The indices poked their neck out today and broke out of their trading range from the last little while. As we were saying yesterday, market was looking for a catalyst and today we got one. Does that mean that we are ready to challenge the old high next week? Ah ha, if market is predictable like that, then we all should be running multi billion dollar hedge funds. The truth is that we just had a good old relief rally today and what comes afterward is usually trickier than what most people would expect. One good thing about the reaction of the fed decision today is that we are that much farther away from the recent low. Today can be used as a good indication that we've just had our bottom for this correction. The sub-prime issues are being sorted out and worked out slowly and many institutions now have a realistic expectation of what to expect from some of the firms involved in the sub-prime lending. This is good news! Uncertainty tend to raise fear and certainty raises optimism. Seasonally, we are ready to kick off another earning season. What? It seemed like we've just finished our last earning season. Yup, this gig is literally all year around and right now we are back to focus on finding earnings plays that fit into our criteria and trading theme. In a way, we are kind of glad that the big drop happened before the earning season. Does anyone else feel like "we just got rid of a monkey off our back"? In plain words, now that we just had a correction, bears can all suck up and go away. Hopefully this is the case but we do need confirmation from market action during the next little while. The best case scenario for this market is to inch up slowly and digest any big market gains like today with time. The absolute last thing we need is for this market to go up in a few straight days and then to get smack down hard which will for sure shatter investors' confidence.
Now onto our small cap land.... When the market is in a good mood generally, the small caps always tend to get busier and see an influx of funds. Here are some of the stocks we are noticing today...
CSV, we have to crown this one tonight as it joined the 25%+ gainer club today. This one is such a sleeper that despite the fact it doesn't generate any buzz among the momentum traders, but it generated 25% during the last month or so. And do we even have to remind people that last few weeks hasn't been the most friendly to many investors. The same goes for HTC, the Euro Telecom which has produced 25% too. The reason we bring these up tonight is after today, it is time to look around at past DJIM stocks and see which survived through the turmoil best. It is probably best to start doing some homework and expanding your tradable watchlists. Another reason is just a reminder that despite the volatile stocks we mostly cover there are plenty of quality crawlers that work for the longer term investor. Last Q, we had EML, SYNL, AMIE's and this Q the CSV and HTC have already stood out.
HURC HDNG, yes keep on going and make those new highs. Market really owes those two as the market environment was not friendly when these two came out with stellar earning report. UEIC falls into this boat as well.
FSLR TSL, we wish these two had done a little better prior to today. Nevertheless, whatever it takes to kick-start the momentum is fine by us.
SIMO SNCR UEIC, had new closing highs and we are definitely gonna look more on the tech side of the plays as the earning seson goes on. SNCR was probably towed by AAPL today.
AMAG, we used to trade this back in early 06' with great success under a different symbol, it's a streaky stock and if you get on the right side..at the right time this one can be quite the winner. It's in late-stage development for iron deficiency related anemia in chronic kidney disease and that is the speculation part. We started very small and will see if the small float and big short interest can dance with the Deutsche Bank $100 target put on it today. Wait for confirmation of a turn here before taking on a play like this or just start very small and make sure you have many more plays before it.
Folks, market definitely seems to turn for the better last couple of days and especially today. With the earning season coming up, we feel like we should get right back into it 100% and pick up where we left off. This doesn't mean that we are gonna be committing all of our capital. It just means that we are gonna be committing 100% of our time and focus in finding trading opportunities for the next little while. Hopefully we'd get some really nice plays that'll make up for some of the lost time that we incurred from earlier this month. Just remember, we might need to curb our enthusiasm as traders soon after a day like this and that simply means taking some profits before kicking it up again.