After all the volatility, turbulence in August, the indices finished a shade of green for the month!. Hard to imagine, but with the needed intervention...bark by Bernanke and Bush late in the week to show we got your back....it was able to pull it off. The futures boomed pre market off the Bush news, even though it has to do with a very small population. We opined here last week, we thought Bernanke would not offer any more up and that was the case. But, it did reinforce his whispers from earlier in the week. This led to our early alert by 10am to take some profits off the table as we used Bush instead of waiting for Bernanke. So what happens now?. Well, why over analyze, just go day by day as August proved. We don't think the sub prime tree is finished being shook and we expect a few bad apples to fall down and shake up the market here and there. But...with the summer holidays finished, we think a few deals will come and get us through September that we can then follow through to take us to the late year months that are always considered the better, if not best trading months. We aren't looking for 1-2 billion deals, we are looking for the 5++bln deals the market will take notice and then feel better about the credits markets. There are plenty of healthy companies and those willing to give cash to them or for them. Even though we were reducing the size of our positions and sold off all of some late in the week, those names are the names we will come back to. A possibility for early in the week is of more momentum.... if you believe many are coming back to their desks and will be playing catch up early this week...bankers, investors, traders...either trying not to miss the market intervention on the long side or short covering. We'll know soon enough....
In regards to recent DJIM closely followed stocks....it was a big week for many and the late week action provided an extra push and made some of the stocks a little extended and worthy of taking some cash out of them. We liked seeing many break to new highs, but we don't doubt some might retrace close to their breakout levels. If the market dictates chase, well...we'll just chase..no harm as we've protected ourselves and got more to use on them if needed.
DRYS, last weekend we highlighted DRYS and the sector in an alert. Simply, we had an index (BDI) making new highs while the rest of the market was in recovery and off highs. Considering how closely trading NCH (new closing highs) is on our priority list here, this looked like a good place to be heading into last week. This premise played out during the week as DRYS was one of the best to trade out there. Low 63's to 72 on the week. EXM , another name noted then also performed great as it also played off an IBD piece. Their market is very tight, prices are rising for dry bulk vessels day after day but it does not mean we are holding them day after day.
ISRG, a name thrown around here lately from $111 moved to $120 after taking out 1 month highs in 113, we were happy with that move and so it was one we were parting with until it gives clear indication/ volume of breaking out further. Again, we after watching for better volume to keep this a sustained position and as of Friday it still wasn't there.
GLDN, we noted its recent tops here last week and after Fridays nice gap open, we'll watch to see if has the heart to move over this level that it has banged its head against twice before getting back in. It did get a price tgt increase late in the week to $86 by one firm. Now VIP has reported excellent earnings (a potential suitor of GLDN) and MBT is next line to report. So, keep them on watch together, they usually work holding hands. Thin ROS might also come into play again.
LDK, it took its time to catch up to the solar movers last week, but Friday, it tacked on a big day and didn't let us down for mentioning it as our solar play for the week in Wednesday's Journal. Last two days, mid 45's low to mid 51's. The DJIM methodology has always been to play stocks making new highs or very close to such. Even though many solars were having recovery bounces, we preferred to play the safer bet in our view. A stock at highs.
If looking for some stocks that are not extended like some of the ones above might appear, look to other DJIM names we haven`t called out lately since earnings, such as FCN ARTC LDSH UA JST that have lagged...that`s if we see volume and continuation in the market, of course.
BCSI looks very ready.
VMW WX PCR CRNT MR CUB continue to be tradable day after day and always near the top of our trading list. BPHX continues to be a nice and popular 'ride' from our forum trader participants.
Also AG stocks came back into the picture after some USDA crop progress numbers released last week. Two recent DJIM names KMGB, TNH were a couple of the big winners...so you might wanna keep a closer eye on them heading into the week.