DJIM #35

If you were told a week in advance where the stock indices would end up, what would you have done?   In other words, what stocks would you have bought or sold in anticipation of this move.   Frankly, we wouldn't have guessed right about any stocks even if we were told the indices would go up this much.    Instead, we just had to rely on our instinct and take cues from daily action.     Everyday, things can change and moves can be unpredictable.    This is definitely one of the toughest trading environment we had to encounter last little while.    Sure, at the end of the week, we can look back and see how easy all these plays would've been called and how everything just made sense the way they behaved.   So was it that obvious?   Lets just say, every one of us would have a different version of answer to that.

The fact of the matter is, despite what may seemed like a good week for many of us, we still played very cautiously.    We try not to out read the market or outsmart the trend.    We just stuck to a simple game plan.      We look for plays that have relative good strength and load them when market is in good momentum.     We lock profit constantly when the market looks directionless and buy them back when the market looks stable enough.    All in all, we simply stuck with a group of stocks that stood out from the crowd.    That, to us, is the key in trading in this kind of market.  This isn't to say this strategy is fire proof and can net you a crazy return.    To us, this is just the safest means to survive in this kind of unpredictable market.

In terms of crisis management, we seemed to have gotten less news(bad ones) from the market last week.   This definitely calmed down all of the market participants somewhat.   However, this doesn't mean that it's the end of this whole subprime and credit crunch saga and we are safe to move on.    This market still needs some strong test.    The kind of tests we are referring to are the "swallow the bad news" kind of test.    Basically, we wanted to see how this market copes with another round of subprime or credit crunch related news.    If by then, the market seems to absorb the news in a good way and focus more on the earnings side of things, we may then be able to expand our play list into other area and increase our exposure.     Basically, we just have to be prepared for alot of unknowns and everybody has a fair chance at this point.  Tthis is why we love this gig!

Now onto some plays...

WX, this one didn't make it to IBD100, in case anyone cared.    We don't think this is the concern at the moment.   What we notice is that this one is sure on alot of traders' radar as a hot play.    We like this fact!    This company is in a unique position to take advantage of its business.   Basically, nobody can compete with them in terms of cost, the cost of doing business that is.    As far as its business goes, you can simply read up the latest IPO filing.     Right now, we are playing this one like any other hot plays.  It means we are taking profit as often as  going for re-entries.    The play isn't looking tired in anyway at this moment and we hope it'd last alittle while longer.

VMW, perhaps we should just simply buy this one for long term, like back when Google IPOed.   But we then realized there's only one Google and this one is called VMW.    There's alot of expectation out of this one and institutions are getting involved in a big way.   Sure, we don't think its business can grow like Google but that is of no concern to us at this moment.   This play still has legs and we aren't playing this one casually either.

DRYS, this one just looks very tricky because it's at its previous high.    Keep in mind, we aren't talking about the earnings or fundamentals here and there's nothing wrong with that.    We are simply unsure if shippers as a group can gain a new leg up.   We don't believe DRYS can go up on its own without the whole sector following behind its leadership.   This is a big if and we have to keep it in mind constantly.

CRNT, who'd thought BIDU would take #1 spot on IBD100, instead of this one?   It's irrelevant at this point.    We got a feeling that this one can start a new leg from here.    Alot of this speculation hinges on the performance of the index, however.   Unlike some of the other plays here that trade less dependently on the market, this one seems to follow the indices better.

BCSI, even a monster needs a rest sometimes.    Of course, this one has the kind of float that reminded us of many great plays in the past.     We'd be alittle more careful trading this one.