Reversal of fortune?

who cares, right now!......how 'bout just knocking some sense in again about protecting and building our own little fortunes as we start to experience this daily volatility thing.  This is old hat to the experienced traders, but this is something we all need to be reminded of at times.  Today a couple things came up on DJIM that makes this necessary.  One was early in MTRX.  We always say let the markets action dictate your move, the action, the volume will tell you what it thinks of earning / news and give you a clue as to what to do.  Sometimes its obvious and you might as well get your 'ball spikes on and join in the frenzy..aka FFHL type moves, other times 40k volume premarket as in MTRX will leave you holding your shorts on a white stick as you stand on the 'top' looking down at the action at 9:35am.  Do you want to be with the 1 million shares seemingly traded around 16.50's today or be amongst a few at high 17's, some 18's premkt.  It's lonely at the top!. We tried to throw caution in the morning note again, there is more than one buy opportunity after the exuberance dies off and it will come at a decent entry.  Be patient!.

Back to basics on MTRX, the numbers are very good but unfortunately come on day 2+ of the massacre on the oil patch.  Matrix Service Co beats by $0.13, beats on revs (MTRX) 15.10 :Reports Q2 (Nov) earnings of $0.31 per share, including options charges, $0.13 better than the Reuters Estimates consensus of $0.18; revenues rose 31.2% year/year to $166.4 mln vs the $138.4 mln consensus and raised revenue guidance by 10%.  The instit's hold over 90% and today they churned this at recent resistance.  We took a starter early and added a bit more at the close as it showed it could hold that resistance at least for today.  You might remember our intro of ABM pre market back in December. The first candlestick looks similar as MTRX today and we alerted the next day I think at 21.50 to our buy in and it rocked past that candlesticks top.  That ABM is also a big instit holding and maybe this will play out in a similar fashion.  We touched on ABM last night, everything still holds..but it just looks a bit better today at the close.

The other matter came up in the forum. Yes, we recycle stocks..but to recycle they need to lie in the bin for a while. We do not go buying the dips the next day or the day after.  Let the raccoons frolic in the bin.  We avoid the downturn in a stock by going somewhere else, sometimes its just into cash.  Yesterday we said the 'FXI' is the fix right now in dealing with our Asian DJIM's.  We got a nice run the past week and yesterday as the FXI turned,  we were locking in those gains.  If we put in the forum the FXI is at the gap open and it could get worse...we mean it and wouldn't be standing around at the gap open in a falling market like yesterday to see the gap potentially close.   So no ...we wouldn't be adding the MR, HMIN back today when the FXI has closed that gap pre market at $112.  This can't be a buy signal during the day if we are using this ETF as a measuring stick right now to our China Stocks.  We've had MR,EDU since September, recycling it over and over again but never the next day.   BIDU, is an exception as it trades with the internets and today that sector was not a bad place to find yourself.   Speaking of dips..GROW is swimming in it and we ain't jumping in on such a break of the 9ema.

What we always prefer to do is find something else, something else that is near a high, breaking a high or in the beginning of a reversal.  Something like a SYX or a HRT or more ABM or a new play that might catch on like MTRX.   Basically we trade the "GREEN' not the "RED" stocks. If you don't like GREEN and prefer Pink, Orange, maybe your trading platform will allow you to change the colors around. Whatever color you choose, it's best to trade the stocks with a + in front of them in our book.

ROS has been renamed the Russian Rocket...this is just funny and explains those huge lots on the bid we talked of recently. There's been one shakeout recently to low 40's, one might come again but in the meantime adding as this goes higher.

ZOLL is just ZOLL, a nice and quiet medical device stock that doesn't really care about much about the markets internals. Steady she goes...

Besides the highlighted stocks above, we are trading some AMK on the speculative side of things today.

The funny thing we kept mumbling yesterday is its Jan 3rd,2007, who the hell cares about the December 12th, 2006 FOMC minutes.  But it doesn't matter how silly we thought the Times Square NYEve Ball drop was...the only thing that mattered was what the market thought.  It's all reaction..action and we just play along with it....yesterday on the sell side...today on the buy side.

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.

DJIM #3, 2007

For investors the best thing about a 3 day weekend is it gives an extra day for M&A activity to kick in. This weekend surely is not disappointing in this department as lots of activity is coinciding with the markets playing with highs.   Hopefully, this gets us off on the right foot into a shortened,  but what we expect to be a busy week.   The flurry of earnings will hit us this week and hopefully we can hit back hard by buying into DJIM type earnings winners.   This is the time we/you might want to reduce sizes of holdings or get rid of stocks completely stuck in the  'hub' with no immediate flight plan.   It is best to have cash ready and not be forced to sell things off to get in on a play early.   There is always more than one opportunity to get in on a DJIM stock, but sometimes the first is just an easy gift you can close early and then look for another entry..examples might be like a SNCR move last week but one with earning or an explosive VOL off earning.    Also...don't forget to look for earning dates of your stocks!.  We have enough on hands here in Canada following US holidays, so help us out on DJIM stocks...we knew EDU had earnings Tuesday,  but we didn't know we had a holiday today till about 11 am on Friday..lol. We almost broke our 'no holding rule' into earning with EDU!.

Heading into Tuesday,  these are our top hold/ hit lists plays at this time in no order..

CCF-  Chase Corp is one of those small float (2.3mln float) Amex stocks that hides with pretty darn good earnings.   Friday it reported its profit doubled on a 26% revenue increase.  This .62c Q follows last Q's .69 on similar revenue.  We also like Fidelity owning about 50% on the the instit. shares( 400k).  If they want more, they can get ours now in the $30's!

OSIR- made a nice comeback late in the day Friday.  It seems this one besides the FDA news last week is starting to be looked at as a stem cell stock of sorts.  This explains the volatility the last 2 trading days, Osiris is also developing stem cell treatments for cancer and heart disease.  A new NCH has us looking for more in this name, but now we are looking for more volatility that made us run out of it, Thursday.   Easier to deal with volatility if you know why its there, we didn't Thursday.

CCOI- just a steady follow up Friday from its big day the day before. A NCH and a stock that is up 4.5 points in the New Year so far, almost 30% and is sure to be picked up by more eyes, but it also should consolidate sooner than later.  So be careful jumping in!.  Some of you are getting in a tad late on some plays and expect miracles too fast!.

ABM- we are satisfied with this steady performer.  A NCH to end the week, don't forget we have been on this since $21 and the big push the second day after earning.  This is heavy on institutional support,  so this pace is not unexpected.

MR,  is back in the picture... we like the move Friday and the fact it held it by the close.  We added some near the finish and think this one might be one of the better plays to start week as it has climbed nicely above its 9ema.   It could be just MR, it could also be EDU following earnings and HMIN might not be far off ( we would like to see 40+ before really taking another stab at it).  FFHL should get some play but there is that supply of ones wanting to get out overhead to consider.

AMK, might be the other top play heading into the week.  This is a small float with a nice earning story that is reporting early February.  It just looks like a typical 9ema play at this point heading into earnings.  Wish it just take out Ceramics from its name from its name!.  Can't help but think pots when you first come across it!

INFY, we like it for its EPS, its business and where its at (India).  A few targets in 60's already out following EPS. This might be a nice longer term hold.

CENX,  a play we noted off AA earning is doing well but might want a rest in the 43's. It opened just below $40 on Wednesday following AA's eps.  Again, if you want a nice aluminum stock to hold for the AA story, this is it for the longer term.

MFW,  looks to be one to pick up more of on the dips. At this point as it has some interesting intraday moves and sits close to a high.

SNCR,  seems panic has set in with some, yet its only finished day 3 off news and is only 6% or so off highs. There is two camps here,  one that was getting in $15's Tuesday AH  and then early Wednesday and the second camp that was procrastinating and moving in mid $16's and higher.  Basically first camp has been distributing and the second camp just needs to be patient through it.   If you don't believe in the story then just move on.

VOL,  momentum begets momentum and that is what happened to the upside...and to the downside.  It works both ways, kids. If you've never seen it before, you just passed MOMO 101 last week...hopefully in one piece.  Violent sell offs are nothing new in something that goes up so fast.   Now we turn to giving this a look around the 9ema area.   At this point its only a look, we like to see a reversal begin before considering a entry.

MTRX, MTRX, MTRX one fine oily day it will move.

Some notes on other stocks in Alert/Update page. 

Fed Day

This is one of those days where we wish we were institutions rather than retail investors.  Not!   Up until the Fed decision, the market seemed like it was stuck in mud.   There was hardly any action and most of the entertainment was provided by the special guest on the NYSE trading floor.   We had to double up on the amount of coffee we drink just to get to the 2:15 p.m. mark.   Then it felt like there's a jolt of energy injected into the market and everything becomes alive again.   You don't think the guest of honor would address Wall Street and then have FOMC ruin the day?.      Let's just say the stars were lined up ...Bush...Bernanke and not accidently.

Speaking of jolt, the Chinese market was rocked the night before and it's definitely spilling over to all of the flavours here in North America.   The familiar ones we cover all suffered to one degree or another.    However, we see little correlation between the market over there and the Chinese stocks trade here as most of them only trade on North American market.   Still, we prefer to see a trend change here.  We'll see soon enough if this is mere a distraction and provide people here some opportunities to add to the strong ones.

TGX, this one had the best follow through from all of the stocks yesterday.   Sometimes you just simply have to be surprised by the kind of stocks that are performing in your portfolio.

VARI, this is one of the earning play that obviously enjoyed the Fed day more than the others.  Action speaks louder than words and we added during its strong performance today.

CHRW, this is a new one we are throwing into watchlist as this is the rare earning reaction for a big(relative) co.   Volume is huge and stock finished near the high.  Whatever the institution is seeing in this thing, we think there's going to be more to come.

CNS, we think this one is finally ready after excellent earnings to move forward.  We picked some up near of end of day

ABM MFW, these two DJIM's just keep serving up excellent days.

CCF is turning slowly...as we said... patience these earnings are not going away.

The market got a late day upgrade,  if we are to continue this longer term uptrend there is no better place we'd rather be than in strong EPS stocks. 

SWIR, we added a few times AH, the earnings are quite good and considering SWIR was just 15+ getting a position in the high $15.60-80's is a treat.  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.  We think we might see a 5++mln volume day on these numbers, if that happens the share price will be quite higher intraday.

Reports Q4 (Dec) earnings of $0.09 per share, $0.02 better than the Reuters Estimates consensus of $0.07; revenues rose 81.8% year/year to $68.3 mln vs the $66.3 mln consensus. Co issues upside guidance for Q1, sees EPS of $0.12 vs. $0.08 consensus; sees Q1 revs of $82 mln vs. $65.83 mln consensus. Co states. "Based on strong bookings, we have solid visibility on Q1 2007 revenue. This guidance also includes a sizeable increase in operating expenses related to new product launches and major trade show activity expected

Bounce in index...

doesn't necessarily mean that there are opportunities in individual stocks.     We are looking at some pretty wild swings in the index's today and this has to be expected given the magnitude of the sell off we had on Tuesday.    There's a camp of participants that just don't believe that the correction is done and refuse to chase any bounce/rally so soon.    Even though we don't have a bias on market direction,  we do maintain a very cautious attitude and refrain ourselves from tip toeing back into the this market other than maybe a quick trade here or there.   Frankly, it's very easy to go back in and start buying and it's just as easy to start losing.   The question is... do we see any opportunities to buy right now given a lot of the "opportunities are abound talk by many of the gurus out there"?    One thing we need to have is trading opportunities WE are most comfortable with and are familiar with.  We just haven't seen it yet!.   For those who have a 3 year or even longer investment horizon, everything may seem like a bargain compared to 3 weeks ago.   For us, we are short term traders and that's what got us to this point and we'll stick to it.   Our discipline saves us from making unnecessary risky calls/trades and that's the way it is.     Come think of it, making good trades in a good market is not that hard of a thing to do,  but not losing a SINGLE penny in a bad market is probably the hardest thing for any trader.     Trading is often like fighting a battle, you only go in when you sense favourable odds on your side.

There are a few facts about this kind of market environment.   Market won't go away, market participants won't go away and we won't go away but the only thing that can go away is your capital if you don't know how to protect it.   Opportunities will come sooner or later and when it comes, your capital better be there to make it good.    Regardless how big your portfolio size is, we just don't believe in buying anything now for better days ahead.    We just don't know how much worse this correction can get and we are definitely not putting our own money in to find out an individual stock we loved a week ago has another 10 or 5% downside left.     Also, when the markets do bounce back meaningfully and resumes its uptrend, how do we ensure that the stocks we buy today are even going to participate in the rally?   At this point, we don't know and we can only wait and see.     Strong EPS plays are only good when the market is in a favourable condition and there is money chasing them.   Take GEF today, we said.. "What the market will do with new earning play possibilities is up in the air as of Tuesday, so we will be cautious and go with what the institutions are doing with this today".   GEF would have been up 10-15% a few weeks ago on the numbers they did.  This morning we dipped in to see if there would be any earning momo as the market started showing signs of a reversal early.  It moved a quick $3 bucks, but that was it.  By the afternoon the market showed it didn't give a damn about NEW earnings plays and this is what we feared in our cautious note on it.   Simply, we followed the institution flow and traded accordingly which included letting the small piece go.  Let time be your friend and not your enemy at this point.  Knowing that we can afford to wait on plays like GEF or any other play is our biggest advantage here.  Now its on radar again and we shouldn't miss a move up if it comes soon.  If there is no momentum shown, what use is it hold and risk downside at this point or just sit in a flat stock.   Perhaps by next week, we may all be in a buying and holding overnight mood but just not today and probably not tomorrow, a Friday.

There were some stocks near(ing) 52 week highs such as CSV ENR ABM,  but in our opinion these are NOT the kind of momentum movers that may benefit once the market does turn around.    Once again today, we mostly sat in front of our screens to watch the volatile action and listen to CNBC to be amused by their guests.     We are simply looking forward to the weekend.

To chase a little or not?...

Just as the stress seems to have abated to a certain degree, we are faced with trading going into a weekend.  If the markets takes comfort today in the international markets and uses it as a catalyst to gap at the open, we wonder if taking solace in the rebound action carries over to holding into a weekend.  Somehow, we think the investor/trader would rather get back in the cautious tent, put away the bargain hunting for a day and just wait for the signals from trading overseas come Monday morning to proceed.  Yes, it felt better today but we prefer to lose sight of this and just head into the weekend with a cautious stance before everyone else.   Hey, if we're wrong today, it doesn't mean we won't be kicking and screaming in if the market shows strength tomorrow. This was part of the thinking today and not getting overzealous in finding stocks off the gap that we would want to hold into the weekend.  The gaps are great on the heels of a foreign market if you bought the day(s) before, but to chase them is not so fruitful as the days have been met with late day sell offs.  Today was different,  well actually it was not as the sell off started at 2pm instead of after 3pm when the subprime mumbo hit the market.  These market opens are great if you want to dish out for 1000k shares of a HMIN type and make a quick grand+, somehow we don't think many of us are using this leverage but many smartly are as they sell off to others that chase these opens.  Today just proved how sensitive the market is to any headline as we regurgitated more of this subprime news that has been burdening the market.   Simply, it puts into perspective that even though some might be thinking we have bottomed, they will still run at first sight of any negativity.  Most are thinking what ma and pa would do and not what they want to do themselves.  Everyone is thinking what their fellow trader will do and right now it seems one doesn't have much confidence in the other to hold into a potential change in tide.  Yep, we're guilty!.  We have been bunkered 8,9 days and we won't miss something beautiful by jumping the gun, especially heading into a weekend....The commodities are showing they are game and financial are participating which has been a good sign.  Besides doing some of the fashionable day trading here and there, we continue to be selective in what we put up.... 

KBW , we mentioned as a follow up Tuesday night to the banks has moved from $34 to a touch of $37 today.

NVTL , had climbed 5% to a high until taken down with the market. We said because we expected fewer plays, we'd taking bigger positions than usual if we had something showing movement upward.  To work this strategy which includes adding on a sign of a move to a starter, we also said we expected to sell sooner..meaning a change of tide and we would bail most of our position.  We did this with ABM yesterday and today with NVTL. We are not giving up profits in this market and there is no such thing (not that we have such) and that is a stop loss.  We sold a sizeable amount on the 2pm swoon but think this will play todays highs soon again.  In some respects it easier to trade now as you are concentrating on fewer positions and can see a move begin to materialize and therefore add or subtract in a more timely manner. 

Today, we picked up FSLR again. It closed in NCH territory and is one of the few stocks that has regained all that it lost this past week.