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Entries in ALGT (2)



It was ugly!   For a number of days, we were wondering what it would take to bring down this market, we wondered prior to Friday’s trading day, “Tomorrow, is seemingly the perfect day to begin a much awaited “sell this rally” correction with C, GE on the podium”. 

Well,  a day off, we got a legit catalyst (BAC) today that simply spooked just about every type of investor and every sector,  Notably, $BKX( bank index) >15%,  Materials were under big pressure led by crude <8% on a very strong $USD.  Industrials, Tech>3% (semi’s >6%).,   There wasn’t an escape clause (sector) if invested over the weekend.  You simply get hit!

BAC ,  the once hated bank among the investors, is back with a "NOT so inspiring" earning report (big deterioration in credit). This may just be enough to put the "we are still not out of the financial crisis" agenda back on radar with stress tests results coming.    It is somewhat unfair though, especially after what companies like WFC JPM GS  BBT  have said in their report.     This may just be a company specific issue, we all know BAC isn't a five star quality anymore and hopefully the market comes back to it‘s senses and understands there is a ‘best of breed‘.    However, this is exactly (any excuse) what sellers wanted and were waiting for at these overbought levels to roll this market over.  Rollover they did!

We closed at SPX 833, which is below the low of last few days.  We'll see if any bounce occurs around here,  it didn't look like a possibility with the ugly close.    The next major support is around SPX 815 area and it isn't that far away.    Without some major positive catalyst, we think the shorts will press below the 840 level to test that 815 area this week.    It is therefore, extremely important for us to stay level headed and accept this as a fact.    We have to play defensive on this sell-off until some more meaningful trend is established.    Can today's action derail the recent up move?  It certainly can and as a matter of fact, many bears even confirmed today's action as the "tell" to go short.    We are not so eager or quick to jump on the bear wagon, but we do have to respect the opinion on the other side.   We have to let this market settle and we have to see where this market will find its footing.    When it settles, we'll then decide whether to play the recent earning stand outs or a specific sector.    It is just too early to jump to any firm conclusion after just one day.

On the bright side,  we do have ALGT ,  we’ve been watching it as it hit highs last week. Performed really well today after their conference call.    This play has a particular high short interest/small float, so that may have something to do with its strength today as well.   

Bottom line, we aren't going to be buying on dip on anything at this point and we will let this market settle down after today's ugly session.  We have lots of Dow components, Banks reporting tomorrow morning and a few tech statements tonight for the market to decipher.


..Super 'eps' Tuesday

Just when you think the ‘rally’ is in trouble…’Boom” get an explosive reversal as once again an underlying support bid prevails sending the shorts back to the bench.    On this side,   the seemingly momentum crashing day to SPX 833 didn’t crush our confidence.  Instead, we pointed the chance of finding support at those 830 levels yesterday and today led that we may see it get better later in the day.    The premise was shorts were scared to layout new positions over 860-870 recently and instead were covering in this area because of nosebleeds.   What they were waiting and got was a ‘bad news’ day and laid out fresh positions once 840 was taken out.    This confidence on their part extended into overnight and in the morning as they pressed new positions.   It’s the same as longs waiting for higher levels to get into a trade, except this simply works the other way with shorts as far as psychology of a trade goes.   Below 840 gave them confidence to put on more positions into the close Monday.    Thus, ugly close.  Unfortunately,  a reversal started to take shape today and by 840 on the upside they had started  throwing in the towel on their new positions.    We felt this would carry through 840 as more would lose their will and bailout.    This led to SPX closing at 850 +17 day and +23 off lows.   The shorts were a little to eager for a correction it seems.

The naysayer’s were trying to point out the BAC debacle was continuing in the morning by pinpointing earnings from banks ZION BK  KEY  RF.   Yesterday,  we talked about the market coming to it’s senses and realize there is a best of breed or at least those reporting ‘better than feared” than those above that were worse than feared.   Well,  this probably occurred as banks STT CMA HBAN  NTRS .. all started to reverse about 20%+.   USB , was a good one from the previous AMC that was forgotten.  Shorts decided to attack all these on the heels of ZION etc in the premkt/morning and got burned as the bid came into these banks.    Tomorrow morning,  we have more focus on banks w/ WFC PNC and many more reactions to watch.   This is almost over…banks reporting and it will be interesting how all this is digested heading into stress test results.    Hopefully, they will begin to trade on an individual basis than be traded as a ‘basket’ case.   Also, brokers like JEF AMTD are following up on other previous good reports.   In most cases, capitals are not deteriorating as co’s such as STT is showing improvements in the closely followed TCE’s and many are using the ‘stabilizing’ in their CC’s.

We have a few tailwinds in corporate trends and we have M&A spreading from Hcare to Techs!!. BRCM/ORCL.  Also, Geithner helped dispelling market concerns...becoming a cool testifying cucumber.

If we can avoid a ‘BAD catalyst’,  shorts will think twice before pressing new positions once again after today's failure.     On the other hand,   we don’t think there are new buyers around here to step up and push this back to 870‘s,  so we may drift up and down until one side gets the ‘catalyst’.   Most likely, it will be individual stocks/ sector fishing time as in selective stock picking…like ALGT  AKS  the past few days …Stocks/ groups like MYGN APOL ESI  are potential rebound trades.    We have some solar eps coming up, doubtful these will be pretty reports, but there may be an attempt to rally some briefly into reports.    A stock like ILMN that always has good reaction to EPS, may not this time.   A dip would likely bring in buyers lower as some that see disappointment by playing into earnings would leave their shares for real buyers.   A buy on weakness possibility from earnings present this season…CAT today as example.  Anyways,  just some scattered trader thoughts…