A-Team wins the coin toss!

Kick off time came a little early today with AAPL giving what many hoped for at the show!.  You couldn't read a piece of press without the question on everybody''s mind...What will AAPL do?. The anticipation was there and the traders were waiting for the news.  Nothing like a little spark to the techs that need to lead this market.  You can't live on Tires and Rubbers being the leaders as in the past sessions much longer.  Mr. Jobs you may now call it Apple Ltd,  Apple Inc. or Banana anything as long as you keep throwing the toys out.  We talk a lot about momentum here, nearly 120 million shares is definitely it.  UBS lifted the tech sector yesterday and AAPL lifted it today.  Let's hope we can get some conviction in buying techs.

We've heard ramblings from analysts that aluminum might be somewhere to go in 2007, so maybe it's no big surprise the official EPS kick off went all swell with Alcoa giving a shiny picture AH.  The stock is up nearly 5% AH.  Nothing like a look in the past and getting some ERS dusted off, maybe some CENX too for tomorrow.   Always look for something that can piggyback an Alcoa type play, the secondary plays are often more fruitful.  Same goes for those that will feed off the AAPL endeavor..you didn't have to look far as a reader tossed out a play out of our backyard in SNCR on the Forum.  Last look before calling it a day, SNCR was trading at $15, now it sits in the 15.60's. 

Last night,  we discussed the need for new stocks, new plays!.  If anything these events give out a few secondary plays that should get some traders interested.  Still, today was not without a few other things working off DJIM notes that provided some nice opportunities.

VOL, which we introduced on our last forum has come back with vengeance today.  It beat estimates handily and we started to trade this off the pullback around $41 as soon as it looked like it would hold its morning gains.  Soon after our mention it broke the days high over 42 and added a few points more into the close.  This is a volatile play but when it gets momo it can give you a helluva a ride.

OPTM, mentioned pre market caught the usual wind and from just over $25 hit a high of $26.60's, hey if Cramer gives you 5% take it and say see you next time.  One good thing about OPTM is most of you have played it here and should have a better feel for it.  Its not that big of a surprise it gave it all up by end of day.  Not so good to finish at low of day for any stock, but this one is quite the choppy trader so it just might have legs again very soon.   Off this ' triple play' business, we alerted another at $25 that has been talked as a triple play threat, even if its robotics/lasers are used elsewhere mostly..... IPGP a recent IPO that has held steady after gapping on IPO day and now by the end of day looks even better on the charts.

OSIR,  the FDA play from last night to watch. We picked some up again as it looked to finish near the high. Maybe it has a another day in it or two.

So there are plenty of new holds tonight..AAPL,IPGP,SNCR,VOL,OSIR

AMK which almost kissed $20 after being in the low 17's a few days back and MFW which had an incredible snap back today show that quality companies trading well can do some fancy dancin'. Most importantly, how irrelevant it is to know exactly what prices we enter these or any stock at.   We give you a stock to watch for a potential trade, some move soon, some don't...some you just better keep around so you can catch a move like MFW did the next day for 3 points today.  In both of these stocks readers could've had better prices than the prices we got for our first bite!.   Don't concern yourselves about exact prices of our entries on stocks, just make sure you're making money....hopefully on the same stocks we share with you.

This is more like it.....a little conviction

Of course, we are referring to the various strong action from the DJIM stocks.   In fact, you may very well call it a DJIM market today.    In our opinion, today is definitely the best trading day so far in this new year.    Sure, we don't have any crazy movers out there but that doesn't stop our readers from throwing out a few..CBLI,  but we are very encouraged to see the broad action from many many stocks.   Ok lets start with the run-downs.....we'll skip the first of 5 from last night new crop, AAPL .....

VOL, we had to put this one on first because after a breathtaking run-up yesterday, we got another speechless run-up today.   So, to answer some of your "entry pt" questions, when it comes to "EARNING" play, it doesn't even matter what price, as long as it's entered within a reasonable time frame after the mention.    So what's next?   Again, have you forgotten to take some profit today?   Strong move like this one exhibited always pauses quicker than you can blink.    If it goes a lot higher, we'd be glad that we still hold some and would likely add some back.   Again, the idea is that you'd never want to have an idea of getting into a hot play with a full position at the beginning of a run-up and sell the "full" position at the absolute top.    That kind of "timing" mentality is not only insane, but risky as well.

OSIR, we were discussing among ourselves earlier that this one could be a slow crawler.   For some reason, someone up there heard our chat and decided it's time to teach our "arrogance" a little lesson.  So it ran with very good volume.   We did not complain about the quick change of pace in action so we quickly rejoiced the idea by adding more in the 27s.   If that's the way they want to play, so be it.

IPGP, well we are glad someone noticed that big block after the close.   It just goes to show that ppl other than us, ppl with deep pockets, and probably institutions are interested in this stock.    Time to get in was definitely yesterday and time to add is today....$25-28 move in 1.5 days ain't bad!

SNCR, this one needs no introduction and we were the first ones probably to trade this back in the 9 range. lol   Putting aside all of the speculation of whether this apple iphone will take off or not, just take a look at the volume.   This definitely puts this one on map among many many momentum institutions, if there's such a thing called that.    We don't think the run-up is over right away, judging by its action today.   Besides, this one does have pretty good earning.

DLB, ok we were actually pretty bored with this one lately, until today that is.   So apparently it broke out, with decent volume.   Will we give it some faith and believe there's some follow through?  Hell yeah and if we aren't being faithful in this kind of market, when will we ever be faithful?

MEND, this one was a late purchase for us and we did not have time to alert our members.      Pretty strong breakout and we like its action.  Again, don't worry about entry.  It mattered little on yesterdays 5 new holds. At a point today they averaged about a 10% gain off yesterdays close.

In fact, there are quite few other stocks that did well today and we are just not going to go into every single one of them.   Just go through all of your DJIM watchlist and you'd know which ones we are talking about.    The market is definitely kicking into a "good mood" gear.    With earnings coming up and as long as some good reports come up ala VOL, we'd be in business and it'll be busy enough for us to trade through the earning season.   Looking forward to trading tomorrow....

cheers,

Breakout action vs. Pullback action

We have touched on this subject many times on this site and older forums.     Today is a typical example of chasing the breakout action.  Here's a trading idea for some of you.   On a strong index day when a lot of things are up, you definitely want to concentrate on the "GREEN" stuff to participate in the rally of performers rather than to anticipate the recovery of the "RED" stuff.   Because when you are debating whether to add on a pullback, there'd be lots of opportunity passing you by with strong gains, especially on a good index day.   When the index is not doing much or down just slightly, that's when you look at pull backs more assuming there isn't that many "strong green" stocks to play.   Always prioritize your trading list and go with the strong beta first.    Just because you bought the stock couple of days ago and it isn't doing much for you doesn't mean that you can't cut it lose and go into something else.  We did that with OSIR today, we're not going to give up what we earned the last couple of days and blow a call from between 25's to 28's.    It's definitely easier to play break outs than to play pull-back.    The strategy is also dependent of your portfolio size as well.   We knew a guru who would hold 200+ positions on a day like today.   For most of us that would just be impossible to manage.   The point is, if you have a big account, you can afford to hold many positions and even consider buying on pull-backs.  If you have a small account, consider going with the stocks with the best action on a daily basis.   There will be a lot of trading for you but unfortunately it's part of our strategy and part of the game we play.   When a stock drops below 9 ema, it simply looks less attractive to us, pullback or not.   When you have so many stocks breaking out, the last thing we want to be doing is to be stuck on a consolidation play and "hoping" it'll breakout.   When it does breakout, we'd be there.     Our mentality is that we participate a run, but we don't anticipate one.   Also again, before we are moderators and writers of this site, we are traders.   We spend most of the time trading for our own accounts and writing-updates for this site is just an extension of what we do.    Of course, our priority is to write and alert/update on the stocks we think that are showing the best action(opportunity) for the day.  Whats there to talk about SNCR or AAPL today?.  The fun was had and now take the consequences of a stock going 14's to 17.50 in less than a full trading day or one going mid 80's to high 90's the next day.   Going through the entire list of DJIM watchlist every day may need full time attention.  Use the charts to help paint a picture.  Maybe we can do a weekly recap on some special requests on some of the stocks we seem to have missed..so far we have not heard back from those public requests..if we don't know the stocks, we can't help.   Now onto some today's movers....

VOL, this one probably overwhelmed the most optimistic traders given its 3 day action.   Again, we are not saying today is the end of this run-ups but it does feel a little tired at this point.  As far as trading tactics, there was a question and answer in the forum yesterday.  In the example you can see how you can take profits around 60 and then buy the strong close which leads to another 3-4 points today. You sold the 51-59's run to lock in partial profits, then buy maybe the same 1/4 back into the strong close and walk away with another 3-4pts today on the full lot you played.  This is what we did reducing our exposure and now are in a wait and see mode with a very slim position.  In fact, how can you not resist taking some profit at this point?..

CCOI, This one has institutional prints all over it today and you can see the large number of blocks traded from its time and sales. It wasn't over at $ 19. Plenty of people buying a stock up $1.50 at $19 early, these traders are not contemplating a pull back, they are buying a ticket on a train!.   Same goes for SNCR yesterday.   The first thought of a successful trader/investor cannot be when and where is the pullback going to be.

MFW, it seemed as little as two days ago there were concerns of chasing this stock in the 26s or 28s.   Well we had a dip and dip was quickly bought on that day.   What followed is today's advance and if you blink, you'd missed it. The pullback you saw the other day off a NCH is one of a few you should consider. You know its a hot stock and a pullback is extreme.  Thats called opportunity. A .50 cent pullback on a 20 buck stock is not a pullback in our book, it's life..life of a stock.

EDU, now out of all of the China based(quality) stocks, we like this one the best today and yesterday.   See, sometimes we don't have to predict, we just let the stock show us the path.   This is actually a new closing high and we believe it's ready to challenge its all time high. Instead of looking for a pullback what has been happening for months is we trade a EDU for a MR and back and forth with HMIN. They take turns it seems and with these names there is no need to wait for a pull back. A move comes and that's when you buy back.

ABM, it sure tried to breakout today and it closed about mid way between the day high and day low.   At this point, we think this is the right direction and momentum is definitely on the upside.

HLYS, we alerted this one late in the day only because this one has had a history of intraday fake break-outs.   Hopefully, and keep our fingers crossed, that this one may get some kind of follow through after today's near day high close.

GLDN, was a rocket again as it climbs with some news.  MTRX is a piece of work while this oil massacre continues, just one nice oil day should pop this higher.

PTT from premarket is a 'trade' like NWK was. If the flow keeps on we'll be there, otherwise we have no love for keeping this long.

All focus on AAPL tonight..

Well,  it definitely looked like there's really no other interest to keep traders from staying up till the end.     AAPL's earning is out and now what?   At this point, we think it's more of a company specific news even though the strong shipment of ipod may spill over to some other component players but we are not going to get too cute at this point.    What was anticipated was also probably what was expected.    There are very few setups worth mentioning today, so we'll tackle a couple of the ones we like and a couple of others from the watchlist.

HMIN, perhaps we are not the only ones anticipating this breakout so the end result although somewhat encouraging early, but not spectacular near the end.    One thing for sure, this is among one of the widely held Chinese stocks out there.   The close is nowhere near the high and it was definitely dragged down by the poor index action.    We will call this breakout still but we aren't going in with any sizes. There are lots of breakouts, reversals your stocks may see, but it is always a good idea to take the gift in some size before the overall market catches up to your stock and diminishes the breakout or reversal gains.  HMIN and MEND are two examples today of this.

ZOLL, this is a little rocket that would go nuts off any good news.  Unfortunately, most of the gains were achieved within the first 10 min. of trading and it literally spend the rest of the day digesting the early gains.    It's very difficult to play these and unless you get in pre-mkt or right at the open, there's really not that much of an opportunity.  But, if you're an early starter, your day could be done by 9:35.   Basically, you could make a living off these early bird specials.  Of course, we have to also look at the prospect to see if this sets up a new leg up.   At this point, it's not very clear whether how much of the news is already priced into the action so we are less inclined to chase any more.    If an opportunity presents it self for a nice setup, we definitely will.   There are hundreds of releases every morning, we try to pick out what we think is best for you to closely watch, maybe get a starter position if there is some interest. Today, this was clearly the case as the stock traded in the $66's-67's pre market.

 PTT, is another example of a pre market note from last week that is doing well.  We are back trading some.

MR, now perhaps this is the way they do things over there.   Updating their guidance with a positive outlook while sneak in with a secondary offering at the same time.    From a co's point of view, they timed it right and damage is minimized.  For us the traders, we just hate to see the stock get derailed from some news like that.    This by no means the play is over.   We just think it may need additional time to churn over this "secondary news" or after they announce the pricing.   11 million additional shares is a big deal, in case those who aren't familiar with these sort of things.    Like any other plays with secondary offerings, this news will linger over the stock price for a while and we find it hard that it will challenge the old high any time soon.   Of course, anything can happen but we are going with our past experience for now and going light with this thing.  This is an example of letting the market dictate the action.   Initially, we had no clue of the secondary but the market told us something is not right.  We thought there might be cheap shares, just not because of an offering and small downgrade.

VOL, to play the bounce or not to play?   If you got a fast enough of a trigger, there's probably some intraday opportunity there to provide some quick action.   For those of us who are looking for a meaningful and sustained movement, we don't think it's ready yet.    Those monster 3 days rally followed by an even more wicked sell off is something that would keep some traders away from.   At this point, we are saying we don't trust this thing, yet.   There are also some longs who may be trapped to and are dying to get out.   We'll need to give it some more time.

IPGP,  played with yesterdays reversal some more and now finds itself back over 9ema.  Nice if you took the 23's, 24's yesterday, but we're not sold back on it just yet at these prices in this market.

Again, earning season is in the very early stage and we have many many more companies to report.  Most of the companies which fit our trading criteria have yet to report.    We are hopeful that we'll see some more good report this quarter and give use some real gem to play with.

Cheers'

Post Fed Day

Normally, or many times in the past, the "Post Fed Day" has not always been kind to the market.   This time the market definitely had a change of heart.    When it comes to DJIM stocks, we actually had a much better afternoon than in the morning.   Many of the stocks we are familiar with just simply strengthened up toward the end and some of them had pretty good closing actually.   We'll pick out a few and highlight them...

CCF, perhaps this one is the most surprising one out of the bunch.   It was very ironic that only a couple of days ago that we were worried about its above volume sell off.   Again, we pointed out that we'd give it a couple of days to let it show us which way it wants to lean.   Volume today isn't spectacular but we think it has potential.   We added back some shrs today and no doubt also contributed to some of the rise today.   Nonetheless a new closing high is a new closing high.    What this does is that it actually puts this one back to our top watchlist and we'll again be adding aggressively.   The conclusion is, let the stock show you how strong it is before making up your mind of adding/chasing.   There's no need to be overly optimistic on "the best play" if the action seems uncertain.   If uncertainty occurs, reduce position and sit on the sideline with a little exposure.   Once the danger is over and the trend is clear, then jump back in.    Actually, this is more like the strategy for surviving in the jungle. lol   But in all honesty, trading the market is like surviving in the jungle.  There's really nobody else to look after you other than yourself.   Making kills (plays) just don't come easy when you got so much competition out there.

MFW, it's been up three days in a row now since our alerts on it Monday and of course the little alarm might tick off for a possible pause in this latest runup.    It doesn't mean that we have to go all out and sell it out.   Just be prepared for reversal and when it happens, don't be hesitant to reduce.  Recently after our initial buy in, MFW provided one quick trip down and that has turned out to be one of the best trades recently for us adding in the $26's.

SILC, ok so this one sat there for a couple of days and today broke out on pretty good volume.  There's not much to say other than the fact we added some toward the end.   Why at the end you ask?    If a breakout does not hold till the end, then it may be a fake one and we simply hate any kind of fake break outs.

HRBN, what to expect tomorrow?   Ummm, there's a chance it may follow through and start some momentum.   We are keeping our fingers crossed and if there's any sign of momentum picking up, we'd be adding aggressively.   We are watching it very closely.

TGX, time to let some go today.   We all had a chance after alert at $4, 20+% in 2 days is just too good to ignore.    We reduced most and looking to add on pullbacks.  BT noted in forum some technical analysis on it today.

A note on tech earnings on the Nasdaq, a definite theme has developed that started with AAPL, a few names early this week and then GOOG today.  You can put SWIR in this bunch of sell offs off excellent results.  Last night, we talked of the slows action in AH in the 15's and up only 10% on SWIR..."Maybe we should listen to the CC to find out why this didn't trade higher, but instead we'll let the action in the morning dictate what we do".  The action early showed SWIR had no chance and why.  Simply these techs are selling off the stellar earning news.   As we always say and said last night, wait for the market to dictate what you should do on a earning reaction.  If you do take a position early make sure its a starter, something you can rid of without much of a loss quickly.   At this point, we are carrying between 10-15 positions on any given day and blowing out a small starter position as in SWIR from AH is nothing when you have positive action in so many DJIM stocks.  Cut the laggards and those behaving badly.  If you are one to carry 2-3 positions at a time, you definitely should not be going large into earnings plays until the market shows you what it thinks.   It tells you pretty fast as with GOOG and SWIR last night and today.  We are looking at DLB's earning with all this in mind tomorrow despite how attractive it looked on paper first.

Other stocks showing strength, some more than others.. include ENR ABM GLDN VARI CNS OEH NWK FSYS ALB CENX TRCR ... so most of them are eps plays and all of them you've seen at DJIM over the past 5 months.

TXN, AMZN, AAPL...

There definitely is a pattern going on.   Big tech stocks delivering good earning and pushing the market up along the way.   It feels good out there, especially for those co's that have delivered optimistic news, earnings related or not.    This is good news for everyone.    When market is in a good mood, it's just much much easier to deal with everything else.    We don't necessarily have to trade THE stock in news such as AMZN or AAPL, but we can take the advantage of the rosiness of this market to tackle other stocks that we are familiar with and in our niche.     There have been tons of small caps releasing earning these days and with the help of the generosity of this market, we can sure capitalize on some good stuff out there.

First of all, you have to make money on a day like today.   What we said this morning was vital to tackle today.  If you aren't, then there's something wrong with your holdings/strategy.    What's a cure?   Dump the laggards and get into the winners.   Yes, it's that easy.    For us, we only fall in love with a stocks action, never the stock itself.   So if a stocks action gives us headache, we cut it and move on.

Earnings play!    We have stressed enough times that a pre earning run is merely a PRE earning run.    Holding through the earning defeats the purpose of playing the pre-earning run.   This is not a complicated concept but a much useful discipline for DJIM traders.   We don't hold into earnings, period. We just play earnings.  There are quite a few earnings related plays today so we'll go over some of them...This morning we gave our strategy to a few names we'd closely monitor for a potential play...

DXPE, earning came out last night and stocks action delivered today.    What may cause this is the possible fact that the stock did NOT have a typical pre-earning run-up prior to the announcement.  It just had a fews days sandwiched between a so-so day.  The stock price pretty much sat in a flat line since the last earning report and this time it just jumped much like last time.   Like we said before, seasonality factor favours DXPE, BTJ kind of stocks going into the summer.    The action today only further confirms our thesis and we bot some during today's run-up. Our approach was to watch tape, the market reaction after the bell and "go from there".  Soon, it was clear the crowd, the market wanted a piece of DXPE.

RVBD,  "We will play accordingly if we see it has potential to smash that level or if it does". Well as it happened, low $33 area was attacked and we entered into this play. We are not chartists, but one look at the chart today showed and area of tops from Dec to March. Our 'charts for dummies', handbook said if it takes this level, we'd like to play it. The factor of a hot tech market made RVBD an easy choice today.

BTJ, much like DXPE, this one did very well off the earning.   Mood is very positive for this sector and we have no reason to doubt that this one can run much further.     Float is small with this one and it doesn't look like it'll give up its spot on IBD100 list anytime soon. 

What did these 3 have that SILC didn't?. A mixture of sequential growth and good guidance, something SILC didn't.  If reading numbers isn't your game, let the market make the deciding factor for you before you enter a trade.  Simply..you want to be where there is a influx of money going in..not going out. The easiest way to do so is WAIT!.  Also, it is not just about reading the headline numbers.  If that was the case we'd all be buying EML today!

SCHN, oh how we like this steel earning addition to DJIM. Closed up another 6% higher. This is up from $45 when first intro to a high of $53.50ish today.

IDSA, this is and old friend for us that came out with results mid day.    The stock caught on fire b/c of the recent surge in scrap metal stocks and whole sector in general.   What got us more intriguing is the fact that IDSA's IBD number 90 90, prior to the report, is good enough to get on the IBD100 list.   Be caution though, this one is volatile and can turn on a dime.    We do, like the risk/reward of this one at this point given the rosiness of the sector, the market in general and the potential IBD fever attached to it.

PAE, this one was profiled in briefing yesterday but we mentioned it 8 trading days ago b/c of its earning, plus a recent alert on a move on $2.   All we can say it is a beautiful thing to sell our stocks into briefing profiles that get new bait for our already discovered fish!.  This one has gone up nearly 50% ( 1.70 to 2.50 close today) since our Journal on it but you'd hardly notice it b/c of its cheap price and with what's going on with all the other action. " Usually a stock turning the corner on profitability gets some attention sooner than later.  It actually got into IBD's top earning announcements column and might get a look Monday or simply crawl slowly upwards from here.   It can be a complete bore or its numbers and float and price will get some cash into.." DJIM 

MTOX ROS keep on ticking best. Some others we were trading today in smaller sizes and/or closely watching, MFW RCCC CYNO BW(eps in am).

Pair of Aces...

When you have a pair of Aces, you usually have a pretty unbeatable hand.   In our case, we had Amzn yesterday and Aapl today.    Does this pair of Aces have enough karma to save this market?    Or maybe, is this market really in need of saving?     Some are doing there best to make it sound so..

AAPL is definitely the big enchilada the market was waiting and expecting on today.   What everyone was hoping for was obviously an AMZN kind of reaction.    So far in AH, AAPL is delivering and is up over 10 bucks.    Now we are not going to analyze their report, their ipod or iphone, Mac shipment numbers.    That is really an irrelevant issue to us traders as our main concern is how this thing is trading and what's the likely implication it may have on others tomorrow.    So far, despite the early weakness, we say the reaction has been pretty good.    Hopefully, this can translate into a positive spirit into trading tomorrow with the help of some of the firms morning calls that cover it.    Market was hairy at times today but somehow the indices pulled into green territory.

Bottom line, we want to see that the good earnings report are still being rewarded.   This is the fundamental strategy of DJIM and without that, it'd be pretty much useless to trade.     Fortunately, good eps reports are still getting bid up, so we are still very much in this game.    What we do want to caution to our readers though, is that in light of the recent market volatility, we are cutting down our position number 'considerably'.    We are basically only trading a handful stocks now which we consider have the best potential and the safest setups.  We are also concentrating on new faces, leaving most of the recent winners behind.    We want to trade in a manageable manner so it's time to go back to our basic "be very selective" strategy. We are not in the buy the dip scene either now, so it is better to start with fresh names reporting well and avoid the dips in Solars, Shippers and others that have ran this last Q at this point..  Have a look at VSR, PCR for some more that have beaten up today..quickly.  We want to avoid anything close to this, the best way is with fresh names.  A good report is not going to fall 15-20%, an over extended stock, but a recent runner might for many reasons.  If a stock is breaking out to new closing highs as with LPHI, it is worth another flyer in our book. Still, you have to keep it manageable and in decent size.

here are some plays we are dealing with today...

LDSH, we bought some off its report today and liked the way it closed.   The report is pretty strong and the reaction is even stronger.  This one has basically been stuck around the $39 to $42 range since Feb. so this report is potentially giving this one a good excuse to kick into high gear, for a new runup.    We have been a little aggressive on this one today and we are looking for some multi day action from this one down the road.    Read the earning report, we think you would be impressed. It probably didn't hurt BA was up early with a nice report.

LPHI, how high can it go?  If we just stop asking ourselves that question and pay more attention to its action, perhaps we can get some more profitable trades out of it.   We added some today on anticipation of a good close.  It closed well and we are eyeing the $50 mark at this point.

ANIK, this one reported last night and we couldn't help noticing its strength today.    With its IBD number of 96 84, we think this one is also a candidate for a potential IBD runup. They had a FDA approval to go with the report.  Many of us traded this in the past, hopefully, we could have more glory days with it.

AAPL/BIDU, just a heads up for tomorrow and you case you haven't heard, they are both up multiple points in AH.

What will it be?

Tequilla...JD...Vodka....maybe a shot of each...or maybe a two-four, as we so dearly call it in these parts.   You're/ we are entitled to whatever tonight!.   If you wake with the spins, that's okay cause it might you keep away from buying this slaughter house in attempt to make some of your money back.   Our preference now is to stay in bed ..alone..when it comes to buying any dip or holding anything in size overnight.   We're not about to make this into a daytrading site as it doesn't suit the majority of our membership.   But, if we see an opportunity or if you do.. shout it out. 

There is no way you could have avoided any or most parts of today.   If you were 100% cash heading in, that's only possible if you trade 1-2 stocks at a time.   A scene was supposedly set last night with the Q's being up from the AAPL report.  Some kind of positive was expected by all coming into this morning.   Unfortunately ...and surprising to most the futures woke up with bad breath.   Simply, even if you liquidated 90% of your holdings the past few days, you were still in big trouble at the open as the market plays no favorites.   Stocks gapped down 1-2 dollars and there was nothing you could do, not so liquid DJIM stocks were shot first.   What you do is natural and that is wait for some reflexive bounce action, we've seen it for months as buyers step up to the plate...so you look for it... okay...now as the Naz is down 15...down 20...then down 30...oh yeah its coming at Naz down 40...okay maybe ....50.....60....chit 70+??    If you are looking forward to tomorrow to catch more of this late bounce, that's fine,  there will be short lived opportunities to cash some back in.   But.. in the big picture, you really need to do some background research and realize that this sub-prime, housing story is coming to a 'global' mess created by the US credit market if you have a book of stocks.    We have mentioned many times over,  we love when 'Paulson' comes in to save the market.   He usually does, but it never needed saving like it did today... Paulson says..."Mortgage/Sub prime Collapse Doesn't Threaten Economic Growth" .  The bounce started late as all of a sudden his comments were released...hmmm, yep, that's how it works.  The big boys call their ex wall street frat boy in power and try to have him save..help out....but, today he didn't need a call or 100.   It was a no brainer for him to step in.   Unfortunately, the mess they created is spreading where fear is being felt overseas.   Confidence is dwindling by those around us and that's not good at all.  

In the premkt, we had more than a few excellent reports as pointed out by members.  There was something fishy going on at that point, besides the Q's being down, there was no interest at all in some excellent EPS reports.  Nada..zilch..goose egg...no hitter.   No volume was seen.  Q's are constantly down in the morning, but usually there is still interest in individual issues out with nice EPS..not today!.   Only the big fish have received a good trading enviro in the past week and they are AAPL, AMZN.  We have seen too many enthusiastic, no volume opens on good results from small caps and what has resulted has been short lived up gap opens on low volume where a few end up holding a white flag for help because they basically buy at the high of the day by chasing.   We tried to convey this in the forum this morning..be careful out there as it's not the same market we are used to where EPS winners fly!.    It is best now to get your bearings straight on a stock before chasing it off EPS #'s.   Give it time from premkt to early on it in the trading day, this will probably exclude the micro/ small cheapies with characteristics we all so love to play when they come.    btw..there were a few small caps that acted well today OMTR, AXYS.     Others might just need to be watched and if the market begins to have a positive bias, maybe they will be the first place we should look for an opportunity in.  The dominos are falling....you never know if your stock is next in line.   We all can't liquidate 100% and pretend to see this coming today, most accounts are set up that such quick action would not be possible and if it was... you still take a beating today.   It doesn't help in this market that you can't find a buyer in sight for many of our closely followed small caps.  Your only option might be to send off a market order and bail.  Well, that only adds fuel to the fire and we have collapses left, right and center.  

The only thing left to do tonight is to suck it up and tell yourself with a little discipline you will peck and chew away at the market and get your money back and hopefully more.   There is still that glimmer of hope in the AMZN's..AAPL and many more of good earnings.  This might be an underlying base that will get this correction out of the way fast or at least give us something to eat at the rest of the summer.    The difference from recent times, we the little people really don't know the extend of this credit failure and what it could possibly do from here on in...the impression it is leaving is spreading beyond North America.  Just be smart, disciplined and wait for an opportunity to score...it will come no matter what...just maybe not in a boatload as seen recently.

Shaky Start and a Steady Finish

Although it's still a little too early to write off last week's action, we are definitely off to a pretty good start this week.    Monday always sets the tone for the week, doesn't it?    Ok, superstition aside, we are glad to see that there was no follow through to last Friday's sell off today.  Another big fat red candle would not have been a pretty sight.    Even though some of the names on our watchlist felt a little shaky in the early going, many of them all ended in a very rosy way.    This is somewhat reassuring because we didn't want to see last Friday's ugliness get carried over into this week.   Momentum can get built up on the downside just as easily as on the upside.    Honestly, we still couldn't see the reason why the market was sold off that hard last week.    Many of the issues the market pundits were calling for were known for a while and there is really no quick fix to them.    Still, we have been managing to live with some of those issues(credit crunch, high oil, low dollar) for a while now and most importantly, fed has been willing to pump liquidity into the system and adjust the monetary policy when any unfavourable situation does arrive.   What's the big worry?    If you believe the entire stock market and corporate profit are centred around the housing market and high oil price, then you may have already parked your money in t-bills and shouldn't even care about this market.    For those of us who trade names like AAPL or RIMM GOOG BIDU , things don't get any better than now.

The point is, this market is not just about the 3M or CAT or BAC.   There's a bull market in quite a few other sectors and that's what's keeping the game alive.    You can also argue that there's just so much liquidity out there that there's always institutions looking for some hot (growth) area to invest.   We just have to be on the same page as those money managers.

AAPL delivered a nice report and should benefit quite a few momentum names.

CRNT, this plays has been on our watchlist for quite sometimes now.   Today the company reported earnings which beat the estimate and it also raised guidance for next quarter.   Stock saw a flurry of buying and ended near the high of the day.   We really like this kind of earning reaction and we are playing it fairly aggressively.

LULU JASO ISRG HMIN, these three have traded to their recent highs today and we particularly like their action compare to some of the other names on our list.    For the sake of momentum, we think as long as the market shows some favourable action, you'd want be trading these names aggressively.

Momentum stocks

"For those of us who trade names like AAPL or RIMM GOOG BIDU , things don't get any better ...AAPL delivered a nice report and should benefit quite a few momentum names".  Nothing could've have been closer to the truth as momentum stocks ruled yesterdays action.  It all started with a gap up open and then after some shake and bakes midday,  the momo carried into the close.   What we wanted to see yesterday was the follow through that occurred late, the reason being we somewhat feared a repeat of the GOOG earnings.  Seemingly, we were not the only ones as the NASD gave a few shakes before exploding in the afternoon after it took out the morning highs.   Unfortunately, as we all know this market is a jittery one and could turn on a dime with new headlines and this will likely be the case early today as Merrill Lynch will put the credit crunch back in the headlines early on.   It also won't help a few familiar names couldn't keep up to the AAPL's and disappointed after the close.   If you were trading the momo names yesterday,  the action we got was a weeks worth and there would have been some profit taking either way this morning after the big 2 day reversal.  The action yesterday was reaffirmation of why we trade the stocks we do, momentum stocks rule and it is not only the big familiar names that grab the headlines.  The action in the BIDU, FSLR, DRYS's was incredible the past 2 days and the rebounds in the EDU's CETV WBD have not been that bad either.  The melt up to a high of $110 from SPWR was pretty good as well.

Today...we will get a clear indication if the market wants to play the credit crunch game or move on and feed off the many good reports yesterday and maybe give us a rally of sorts during earning season.  No doubt the yo-yo day to day action will continue, but that is something we all should be prepared for after the last few months.   A wait and see this morning... we won't be looking to add positions, but we also won't be selling the ranch at the open.

A trading note,  no matter how well a small cap acts one day as in the case of CRNT...a downgrade the next morning by a small firm should be taken seriously as it can burst a bubble quickly.   It doesn't have to be a tier1 firm, it could be a firm you've never heard of.    It is always better to exit such things early before the news spreads and the selling hits harder.  You can always get back in the game after the dust settles.

DJIM #49 2007

Tis the giving season and Tuesday afternoon,  we're gonna get some in the way of a FOMC rate cut.   Following Fridays data, a .25pt cut is the most likely outcome, but there are enough still in the .50pt camp.  One thing is for certain is the decision won't be unanimous as we'd all like and all eyes and ears will be fixed on the statement attached.  Unless there is a knockout grinch punch to the market in the language, we think the market will move forward and set it's course on continuing the recent rally into the holidays and New Year.   Basically,  just get this over with and lets move on the heels of last weeks bullish days as the indices finished near the weeks highs.  Last week many quality stocks continued to get out of their bases with many more bouncing off the 50MA with follow through days.   Also, recent quality earning stocks showed some life as quiet a few closely followed at DJIM broke to new highs during the week.    They include...

MA, ISRG, AAPL,  we have always preached set ups with NCH's in place or in sight.  The market started to provide these trading opportunities once again after a long lull as these leading stocks in the past regained their lofty positions.  That's the kind of action any growth investor or just any trader wants to see and trade. 

VIP, MBT, SIGM, WDC, PSEM are the other recent EPS stocks that reported very good numbers and are now being recognized and given spurts of buying leading to NCH's almost daily.   MBT and VIP have an overweight initiation out from Lehman this morning.

SOLARS, the picture was not so clear heading into Fridays trade, but as we noted there were a couple of buy upgrades on YGE and SPWR to possibly play a part ahead of the trading day.  These upgrades definitely fueled the solars up again as many had nice days, including JASO again and STP...FSLR ran up on rumors of a contract.  We've seen the firms 'lead' this sector forward before when they start with upgrades, initiations. We might have some of that starting up once again.

Our closely followed China stocks LFT, STV, WX, EJ, EDU snailed to a 2nd consecutive week of gains since we turned our focus back on them. The volatility seems to have been removed for the time being and we started to call this group of stocks a Mutual Fund as they creep slowly higher and higher.

After weeks of trying to find a decent play, the market has started to give us plays that fit our methodology, eg NCH's and we welcome it and will concentrate on the above sorts with the usual sector (solar, china, shippers) tossed in.  It is a time for all of us to look at the 52week high lists and find more names that might provide a good trade while they trade at these levels.  You will start to find many former DJIM site names thrown around in this crop of stocks as you do your nightly homework...BOOM FWLT FSTR GEF LIFC PTT RICK TXT VE WGOV etc.   You want to trade strength and get out of any bad habits you've found yourselves in trying to trade a corrective market, such as bounces etc.  This may really be the time once again,  if we clear tomorrows FOMC hurdle in one piece.

DJIM 50, 2007

As the year winds down with this upcoming last full week of trading, we find ourselves at the crossroads here.    We are here because there's definitely two distinct possibility in front of us.    One possibility is that we roll over from the recent gain and try to test the November low and who knows what happens after that.   The other possibility is that we stop going down right about here and churn our way upwards, in an apparent and somewhat violent manner.

Lets talk about what happened in the past week first.    The action from past week is purely centered around Fed decision and we can understand how market participants feel after the decision.  They have a hangover.  In our opinion, unless Fed surprised us in the optimistic way, this market would get sold off regardless because  as we had come off such a good 2 week rally from the November low.     In terms of Fed's decision, in our opinion, they are doing the right thing even though it may not be "instant market friendly" kind of decision.     The bottom line with the Fed is that we have the Fed on our side still.    They aren't being ignorant contrary to many people's thought and they are simply being patient to help out the financial crisis.   This of course isn't being bought by everyone because many wanted that "magical potion" from Fed that can solve all of the problems once and for all.    Believe it or not, many if not most of the problems associated within the financial sector still need to be addressed and resolved by the companies involved themselves.   In other words, market needs to do the most to bail themselves out.    This is only healthy in the long run.

Too many people are too negative toward this market and too many shorts have piled onto the recent upward momentum in our opinion.    Basically, we believe that when you want to trade this market down, you definitely want to do it with good timing.   First of all, you want to go negative really hard at the beginning of the crisis and in a seasonally slow environment.    Right now, there's definitely no saying that we are at the end of the crisis but we are definitely far from the beginning of it.     People are fully aware what the problem is and measures are being put in place to correct the problem.   It does take time.    However, you don't want to go really short when things are being fixed, slowly but surely.  

So against all odds, we think the second possibility is that this market churns upwards has much better probability.    In order for this market to dive and take out the November low, you'd need some really disastrous news or the proof that we'd go into a real recession to do that.    Somehow we just don't think any of those two things is in the cards at this moment.    At least, not during the Christmas shopping season, we might add.

Earnings Earnings and Earnings!    What more confident catalyst you need other than earnings?    We have them coming up and the way this market has been setup, anything better than the lowest expectation can cause a good rally upside.   Of course, that also depends from company to company and sector to sector.     Last week we had LEH reporting and we have to say markets reaction has been very positive, despite the drop of all major indices.     In the coming week, we have GS reporting and this is considered best financial house there is.    Again, the way it sets up is that the shorts wanted to push it below $203, which is the recent low and knock it down for good.     If this stock is at $240, we say the odds of getting sold off is pretty high regardless the earning number.    In our opinion, the trade definitely calls for the upside when the number is released.     The next important report in the coming week is RIMM.    In our opinion, the recent 20% drop from the $122 area took away any bearish surprise.    It feels that shorts have pressed a bit too early going into this report on the heels of a couple of firms analysis of RIMM.    It is "unlikely" that RIMM would report a slowdown in its business and we can almost ensure a massive squeeze if it doesn't play out the way bearish camp wanted.     There are quite few other reports in the coming week which include  NKE FDX MS BSC BBY ACN JOYG GIS... quite a few different and important sectors.   This should provide us a good picture whether our economy is heading into a recession or not.     Again, we believe in our thesis that market rarely goes into a crash into an earning season.     Basically, we'd be much more nervous being short than long at this point.

Now some plays....

Solars, is it us or does it feel that most if not all solar stocks are being setup conspicuously on Friday?   Just look at some the chart setup from some of the popular names and we swear they are all setting up for a good run-up in the coming week.     By the way, they are being setup(in a very positive way) on a day that all indices dropped well over 1%.    This is simply amazing which tells us that people want to own these things at year end.   Basically we still have a bit over a week to window dress these names and it isn't a myth that the best stocks get owned at the end of the year to show them on your book.

STP/FSLR/JASO/LDK,  these are what we considered the favourite solar names to trade last week.    With the exception of LDK EPS Dec.19th, which we are still waiting for the audit report to cast away the cloud, a start today as (independent Audit out according to LDK concluded allegations incorrect), the other three are being setup superbly going into next week.  YGE, IBD #92 is also enjoying a nice trend change.

SOLF/CSIQ, these secondary solar plays are also setting up nicely, especially with SOLF.  The 9 ema has just caught up with SOLF and the next move might be big and will likely get this thing out of the recent trend.   With the entire solar sector heating up, we feel the move is very likely to be up than down.  ESLR had 2 nice days after Thursday premkt upgrade and follow up news.

Asian stocks, as seen in charts this weekend they took the week off after a 2 week recovery, following overnight numbers from HANG/SHANG they will most likely continue to be out of favor to start the week. 

LRN, 300k volume and a higher finish on day 2 of trading. If this thing had any volume Friday, it might be already looking at the high $20's.

MELI, this is the play you only can wish we'd all bought more of before Cramers mention.   On the other hand, this is no longer a strange name to traders and with its tighter float and story, anything is possible.    Basically, this one is better now with Cramers exposure than before which is largely an unknown stock to many.    The trading in this one is rather volatile so we'd continue to be inclined to buy on intraday dip and sell into strength.   It has worked beautifully in the past so there's no reason to change the strategy with this stock.  The trend is firmly to the upside since the break at $45.

RIMM, we've been buying some late in the week looking to hold up to the earning report and then play after its EPS is digested.    Again, in either case, if this company reports a good number or the market rallies, we'd be all over this beta name along with other heavy favourites like BIDU AAPL GOOG etc.

VIP, MBT..also seemingly against all odds these were green on Friday, closing around highs of day.  Another Russian stock, WBD pulled off another impressive Q with what looks like their best EPS number yet. Again as we 've seen too many times lately, nobody was interested in earnngs, this time because of CPI data headline.   Simply, you had pockets of strength to buy...the solars, the biotech, the russian stocks late in the week despite the volatility to the downside in the overall market.

Bottom line, this is the time where you have to be playing the most popular stocks.   We have seen it that the small caps aren't exactly working so you might as well join the crowd.   The more crowded it gets with a good mover, the better.    We can even see it with some of the recent story stocks from the biotech sector like RIGL SVNT BMRN etc.   You trade what others trade, when a stock is showing upside momentum that is.   Only then, you'd have a chance to outperform others.