DJIM #45, 2007

Ok, there's no fooling ourselves here, we have gone through one of the toughest week that we can remember.    The past week has to be ranked up there as one of the most memorable.    No, it's probably not the week that has seen the biggest drop nor it is the week that has the most negative news.     It is, however, one of the most psychologically devastating week for traders, in our opinion.     Yes, big or small, most traders we know have taken some hits last week.   

What was a most devastating week wasn't the fact financials kept on finding newer bottom every hour.   It was the fact that most of the stocks which we considered as safe heaven were taken down hard, and in a matter of 3 days worth of trading.    There was a time we thought by staying in some of the growth oriented technology stocks and alike would carry us through this financial crisis, but as we noted before Thursday's open, CSCO might be the straw to break the group carrying the market.    Well, how's 10 to 20 percent haircut from the likes of AAPL GOOG BIDU RIMM... sound to you?     What is ironic about this action is that the market leaders were taken down at the same time where there's an apparent reversal in some of the financial stocks.     Toward the end of the week, there's an apparent feeling of end of the world is coming for this market.  The fear mongers are busy.  There is thinking that now it's apparent that the financial crisis is going to last longer than anticipated, and also the market leaders from the growth sector are deteriorating technically, what's there left to do other than bailing everything out?   So many traders did just that!    Traders have the right to be emotional and act accordingly.   Most of us don't have the luxury of owning a fancy black box that does all the trading for us.    We do things based on what we feel others would do and try to jump ahead of the pack.   If everyone is doing the exact same thing out there, there's simply no out thinking them and you just better hope you get out before the real rush has started.

We all took some losses!  Now lets move on with our lives...

What is next then?   Some of us are hoping that market can tank another 10 to 20 percent so we can get into some of the plays cheaper.   The question is, do we really want that and more importantly will it happen that way?    We are sure at the end of the trading on Friday, most of us will feel it's not just a matter of question of if but when.     Ok, so be it that way.     Wait a minute here, that just sounded too simple right?   Here are  few facts we have to consider here.     First of all, we have quite a few companies here that are enjoying some tremendous growth with their business and earnings, still.    Unless we can see a recession on the way which can definitely hamper the growth of some of these companies, only then we should really start to worry.   At this point, it's still a big if.   Second, we are begging to see some of the financials stocks to act in a "bottom is near" kind of way toward the last couple of days of trading last week.    This may not mean much but it's definitely a start.   Third, the coming quarter, both in terms of historical trading and business perspective, have always been strong for this market.   We simply just can not ignore this important statistics and write it off.    Fourth, market doesn't go straight down.    We think as emotional as it was, it will take more than what we have to take us down much further.    So, a rebound scenario is much likely in the works sooner than later.

The bottom line, we just can't write this market off, yet.   We may have some more shaky movement in the coming days if not weeks but once dust settles, we have to be right there to clean it up.     What we mean is that we'd be right there to clean up opportunities when they present themselves to us.   Many of the recent Chinese IPOs are releasing earning(many for the first time) in the coming week or two.   We have to keep an eye on those and to see how investors react to their reports.    It's irrelevant how "good' the report is but we'd have to pay attention to the reaction.  Best not to chase now as we pointed out last week.   We have many plays that are either broken or severely damaged technically.    We aren't removing them from our watchlist yet, but we'll treat them like fresh plays starting this week.    Right now, we should not be attached, either emotionally or in terms of capital to some of our favourite past plays.   If market rebounds, we have to be indiscriminate about our selection and play those based on what we see, not what we feel.

We are looking forward to trading next week, the bull will have some fight in it.

Saved by the bell...

Somehow, throughout the day, it just didn't feel right that we would actually end in green off a couple of financial and pharma companies.    The majority of the market, on our screen, was way off the scale.   End of day it was horrible as many stocks finished -10% or more off and other NASD momo stocks fell another $10-30.  We had the technology(growth oriented), the oils, the golds, the chemicals, the metals.....  just about every group that did well this year was under major selling pressure today. Diversified Metals and Mining -9.3%, Coal and Consumable Fuels -8.8%, Construction and Engineering -7.9%, Fertilizer/Agricultural Chemicals -7.8%, Gold -7.7%   Yes, the pattern is clear and market is loud in what it's doing.    We want to dump the highfliers.    This is in addition to the continuous and relentless selling from the solars, the shippers and the China group which we all were familiar with.     Basically, if you hold anything that is even remotely interesting, there was no escape.

This is exactly the kind of stuff we were talking about the past few days.    Traders just don't want to be the last one out the door given the doom and gloom scenario that is currently developing.    We can't blame them!   Even standing on the sideline, it is still painful to watch and imagined if we were still knee deep in this market, it'd be totally devastating at this point.    The real kicker here, is that the pace of selling is accelerating and we are going to be approaching a climax really soon.    We can't foresee how many more points this market can drop but we feel at this rate, it's going to end sooner than later, and perhaps during this week.  Considering the magnitude of the selling in the last 3 days, many are still knee deep due to the quickness of it all.  Therefore, you need to know there is an overhead of supply leftover in many of the highfliers just waiting for a bounce for others to pounce on.

Is there a bright side to all this?   We always think that after we survive such a crisis, we'd emerge as better traders at the start of next cycle. We all learn something new during these phases.

We feel Asian market may try to find a bottom the next couple of days and that may affect some of the ADRs trade on our side of the market.    There are a few Chinese IPOs reporting next few days and we'd keep a close eye on the reaction from those reports.   We'd jump in on some favourable reaction unless the overall market is giving us a reason not to do so.  But, there is no hurry.  Let the action in the stock dictate your course, don't chase to be one of the first in the door.

La lidia......art of bullfighting

...and we got ourselves a toro bravo (fighting bull).  We said he ain't dead this weekend, Tuesday was proof....and you know what?...the bravery, performance surprised not only the shorts, but even some of us longs....the scale of it in one big swoop as the bloodied bull fought back was great to see.

We recently noted this was new skool trading..Oct 26th...and finally we got one of those on the long side.
...."let's just accept 100+ /-Dow and 25+/-  point NASD days are old skool.!!!     This is intraday stuff now and we don`t think it was a good day or bad day till we see 250 +/-and 50 point days at the close..."   

Are we jiggy wit it?...We've had all summer to get wit it and now we will most likely close off the year in the same fashion with volatility!

Lets not kid ourselves and admit this was great to see.  It doesn't matter if you made money as many purely gapped.  The reason is,  if you want to make money going forward on the long side this was the medicine you were looking for.  You could not have rolled a better one....This was much better than expected as it came in one nice shot to give the QID's 2x,(-8%) the FXP 2x (-15%) inverse thingy a slow burn...mmmmmm.  Somewhat off topic...but if you want  to short the market don't do it on day 3-4 of the biggest pullback you've seen in recent history.  We doubt many can keep to this game of shorting any index 2x, the FXP 2x without jumping ship as soon as a reversal is in sight or worse a wake up gap up.   If you do want stick to this game plan, do it earlier so you get a big piece of the drop we've had since last Wednesday and not go in the following Monday when the conditions are way oversold short term and risk the great possibility of a technical bounce.  Too many inexperienced traders are entering these plays and getting burned.

Will this move continue today? ..All that matters right now is it was a 'feel good' day, showing the market is capable of a fight.  The bull has some fight in it and this action will open some eyes and most likely bring a better trading environment back.

Before the morning open, we noted we thought the Asian hooligans had some fight in them soon.  Soon was yesterday as many led the way...EJ before eps, hey remember WX moved before EPS ...so who's next today?....  We will also get initiations on the STV IPO today, possibly just at the right time.   Yesterdays action should bring some life into earnings plays as well, before and after the report.  EDU, BIDU, JST CSR YGE led with 10%+ days yesterday and a few followed.   The point here is they are not DEAD,  not if you caught a piece of the action.  The HANG SHANG up around 4% overnight.   A note on WX, the expectations were simply too high.   After a few months trading this must be valued at market prices to a certain degree amongst its peers in the industry.  It is way over the top already with it's PE and had nothing left to do but fall without amazing growth guidance.

In this market, we need to look for opp's that may not be the norm.  One example is a QSC or an E-trade.  Monday morning, we were laughing this QSC might be $3 the next day if we dont mention it.   Guess...the laugh was on us as we saw this late in the day over 2.50 and up over 50% after Briefing profiled it's earnings.   Still, not late, even at 2.90 note as it seems to have traded as high as 3.35 AH.   What we think is as this trading enviro becomes possibly more difficult,  we will turn to some 1-24 hour plays like this as an alternative time killer, money maker.  This is something we all can participate in and skin a cat or two on, so as we suggested during the China revolution a month back...give us..the readers your junk and we'll throw in some as well.   This is just the idea of throwing something out for all to decipher, investigate as they please.  Nobody will judge you, its all speculative..We also have Thanksgiving holiday trading coming up which usually gets some junk flying around as the retail traders play while the desks empty at the firms.

DLB PBR PSEM MELI  are a few names of trading interest.

Too much to handle...

Some may call the most recent rally as a massive short covering that will not last.    Well, today those participants got what they wished for, a fizzling follow through, especially late in the day.    Ok, if this is all what it seems, then much of the action in the future can be anticipated, right?   Not so fast!    Regardless how you interpret Monday's action, it was basically due after days of relentless selling.    You don't think this market won't put up a fight and just let it slide 30% straight?    In this day and age, longs still dominate the shorts and bulls dominate the bears.    Most of us are raised to buy stocks, and most of us had to learn the hard way to know how to sell stocks.    It was just an oversold situation that was being taken advantage of and that's the end of that for now.    So where are we now?   We can either retest the lows or trend sideways for a bit.    After a big sell off like we just did, the best case of scenario is always trending sideways, in order to find a true bottom.    It's true that we may still go lower but until that day comes, we'll assume otherwise.

We had a couple of pre-earnings run ups today.    The strength in EJ STV LFT looked particularly good but we have to understand that they are all due for an earnings release.    EJ and STV are releasing on 15th, while many other Chinese co. are releasing on 19th and 20th.   So keep an eye on those releasing before and after the reports.

QSC, it sure feels nervous trading this thing the last couple of days.    After all, it was merely 40 cents three months ago and around a buck three days ago and even up another 50% from our alert late Tuesday.  This one had a tremendous run so far and odds definitely favours a pullback at this point.     This one may have a much higher valuation down the road but at this instant, it needs a pullback.    We cashed out most of our holdings today and will watch how far this one pulls back to in order to find a possible re-entry point if warranted.

PSEM, this one in our opinion is near the end of a setup and something is about to happen.   9 ema has caught up to the recent rise and the next move will determine where this one wants to go.     We have a strong likings to this one but as it's proven to us many times before, seeing is believing and this could use a little help from the tech sector.    No matter how strong we feel about a stock, the stock has to act accordingly to our feeling.    We are eyeing this one closely and waiting for a move.

MELI, reported accelerating revenue and slightly beat the estimates. This one moves fast when it wants to and did at the open before settling down the rest of day. Considering it didn't slide further while most did late, we'd keep a close eye on it here. Also, because it might get a positive spin from a firm covering it as it did last report that pushed it higher. NCH is not far here. CDS , the possibility a firm covering it will put out a positive spin is here also as last Q after earnings. Considering the reaction was muted to their report, we'd look for another angle here such as that to get it going.

The bottom line, if you must trade, trade small, trade those that had good earning recently, and most importantly, trade those that have strong technical setups.    We aren't out of the woods yet in terms of dealing with extreme volatility.    We have to be prepared that the market can swing triple digit point either way on any given day.    This can be a very stressful market if you trade actively.   In our opinion, it's best to go light and pick your play selection carefully.

...same old stuff

well that's what it feels like...when you have no patience like us, especially after the early week snapback rally.  Now, it seems its the same old as late day fades rule, yesterdays a bit earlier than the previous and then a battle at around 1450 on the SPX with buyers stepping up to close it above this line.  Indecision is running on both sides (but the shorts may be more nervous), maybe it is plain exhaustion and we all just need the weekend to get here quick and some headlines to give this market a course for the short term.  Still, yesterday was not without what's important to all of us and that is there were a few names off DJIM Journal that were making some noise...

MELI, seems a few agreed with us and came to play as MELI got pushed 5.5pts from lows to highs of day.  Earnings reaction are not always a first day thing as MELI showed yesterday.   Now with it showing up on a very THIN new highs list across the market, especially those tracking NCH's, we'd hope the idle money comes here to spend some time.

QSC, the other day this had a big buyer eating up shares at $4 even, millions of dollars worth, sooner than later this was pushed to the high 4's as such action seemingly always does.  Yesterday's pullback might be sufficient, a plus is it was on fairly light volume. 7mln to 10 to 11 to 3mln volume.   If this was a quick flash in the pan, you'd think we'd have more selling yesterday.  Anyways, this regained the $4+ level and closed at the highs of the day.   A quick volume move might be in store in the short term, watch for that as a possible entry if not holding already.

STV, EJ.... the concentration here the past week was to use STV as a possible pre earnings mover on the heels of WX and EJ.  STV had climbed about 25% since the week started and to many that is good enough!.    So, it is not surprising profit taking was part of the equation after STV released earnings.   All stocks are different and in the case of EJ the pre earnings move translated into profit taking the day of earnings giving it some leg room to move forward on a good report as we saw last night to recent highs.   As we've noted recently regarding WX...expectations are over the top on these Chinese IPO's.   You are not going to get a surprise reaction and a fast move up like with other nice earning reports that come out of the blue and immediately push a stock higher.    These Chinese IPOS' would not be trading on the NYSE now if tremendous earnings growth YOY didn't put them there in the first place.   Great YOY numbers are expected and you could say priced in.    What these stocks need to get a big push higher right after earnings is something almost impossible unless you are a GOOG!.     What we look at instead of YOY growth is how a company performs sequentially to get a better read of how business is progressing the past few Q's.    STV's revenue came in at 14mln after 20mln for the past 2 Q's, so there is nice growth that is ongoing.    Also, things like operating margins,  in the case of STV are just not to be found in many other stocks.   What these stocks now need is the firms to possibly set a good tone in their reports, initiations in the case of STV.   As we said, we like both reports and STV might have been a bargain last night after hours at $32,33,  but it is the market the will dictate the stocks path and a firm or two the day(s) after...a good market would help too!.

DJIM #46, 2007

Three sucky days, one so so day and a really awesome day.   This is pretty much the action from last week.    While this isn't for certain a bottoming action, we can see that this market is working pretty hard to fight off this extreme volatility.    There have been signs of the market rebounding from some excessive selling.    We are glad to see a somewhat different pace toward the end of the week and hopefully it carries into the coming holiday week.    This doesn't however ensure that we won't go down in the near future and break the previous low.   We have to be prepared for any possibility.    At the end of the week, we seemed to have some good action from the solar sector and some bottoming action from the big tech names AAPL, RIMM etc.  This might bode well for the up coming holiday trading week.     Traditionally, the Thanksgiving holiday week has been a strong week for the bulls.    Although we can't promise the same this time around, our fingers are crossed in hope for some good action.    Even just to show some good action, we can demonstrate to the public that this market isn't just a one way ticket, down.    Right now, the most important ingredient this market needs is the confidence.    The confidence level to see a market turning to the upside is comparable to that of August's level.    We as traders don't really know what to expect on a daily basis.    Do we have to deal with gap downs after gap downs or a strong rebound?   This is pretty much the same dilemma for everyone here.     If we put a big wager on one direction, we'd pretty much end up just hurting ourselves.    This is the period where our confidence level, our patience and our discipline level are being tested severely, and repeatedly.     If you took some losses, just leave it behind and do not let it get to you.    The last thing you want, is to go reckless and chase back the losses in an extremely difficult trading environment.

Our game plan here, is to go after the safest and most obvious kind of plays.    We are cutting our sizes down to absolute minimum so the volatility has little or no effect on our position.    Now it's easier to assume that you want to carry some hefty positions to enjoy a day like last Tuesday.   The fact is, for every huge day, there's probably four to five times as many really crappy days waiting to hammer you down at this time.    Since we are still facing a very uncertain market with extreme volatility, we have to use our disciplined judgement to carry ourselves through this downturn.    The bottom line, there will be a time, sooner or later,  where we can go big in the market, but now it's not the time.

Some potential plays for the coming week....

Solars, FSLR JASO STP SPWR etc., this group seems to go the same direction as oil price, and more so lately.    It might be too cute to think that this group can challenge the old high on its own while ignoring the overall market condition.    As long as you have both the oil and market in the green, this is the group you want to be in for some quick trades.    Also, since many of the plays in this group tend to move in a healthy percentage on a given day, we'd think smaller sizes is the prudent way to go.

QSC, it seems this little bugger refuses to pull back in any meaningful way.    Trust us, nothing goes up forever and we'd really like to see a good pullback sooner rather than later print on the daily chart.   If you missed the big run so far, there's no need to chase it aggressively knowing that a pullback may be just around the corner.    We've seen on Friday how quickly it drops from $5+ to $4.30 and that's just a quick 15% that nobody would enjoy.

PCLN MELI, MSTR, DLB are some of the recent earning plays that seem to trade much better compared to the rest of the market coming off earnings.

China plays, it is becoming obvious that it's absolutely essential NOT to play the earnings.   We've seen it from the likes of WX and now EJ STV so far that regardless the earning number and expectation, those stocks are getting sold hard.  It is also micro-small caps in general that are not getting a positive reaction off earnings at this time.   So don't expect too much out of these next little while since it's very much a sector problem rather than individual report.   Be careful with other China's reporting this week as well.  We'd look for the group/sector to see some sign of life before we are willing to really get back into some of these plays. 

Assault

End of last week we discussed the weekend coming and the possibility of headlines giving the market a short term direction.  Good or bad, just to get things going a bit.  Well, we got a bunch of headlines Monday morning and none of them were good for the bull.   Yesterday, seemed like a slow orderly death as the GS downgrade of Citigroup, the delinquencies in auto loans at GMAC, the Chinese curbing lending, some ugly retail numbers played havoc, leading to an assault on the very important technical levels, the DJIA 13000 and the SPX 1440-50 levels.   Seemingly all wanted to get out before the holiday and possibly start fresh next week, this was most visible in any high beta stock carrying more risk.   You might argue the big money is away this week and they won't burn the turkey while away, but in the age of the computerized black box trading it doesn't take much to leave the switch on and many are set to go off as these levels on the indices are assaulted on.   We just don't know exactly where and we don't want to find out being long.  So, despite the very oversold conditions once again like last week, we are very cautious in stepping a foot in this market.   It is best to wait it out here and if the FED minutes or its specualtion give reason to bounce, well then we will bounce and flip a few stocks into the close.  But...as far as holding stocks overnight and continuously waking up to gap downs is out of the question now.  The pre-open negatives are rampant and it is hard to imagine waking to any good news at this point.  You might catch a nice trade intraday these days and decide to hold for some follow through the next day...unfortunately, it is not happening and you end up trading from your heels.   It's very easy to fall on your butt from this position as all it takes is one nudge...one or two sellers who will get out at any cost and the lack of bidders will do the trick in many of the plays we liked around here.  You simply cannot trade on the defensive and be successful.  If you have that defensive and/or worry feel in a stock, it is best to get out.   The seasonal bias is on the bull side come late this week, hopefully we can just recover some on the indices (getting over Thursdays/Fridays lows would be a start) and set up for early next when the big bull money might come to play this corrective slaughter.....if there is any left!.   We'd prefer to see it that way, instead of bouncing hard this week on very average volume and the Bears coming back and saying it was only on low/average volume.  They'd have a point!.

Holding Still...

This market just doesn't want to go into easy mode these days.   Despite the fact we are in a holiday trading week, both the volume and volatility of this market are right up there among the higher days we've seen.     Of course, there's one and a half days left in the week and we have to literally laugh off any potential heavy action that's yet to come.    Today's action is definitely better than yesterday's and bulls held their ground from last week's low.    Although we are encouraged by market's late day action and particularly action from some of the high profile tech companies, unfortunately the action isn't spread evenly among all the names on our watchlist.

Shippers, this group just can't seem to get a bid whether market has a rebound or not.    We are definitely staying away from this group and unless something really dramatic happens with the sector, we aren't likely to play this group for a while.

Solars, since most if not all of the names in the group have released their earnings already, we don't think there's that much to look forward to in the short term.    It's troubling to see that none of the solar names wanted to participate in today's late day rally.   There were also numerous upgrades on various solar names last little while which didn't seem to help to lift the group at all.    However, if we get a meaningful rally from the crude oil, this sector will definitely get some action again.      Until then, we'd stay on the sideline for the most part unless a good intraday opportunity comes up.

China Plays, we have just one last reminder.   Just because some of the stories were so good a month ago doesn't mean people are still paying attention to them.    The group's currently in what we call a "diseased" mode and last thing we wanna be doing with them is to play a rebound.   Untill both the Heng, the Shang and major Chinese ADRs here all get some good action going, we'd stay away from the group completely.

 Right now, we are doing exactly what most others are doing and that is sitting on our hands for the most part.    The further away this market moves from last week's low, the more inclined we are to get back into this market.   For now, we are just playing some intraday points from the likes of RIMM AAPL GS etc.

...cold Turkey...cold Bull.

Maybe sitting around a table with family and friends ...getting stuffed, laughing, watching the Pack' attack yesterday brings some sensibility that it's not the end of the world and that this market is not at the end of its rope.   Just like Brett Favre being written off, this market can rebound too and show some of the same grit and determination.  Right now, we are overdone for the short term and the shorts might be thinking of a snapback more than the longs.  You can see this in how fast a short covering comes and moves the market up.  We saw this on Tuesday.  The confidence is just not there with the longs in the past week, you know the amusement park game where you smash constantly the popping beaver...rabbit or whatever it is with a mallet as they keep popping out of holes.   Well, that's what the market feels like and plays like, except its Bulls ..and every time they get an uptick during the day and show their horns....they are hammered back down.    Soon the Bears arms will get tired and we'll get a reversal of sorts, nothing goes straight down, especially with earnings growth still around.   In the meantime, intraday traders should be selective and those with a longer hold period should just stay on the sideline until a march up the field takes place.   You don't want to start at your own 20 yard line, wait for a few first downs from the Bulls before coming back into the game.

Happy Holidays..

DJIM #47, 2007

How time has gone by so quickly these days!    We are near the end of November in one of the most turbulent year for as long as we can remember.    First of all, we'd like to hope everyone just had a really relaxing and joyful thanksgiving holiday.    For now, we need to rest as much as we can to prepare for the coming events.    This week is marked by a pretty strong finish from all  indices.    Unfortunately, to most of us, the week really finished on Wednesday, where a barrage of selling that took our indices below the August's lowest closing point.      So does this Friday's half day trading mean anything to us?    Yes and No!    It means something because we know now that there's at least bargain hunters out there willing to take their chance and put some capital into work.    It also doesn't mean much because if coming Monday this market resumes intense selling, the action on Friday would look rather like a joke.

The big question here is that if we are going to see more severe selling next week, when the majority of the market participants come back to their trading desk.    As oversold as the market is, it can still go lower before we see a meaningful bounce.     Yes, a meaningful bounce, and that is something we have not seen from this particular sell off.    On Friday we had some encouraging retail data(Black Friday) which gives us some assurance that at least the consumers are spending.    All we are hoping for is that the market participants would take it into their trading consideration and that would likely give a boost to retail sector(another battered one) and consumer electronics including gadget makers etc.   Hopefully, we just need to take some attention away from the current financial woe.    This may be a lot to ask for but we think the timing of the retail data coupled with the severe oversold condition, it's not unrealistic to see a bounce out of this.

Our game plan is simple...  if coming Monday this market continued where it left off on Wednesday, then we'd obviously sit patiently for something to develop.    If we get a good follow through from Friday, we'd likely be start looking at some plays including everybody else' favourite like RIMM AAPL, solars and anything that's relatively close to their year high.

Bottom line here is that this is a very tough market we are dealing with and we have to fully appreciate the magnitude of it.   Right now, it's not about making more money than others, but rather not to lose as much as others.    Whether a bounce comes in days or weeks, it will come and that's that.    If a bounce somehow turns into a rally and all the bad news get absorbed on the way, then we'd be fully committed capital wise.   Until that day comes, we'd be in a total survival mode now.    As long as we all understand what's going on, we have a pretty good feeling that we are all going to get through this.

Pivot

You need a good a pivot foot to drive to the basket and this market has its laces all loose and tangled and keeps falling on its face as it attempts to take a step forward.   Yesterday was a disappointment and it was set in motion by a few firms laughing off the holiday shopping.  Guess all their junior analysts walking through malls saw something different than the numbers put out that got some thinking positively.  The action just proves that if you are thinking of going in on a somewhat longer term trade, it is better to wait for a few first downs to see if the market can hold on to the ball if it starts to march up the field.   Yesterday, after the first 1st down on the Friday the market was sacked 15 yards back into the red zone.  This being the 12800 yard stick on the DJIA.   Well, just following this close while all the Bears began the Bear chant of recession, Bear cycle again, Citigroup announces an expensive capital raise of 7.5 gazillion dollars to Abu Dhabi Investment authority. This capital infusion and the CEO commitment to maintaining the dividend and not cut could restore some confidence in this issue and help other financials.  No promises.  We're not going anywhere unless the financials start to rebound.  'Maybe' this news gets us back over12800 to start.  It's not much in the big picture, but this market needs all the help it can get at this point.   As we said in chart section this weekend this area might be riskier than all the ones before that were broken.

We haven't mentioned a stock here on the Journal for about a week now.  It is best we don't give any ideas to those that are not more than intraday traders at this time.  Just too dangerous.  There are a few stocks that are providing some trading opportunities, but unless you can have eye(s) on the screens throughout the day, you might as well continue to get splinters on the bench.  Even...below is a case and point in one stock that was acting well against all the odds lately.

Just a trading note...a general rule for us is to rid of stocks getting a negative headline immediately.  Sometimes this is an offering or whatever and deal with it after.   But it is essential to get out the door early.   This brings us to BIDZ yesterday.  Most of us here know that rule applies to Stocklemon reports on a greater scale.   Usually they go after stocks we've traded generously to the upside and therefore these stocks have lots to give up fast and usually do after a report is published.   A members note on the forum yesterday, hopefully saved those playing BIDZ some 5 or more points.

Worth cheering for...

While not all of the names on our watchlist participated in the rally today, it is something that's worth cheering for.    Of course, this is becoming a norm now that stocks don't just finish flat.   We either close up 200 + pt or down just as much.    One thing remained clear though, is that the financials had a very heavy weighting on the movement of the indices these days.    Today's news is that Citi is selling $7.5 billion dollar worth of co. to Abu Dhabi's state investment fund.   Although this news did not seem to spark Citi stock that  much, but it did have an effect on other financials, and as well as the overall market.    It seems whenever the financials find their footing, everything else will get a bid from the market participants.    This has been a concern for many of us because honestly, nobody knows when the financials are truly done going down.

For now and for today, we simply have to take this up day at its face value.    So we are up today and that's the end of the headline.   It doesn't mean anything about tomorrow or the state of our market.     Yes, we definitely sound like we are a beaten up bunch.    For what it's worth, we'd like to see a good follow through tomorrow.   A flat day would  also be a good thing in our book.     These days, an up day just doesn't count unless you are done booking all your intraday profit by 4 o'clock.     We are in a very oversold situation and the least this market can do is to go sideways with decreased volatility.    What we are looking for at the moment is to see if this market can absorb some bad news without people puking up anymore.    We know that there's going to be more bad news with regard to write downs etc., and  it's in this market's best interest to hold through at this level.    Funny thing is that we are merely a couple of big moves away from either getting out of this bottom or starting another leg down.    In either case, we as traders have to be clear headed and play only what this market tells us.

now some plays we are trading/looking at today...

RIMM/BIDU/AAPL, when market is up this much, it's almost a guarantee that these names are in play.    Even though these names have come quit a bit off their recent lows, they are still quite bit far from their recent highs.    Right now, we feel these names may need some help from the overall market.     Basically, if the market is showing strength, we'd feel no hesitation of jumping into any of these names.   Even when the market reverses, there's plenty of liquidity and time for us to get out.    These are good intraday trading stocks if that's the kind of things you are into.

GRMN, this one was punished a while ago because it's aggressively bidding for Tele Atlas.  It's no longer doing that now and holiday season is upon us.   According to many sources, portable GPS is one of the hottest items and these guys are simply the best in that area.   We are trading frequently on the long side with this name but will act according to the overall market condition.   

LFT, believe it or not, this is the Chinese play that had the "best" earnings reaction recently.   Now this isn't saying much because the entire China sector is pretty much being left for dead.   We just want to bring it to attention that we'd look to establish a position if things on the other side of the globe start to improve.

BIDZ, IBD play, IBD #2 debut, $22.50 high, lemon report, kaboom, ridiculous CC, possible fraudulent activity....   that's pretty much the order of business for this play the last 7 trading days or so.    Yup, we do live in a world that's full of twisted drama.   Fortunately today spells the end of BIDZ drama and there's no need to look at it anymore.

Worth every bit of headline...

We had a little hope yesterday!   We hoped that the market today would at least close flat and not to lose any ground on the day following a rally.    Boy did we close "flat"!   To summarize the action today, it was simply breathtaking.    There are basically two parts to today's theme.    The first part is of course the 'trading part' and as long as you had a little merchandise from the day before, or played just about anything intraday, you'd come out on top.   This is good because everybody is making money today, even probably the shorts!   Why?   We are assuming some shorts would be smart enough to cover today and booked some of their profit.   This is least important as it's really about the possibility to trade and make money into the New Year, not just today.    The second part is the psychological part!    Yes, the rally today does resemble the rally we had two Tuesdays ago but both rallies do seem a world apart.    Today's move is followed by a very strong move off yesterday and this is a very bullish sign.   This tells us that there can be momentum on the upside, and this market isn't just a one way ticket down.    Over 500 points were made in two days' worth of trading.    You can attribute some of those point gains to short covering but shorts cover for a reason don't they?     Now granted, we've come from a very oversold condition that is almost a month long, and today doesn't guarantee the end of this downturn.     However, odds have dramatically improved that we have just witnessed a bottom couple of days ago.     Basically, we need to fall more than 500 points just to reach the previous low and somehow we don't think there's that much more merchandise left for people to dump.     Even the financials, all of them, had a great day today.     Ok, we aren't going to get too cute with the financials and we still don't think they should be on our playlist, except GS here and there.   However, seeing the financials behave the way they did today does inject some much needed confidence back into ourselves which benefits our trading with other names.

Let's talk about some names....    First of all, the rally today is so broad based, we couldn't really find anything that's not working.    We'll just stick to some of the obvious and highly playable ones from our previous leaders. 

RIMM BIDU AAPL GOOG, out of these liquid ones, we actually liked the action from BIDU the best.   It does give you the best bang for the buck kind of deal.    Of course, today's isn't one of those average up days, so we'd cash out most of positions toward the end and only leave a small one in case we have another positive surprise.    The odds of this market having another great day like today is almost slim to none but we still have to respect what this market is capable of.

Solars,  SPWR/FSLR/STP, these three have become our favourites among the solar names because of their relative performance to the rest of the sector.    STP, a recent addition here and FSLR are near all time high and SPWR went up the most today.    We think given the current rosiness of this market, these names may get another leg up.     Remember, short term players will always look for plays that are fast and furious when the market is in a good mood.

Shippers, although this is the group that took the biggest damage last little while, they are being cheered for today.    We aren't looking for extended gains in names like DRYS EXM since they were beaten so badly and there's probably tons of resistance on their way up.   We'd simply be trading them in a day by day case.

ISRG, usually can pull off more than a few consecutive up days when it changes trends and VIP, a recent noted for a pre-earnings move with a NCH in sight, cashed in on one and will now feed or not feed off the report. These are of trading interest as well.  SIGM, put in an impressive Q and we will watch for a pullback here most likely.

Now, if we can only get the Asian DJIM plays joining, maybe we just will as a Chinese official said the country "will' proceed with a plan allowing individual purchases of the city's stocks.  Remember, this is a big part of the rally in the HANG this year and is also a big part of why the market corrected recently after an official said this was most likely being postponed. The HANG was up 4% overnight, large part to the activity in North America, but also to this 'will' proceed.  LFT, STV, EJ, WX, a few of the most widely played here...let's keep a close eye on them today for an opportunity.

Bottom line, the action may signify the end of the recent correction.    We aren't completely out of the woods yet but odds are pretty good that we won't go visit the recent lows in the 'short term'.     This does not mean that we have to go 100% back into this market right away.   Remember, we still need this market to find a strong footing and let it go back and forth and go sideways a bit before mounting an assault higher.   It does look like a Santa Claus rally may just be possible this year.   

..A November to remember....

..or more like a month to forget!. Forgetting is good, but we all should take a lesson or three out of it and use them to become better traders/investors in the future. On this last day of trading in November, we have some bullish action to lead us into December.  Yesterday's action was quite surprising after two days of big gains on the indices.  Not only did we have back to back huge bull days, but yesterday the market showed great determination and grit in fighting off any profit taking finishing slightly in the green.  It is doubtful many expected so little volatility, mostly the Bears who already started yelling the day before that the 'fix' is in to have a rally into the end of the year. The action was very encouraging if not affirming the belief we can rally in December...well, that is if no huge headlines come from the financials.  Maybe the big boys pack have a secret handshake in play and will save any more bad news till early 2008.  Let's hope!.  The other day we had hints of another interest rate hike, now comes one from the man himself.... Lets go for Day 4!..lol

Bernanke hints of further rate cuts - AP

AP reports Fed Chairman Ben Bernanke on Thursday hinted that another interest rate cut may be needed to bolster the economy. The worsening credit crunch, a deepening housing slump and rising energy prices probably will create some "headwinds for the consumer in the months ahead," he said. Bernanke said he expects consumer spending will continue to grow and suggested the country can withstand the current problems without falling into a recession. But he indicated that consumers could turn more cautious as they try to cope with all the stresses. The odds have grown that the country could enter a recession. A sharp cutback in consumer spending could send the economy into a tailspin. Against this backdrop, Fed policymakers will need to be "exceptionally alert and flexible," Bernanke said. That comment probably will be viewed as a sign the Fed may lower interest rates when it meets on Dec. 11. The economic outlook has been "importantly affected over the past month by renewed turbulence in financial markets, which has partially reversed the improvement that occurred in September and October," Bernanke said. "These developments have resulted in a further tightening in financial conditions, which has the potential to impose additional restraint on activity in housing markets and in other credit-sensitive sectors," he said. In his remarks, Bernanke said rising gasoline and heating oil prices as well as higher food costs have the potential to raise inflation. He said that is something the Fed also is watching.

As far as individual stock plays, the list from yesterday's Journal should be quite sufficient into todays trading.  Nothing has really changed except some names had big days, most notably a few of the Solars here... and the idea of watching DJIM China names for a new opportunity might have paid off for a few of you already if you entered early yesterday.

Still, We don't see a reason, especially after yesterday action in these names that momentum money going into the solars and back into the shippers won't spread to this beaten up bunch.

DJIM #48 2007

In typical Friday fashion, we were exposed to quite a bit of profit taking, except in this case it was probably more justified after the rally and another early move up Friday. The market ran on interest rate fever and now most likely it will trade sideways and consolidate till the FOMC decision on December 11th.  The FED will be watching the numbers closely this week and traders will be doing the same, some will position themselves for that date and others will just sit on the sidelines.  In our case, even though we think the bias is up, we will be picky and look for a few set ups and pockets of strength.  Possibly position in on some dips on some favorites.  Seems a few downgrades are making the rounds and you start to wonder if the firms might want to get some cheaper (eg RIMM downgraded a 2nd time in as many days).  The pockets could and usually are a sector, but with the gains last week in our 3 most closely followed (Solars, China, Shippers)we are not expecting great follow through on them.  The pockets this week could also be the big financials like GS, MER which are acting like daytrading stocks in this environment and also the interest rate sensitive group.   It could also be oil stocks if the prospects for the winter are any indication by what some are seeing of a long cold winter.  This would also most likely help the Solars.  So be patient this week, as we say the indices don't go straight down, but they also don't go straight up.  If the market did continue to rally this week, we'd be very concerned of a sell off on the FOMC decision no matter what it would be.   A week of sideways action might just be the best medicine.

Just like the good old days, there is some M&A activity for a Monday morning instead of the usual sub prime headlines. Unfortunately, it might have little affect on the the mood of the market early this week, it is probably better to get your XMAS shopping out of the way this week and get ready for pre-xmas trading...we'll see.  What we don't want under our trees is more negative headlines from the subprime debacle to kick the legs out from the market after the recovery last week.  Be patient, be selective...a stock like MELI might be a ticket, it surpisingly didn't particiapte to some degree in the retail/online push from last week, but this weekend was a feature in IBD.