Resiliency

Even Dow's winning streak has been as long as our Blue Jay's losing streak, we know that one of these days their respective streaks will end.   At least in the case of Dow, it's more probable.    Today's the day?    In a very dramatic fashion, Dow closed just 4 points lower.   This might as well be a winning day for both indices.   For those of you that haven't kept the score, both Dow and Naz were off to some good downside action earlier in the day and managed to climb all the way back.   Is this resilient or what?    Again, we will have another test tomorrow with both the CSCO reaction and Fed meeting.    In either case, we think this market will probably go higher still.  During this streak, the majority of the gains in the indices was in the first hour or so with the rest of the day seemingly distribution going on.  Today..that all changed as we saw another side of this market!

In terms of DJIM land, some of the stocks were down earlier but were managed to climb all the way back and some.   What we do here is to make a note of those stocks that managed to come back and those that did not.    For those that come back, we kept some and even added to some.  For those that did not make the afternoon rally, we pretty much cut them off from our position list.   Still, we had about a dozen or so stocks left in our account.    A day like today gives us traders a perfect vision of how strong some of our plays/picks are.   When the market is really green, it's just that much harder to tell.   When the market goes through a shakeup earlier and comes back, you do want to see your favourite stocks to perform exactly that and maybe then some.   If not, time to move on.   There's plenty of good candidates left and new candidates coming up down the road.   There's never no need to be hung on any particular play.   After all, these are just stocks, we don't have any sentimental feeling toward any of our plays.  Just a game!

Here are some notable ones...

NGA, this one definitely surprised us today.   Normally on a weak morning like we had today, a stock like NGA which had such a strong run-up would definitely feel some pressure to pullback some.   Well, it did, sort of, on very pathetic selling volume.   Maybe, everybody has the same play book as us or maybe, this is just one hell of a strong stock.    In any case, we have to be quick to recognize what is going on and act accordingly.   The action, of course, is to chase it higher.    We chased some from low 13s all the way to high 13s.    Bear in mind, we have also lifted our aggressive buy on dip points from low 12s to high 12s, or maybe even higher depends on how it performs next little while.   So basically, when our somewhat conservative attitude toward this one proved to be an incorrect call, we just had to correct our approach as quick as we could.  This is a high stake game where opportunities don't wait for you to make up your mind.   They come and go and you as traders, just have to grab them to the best of your ability.

LXU, this one reported earning yesterday and that was the catalyst.   Boy, would you look at the volume past two days.   This stock has never traded this much volume according to our memory.   Believe us, we have followed this since the $8 range.  It was one of the first DJIM Journal pick entries back in August 2006 or was it 1706 as Mr. Bush would think and slur.    Basically, we like this action a lot.   Sector is on fire with POT SQM TNH...  So why not with LXU?   We think given the valuation of this one, which is still a baby, institutions are getting in big time.   We call it an instant lift of valuation.   How else can you explain the volume?.  From what we recall there is incredible value if this company gets broken down into different segments.  Maybe this idea is again refueled.

GTI, a ha, another IBD play you say!   Well, this is just added bonus we feel.   Whatever is happening with this one, it's going toward the right direction. One thing this is..is a turnaround story that is being liked.  The volume suggests it isn't common retail folks like us that are getting involved, which is good.  

Besides the above, we also like the setup in CUB NTLS TRCR TNH EDU.

Taking more out...

Of course, as we start the day, nobody has any idea how that day will turn out.   Being a trader, it's extremely difficult to prepare yourself "well" for the day.    If you have been in this game for as long as we have, the hardest part of the trading is to anticipate a market "turn".  Sometimes you just go with your market sense, sometimes all this is, is your gut.  Well, we feel today's action is discouraging at best.    The action from indices may be deceiving as there's really no sense of urgency of cashing out.   We feel that under the circumstance, it's best to be more cautionary as oppose to hunky dory.     Maybe it's just us, but we definitely feel that certain plays are getting a little bit tired.  All this might be coinciding with the driving force recently and that is earning season is wrapping up.   How can we tell?   We watch the combination of volume + price action and their behaviour relative to the overall market.     Many if not most of our trading decisions are based on our past experience, and so we decided to reduce our exposure about mid way through the day.     On the other hand, if the market decides to give it another quick push, we'd be there quickly and do our part.   As always, buying decision is far more easier and quicker to execute than selling. At this point, we think weve had a great earning season, we are not about to get lackadaisical look on our faces watching our profits wilt.

There is a couple of stock setups which we feel we need to mention today and let's get right to them...

NGA, this co., oddly enough, announced that they are going to have a 3 for 2 split.   In our opinion, what the heck is the management thinking?  Yes, we definitely do not like this announcement and we reduced most of our position earlier during the day.    The stock, in our opinion, is liquid enough which does not require a split to attract more "investors".  We don't go with management reasoning this will make NGA more liquid and available to investors, including institutions of course.  3 for 2, just doesn't cut it.  Funny thing also, we'd also highly doubt that most of traders who are involved in this stock are long term investors.   In our experience, companies which have announced split at this price level have not fared well, most of the time.   Of course, we aren't just going to ditch this play for good and stick to our emotional opinion.     The IBD play is still on target but we'd be more cautious if we decide to get back into this one again.   

CROX, if it wasn't for the weakness of the overall market, we might have been a bit more aggressive with this one.   Nonetheless, this one had a new closing high and we added a few times to day, including near the end of day.

MTOX, this one actually turned out to be possibly the best trade of the day.   We threw out the 'lead' before 10am and soon were in it mid 26's for a run to 28.  When you have a nice quick gain and the market shows signs of a turn, you have no choice but to give up your new pick. Maybe..we should have bought back end of day as it fell back down to low 26's, but we were just not in the mood to get cheeky.

SPAN, RCCC, NTLS, AFAM, these recent alert plays are humming along quietly in the background and we've used that to sell some just in case.  These have been secondary plays in sizes as the NGA, IDSA's, LXU etc. have been the primary plays lately.  We still have some scattered shares of these, but it is nothing that can do any sort of damage to us.

ERS, we picked up some AH's, just couldn't ignore the 40% revenue increase with the stock hovering near recent low's. This could be just a flip into any strength tomorrow. We'll see if there is any appetite for this old gamer.