.   So as solars, shippers etc, we think the shelf life on this play will continue and DJIM will be all around it.       HK, GDP, XCO, GMXR are the other operators in the area we like.

..wagging the tail?

Did the market wagging tails like a dog signal anything of significance at the close?.  Did it signal a nod of recognition to get traders back in the game?.   If a tail is truly a communication device , well then we were being told we should think about buying because of the tails forming on many a stock and index end of day.     Did we?..Well, no, not just yet as we know confirmation is needed in this market and we'd rather wait till the next morning because we never know what we may wake up to.     Wakey, wakey!..it looks like Bernanke wagged his tongue late in the night and has sent the dollar higher by hinting more than ever the cuts are done with.   Chances are any late day buyers holding overnight will see there gains flushed away in the morning.  Are Bernanke's comments enough to block any technical momentum formed late in the afternoon?.   The futures suggest such, but we know the futures are the biggest headfake around these days.    Be prepared for anything intraday now as big moves should rule with volatility back in the game.   Buying the fade for a flip may be the flavor making a comeback intraday.

As far as the trading day, besides the "Shales" being the new Solar ;),  it was looking quite pathetic.  Even the CRX was ready to eclipse the previous trading day lows, but then seemingly out of the blue stocks like RIMM started to move, even the commodity index we track closely reversed nicely...  Hmmm, one look at a few things like the NDX, SOX and you understood why.    A reversal was occurring as these hit the 50ema.   Yep, the same 50ema which we just saw balloon a move in the $CRX recently.   But, do we really care about the NDX?.    Yes, we do for the overall health of the market, but the concern here is Bernanke popped the commodity run for today as a higher dollar psychology will hurt our winning plays.    It may hurt more than usual if you haven't been taking profits along the way, but it also should be looked as a possible opp' in the near term.   Any exaggerated drop in our commodity plays is a strong possibility at these lofty heights.    Watch the $CRX early on.   A game of dominos potential is there, never think your hottie stock is immune.     Overall, we'd look at drops as an opportunity to pick up some favorites on the cheap sooner than later.    Dollar or no dollar noise,  strength in these commodity plays is not going away in 2008!.   It may get stalled here and there, but it ain't going away.  

As you are well aware of, we don't look for potential bottoms to squeeze out a play in individual stocks and we're not doing it here on any potential technical reversal signal given along the way.   We always want confirmation on stocks ..a change of pace and we definitely want to see one on the indices before buying back into this game.    The brutal action from Friday is fresh on traders minds, scars were left and they didn't heal overnight.  We are maintaining a very light exposure to stocks...commodities ...widgets. 

Better to wait than act..

Index wise, there was less drama today than yesterday.   We are guessing that the market is still trying to recover from last Friday's mind boggling point decline.   This is where we got to pick our spots carefully.   The action overseas, first of all, was just downright ugly.    Normally, we'd say that it should not have a huge impact to us here, but we still have to be mindful to avoid some of the plays that get affected.    The plays we'd avoid right now include SOHU, BIDU and any other Asian companies that are on our shadowlist.    It's really not that these companies are bad, it's just the fact that we are concerned that the overseas action can and will eventually spill over to any and all of those companies that do business there.  Just putting it out there.   Basically, we'd rather be safe than sorry.

Commodities, this is the area where it gets interesting.    Yes, we noted that the CRX may get beaten up today,  some sectors like Steel and Ships just got hammered.     On the other hand, coals and agri/chem seemed to be holding well along with a couple of oil plays.    We are trying to be selective these days while not rushing into buying things eagerly even on dips.    As we pointed out yesterday, while some stocks will appear to be bottoming on an intraday action from time to time, we'd prefer to wait for confirmation before acting with purchases.     Trying to catch the absolute bottom, regardless the quality of the stock, can be risky at times.    So instead, we try to catch the relative bottom after we see signs of a turn.

Out of many plays on our shadowlist, we are going to highlight a couple of plays out. RIMM as popular as this one sounds, it feels like this one is putting a turn in place.   Of course, this isn't a commodity play so you probably won't get daily gains like as in a coal play.    However, by pointing out a probable outcome, even a few points in the current market condition from a tech stock is not a bad thing.    We do like the liquidity factor of RIMM though.    IPHS, perhaps it's catching some fever from MOS run-up but we feel it may be more than that.    There's simply still not enough coverage from this stock and not many traders know about it yet.   Based on the trading last few days, we still think it's in the accumulation phase, despite the fact it's at the 52 week high.   We like this one.    Coal plays, ANR  PCX  MEE  JRCC are the top dogs in that area and this is probably still the strongest commodity group as of this moment with Agi-Chem coming in hard from the back.    If you recall one of our journals a few weeks ago,  we felt coal is the commodity sector with the safest upside and even more recently said the Agi- Chem may be the next group to go.    The coal group is exhibiting pausing action with analysts taking turns upgrading the sector.    At this point, we don't know how much further upside it has left but we always believe market will over exaggerate even the wildest expectation.    The two sectors that are seeing serious trouble are solars and ships.    With Solars, technicals just look terrible and many stocks broke down from the recent support and we aren't even going to bother waiting for a turn until some sector specific news that can boost up the action.    With Shippers, we aren't going to ask questions at this point and will just leave them be.    

Bottom line, everything we said happened, the $CRX fell 30 pts high to low, the market(DJIA) had a fade opportunity as it climbed 170pts intraday...You could have saved money, you could have made money.  We did neither really due to little exposure and because we want confirmation here and there.   This is the time we have to focus on the obvious, and more so than in the past.   Market is going through a lot of turmoil right now and the only visibility we have with us is with the commodity plays.   

sell off continues, but...

...we can't really feel it.    The selling continued and main indexes are now down a fat -520/-115/-65 since Friday's highs. A bounce seems inevitable and/or at least getting very close.   Nothing has changed in the marketplace as the same Oil and Financial noise burdens it and nothing has changed in our strategy now.     It's pretty obvious what that is in our most recent Journals.   We have very little exposure ( a few selective holds in our favorite sectors) and it is better to wait than act and be caught in a ugly session such as yesterdays.    When we are trading, we are sticking to those favorite Ag-chems and Coal and our Haynesville Oil Shale stocks, the Shale names were highlighted in DJIM #23 and a few of those names bolded that are not in our Shadowlist as of last weekend should replace a Shippers, Solars names.  We're not playing hero with these dogs as they take it on the chin.    A dumbfounded, but still cute CNBC anchor yesterday to Haynesville idea was funny to see.   The analyst responded "you heard it here first from me" in regards to this play. yeah, okay guy!. 

One thing to point out today is last time ACI got downgraded it hit other coal names.  One point that is not covered by Briefingcom this morning is JPM is raising 2009 estimates for coal pricing to $300/metric tonne from 240 and all their estimates for covered coal companies rise under this new pricing, even ACI.    MEE is one under their umbrella.   All the downgrade for ACI means is it is more fairly valued than the other names they cover.   So, if their is any misinterpretation from the downgrade with coals getting hit, we'd use it as buy opp'.

It's pretty simple now, so not much to add going into the trading day, except maybe read over most recent Journals as to what we're thinking and what names we're into...

Change of pace needed...

What might be the change to get the doldrums of this week out of the way.?    Well, once again, we are nearing the reporting season with some of the major financial companies reporting next week, led by GS and then a tech in RIMM on the 25th to possibly get attention on other matters..."earnings".     Once again today, one of the financial companies was under major scrutiny.     This stuff just doesn't seem to get old and the situation is eerily familiar.  We said LEH needs to throw out the kitchen sink before the week started, today they sort of did by sweeping their CFO elsewhere and throwing out the COO.    The only difference this time, is that people "sort of" know what to expect from this situation.     It really doesn't matter what shape this company is in financially, people expect it to be sold in order to survive.     The way the stock price has been acting as of late, the general feeling is that the company will be sold at a much cheaper price.    Whatever the case, just get it over with!   This is just darn right scary considering LEH was considered a powerhouse among the investment banks to so many.      In as little as 3 months apart, can 2 well known investment bank/brokerage firms cease to exist?    Whatever the outcome is, this is shaping up to be one of the most horrifying years for the financial industry that won't be forgotten easily.

We also had to deal with MSFT dropping the acquisition discussion for YHOO that stirring the market.     This means that internet competition is going to remain fierce with all the major players remaining independent.   We think the eventual victor out of this is still going to be GOOG as evidenced by its stock action.    We're not into recapping news,  but we are just pointing out how much we need a change of pace and hope earnings from a financial such as GS and a tech in RIMM will do such.

In terms of commodity area,  it was a bumpy and lumpy ride throughout the day with the $CRX breaking the 50ema and closing at levels not seen since early May.   Yes, we can blame the dollar noise noted beginning of the week.    Crude reversed the early loss and ended up with a slight gain.    In AH,  STLD raised guidance, so we may be able to see a bounce from the steel sector.    The steel sector can definitely use some positive news as technicals show worrisome signs.    Basically,  it'd be nice to have some news like the Agri/Chem had couple of days ago.  

Coal plays are hanging in and there's news that MEE is being upgraded to S&P 500 index in AH.  We tried to get Briefing to point out the earnings revisions from JPM on coals noted here yesterday,  but they've always been a little hard headed when they miss something important. 

We are eager to see how this week closes off tomorrow and/or just get this week out of the way.   Many Shipping stock holders are definitely for the latter after seeing them fall 25-30% in a week or so.    The numbers are ugly this week, -3.7%, -5.7%, -4.6% for the DJIA, NASD, SPX.   Again, we aren't rushing to chase anything significant at this point, we are simply waiting for things to settle down.

DJIM #24 2008

Another week of the market being held hostage by Oil and the Financials/ Brokerages has passed.  But, heading into this trading week we're possibly in a position to see a 'change of pace' this week as GS and others in their group report, while Oil is on the verge of doing something from a technical analysis position ( forming a pennant formation).   Hopefully, these dynamics can make the market move in either direction just to give some clarity.   The only positive to possibly takeaway from last week for the overall market was that Fridays move didn't fizzle out like every other move during the week.   We're not overly excited about the action, we were more excited by the continued strength of our heavily followed as at least 8 put in New highs.   Of course, this consists of Coals ( ANR PCX MEE JRCC ), Ag-Chem ( IPHS MOS) and those Oil Shale plays like GDP.   The theme heading into this trading week remains the same from last week..."When we are trading, we are sticking to those favorite Ag-chems and Coal and our Haynesville Oil Shale stocks,.."'

We've updated the Shadowlist and have included the GMXR XCO Shale plays noted before, while removing the Shippers and China stocks to a secondary list for now.

A few have asked why we follow the $CRX and not the CRB index.  The reason is the Morgan Stanley consists of individual stocks with some of our favorites being the 2 largest positions POT 6.7%, X 6.55%, while the CRB uses a 4- tiered approach to allocating among commodities included in the index.  Group 1 includes only petroleum products with Crude Oil having a 23% index weigh.   We simply find the $CRX a better measure as it's based on shares of widely held and therefore seems to give a better insight to intraday activity of where our stocks may go.

As long as our groups show leadership in an uncertain market, we won't stray...unless it's to bet on Tiger Woods today.