A sign of things to come?...

First trading day of the year, it sure was rocky, to say the least.    What began as a all out rosy day turned into a scary moment in the afternoon but only to be saved by an uptick during the last half hour.    Volatility is in the air and we can smell it.   Some of the momentum stocks reversed intraday and got hit hard and some struggled hard to hold their ground.    Boys and girls, welcome to the new year!   One thing that we are sure of, regardless which sector is working today and which sector is not, the action we've seen from the market today is caused by the exact same players that were playing these same sectors a few days ago, or a few weeks ago, or a few months ago.    Blame on the Fed Minute, blame on the oil, or we can simply blame ourselves for creating such big volatility.

When it comes to trading stocks, what we are really doing is not trading the stocks themselves, but rather we are trading against the people behind those stocks.   It's a competition and it's a game and majority ALWAYS have the right saying in a stock.   We have to accept it.    So when the market turns intraday today and even the mighty FXI could not hold its ground,  we have to accept the fact of what's happening and act accordingly.  SELL..   How many times have we seen a +100 Dow day reversed into a -40?   Not many times!   This of course raises our caution level considerably and therefore we have to act accordingly.    There's no pride in this game, it's just about survival.   When you can actively survive in this game for a long time, it means that you have done something right and it also means you probably have won a lot.  Ok enough of this philosophical crap and lets move on to some real actions... lol

China stocks, namely the ones we track, HMIN EDU MR and BIDU (more for the trader) all had a relatively good day.    Even though MR and HMIN did not finish near their high of the day but given how bullish we were on those stocks last week, we all should have had some to lock in for some profit and /or if you played our idea off yesterdays Journal that these might catch a bid, especially with the FXI gapping up 3+ points premarket and these not far off Fridays close.  EDU was still left behind 15 minutes into the trading day and so we tossed out this idea at $34.20's.  We still like HMIN alot and think this one is definitely in play, given the recent surge in volume.    We are very much in the camp of buying aggressively on dips for HMIN while adding lightly on strength.   Why?  Well it seems this is how this thing has been rewarding us so far and there's no reason to change the strategy.    MR, some dude's been putting an iron lid  on this thing at $26.    When so much firepower has been absorbed at $26 and stock wouldn't go any higher, we think it would've dropped even without the index help.    Give it some more room to work, buying dip also works well with this one.   Both EDU and BIDU looked pretty good at the close and both showed that they are busting their respective downtrend.   We are definitely keeping a close  eye on all these four stocks and looking for opportunity to add.     One word of caution though, we are only playing the quality China stocks at this point and there's really no need to spend our time or capital onto other " wannabe runners".    We do make FFHL as an exception since we are familiar with its play and it's also very much in play still.

One thing you might use now is the FXI, today you saw how hand in hand this acted with our quality china stocks..just look at 10min chart comparison.  It reversed...it played with the gap, it turned and DJIM's followed the whole way!

ATNI, this one for some reason had a late push and we alerted all our readers on its break out.    We don't know what caused the surge but we were following the action.    The volume is very good on the breakout and this one has had a pretty strong basing action last little while.   If this one follows up, we are likely to add more.  See the chart up that showed this was not far from breaking out and should have been on radar.

POWL, we alerted this one earlier also and thought it had a chance to breakout.   Unfortunately it suffered a reversal as every other stock did an hour later and did not close anywhere near the high.    We still think this one has potential and the close today only put it right in the middle of that tight trading range.   We'd keep a close eye on this one.

ABM, it's almost hard to believe that a stock can consolidate for so long within a 50 cent range.   Only from NYSE perhaps!   Given the surge in trading volume ever since it released earning, we think that this play is far from over.    Once the institutions establish a trading base and enough shares get exchanged hands, the next step should be higher rather than lower.    We'll see if it creeps back above 9 ema next couple of days to assault for a new high or not.

ROS, well there's really nothing we want to say other than noticing "who's in charge today"!.  Seems just yesterday it was alerted at just under $38 as a play off the other Russian telcos.

The bottom line, earning season is almost upon us and it's ok to have some volatility going into the earning.    Again, we've said this prior to last earning quarter that market rarely crashes before the start of an earning season.     At this point, we are trading smalerl sizes and taking advantage of some hot sectors and a few tradable opportunities while we wait for the earning season to start.   When a really good opportunity comes along during the earning season, we'd pounce on it hard with all we got and put another 25%+ gainer on the plate.

 

DJIM #4, 2007

We can't block out all the noise, all the negative noise hitting the wires, the bobble heads on CNBC as its venom is in front of you on your screens...the abundance of red, 3 out of 4 days!.  But it is possible to turn off the excess, the actual stuff making the noise...click..it's off!!.   If you want to dwell on the macro, we can refer you to 1000 places that will discuss the possibilities till they and you are blue in the face.   It is so easy to get involved in the hype, even if it is reality in many respects and get a tad depressed and sit on your hands.    You could fall into this trap and sit ideal or you can jump a bubbly, new opportunity to make some mo'.    DJIM is ' stock picking',  it is not to evaluate a macro situation and decide to take a position in a stock that could be affected by the goings on 3 months from today and make you 10% down the road...Why should we wait 3 months, a year for a 10% gain when the possibility to make that much in a day or two is granted almost every day....This is especially true during earnings season!....No matter what the 'big boys'..INTC, IBM's are telling for the future....Small caps for the most part are only telling you what they did for the past 3 months with no outlook.  This gives us all of us an opportunity to collect points, here and now on the PAST..in most cases it's easy money as it tends to bring in momentum and an excellent trading environment.   But if you're shacked away, clinging to stocks stuck at the 'hub' with no immediate flight plan...well, then you are also missing opportunity after opportunity if you do not have excess cash to use.    Procrastination... is something best left in bed or on the potty in the morning,  if you're going to trade successfully.   The ability to differentiate between stocks and understanding what has the most potential to move out of the gate the fastest is so important in our and your success.   You have seen what momo can do recently...good and bad as in VOL.   If you do not recognize momo and jump in day 1 or 2 and procrastinate till day 4, you are left at the summit.  Bet there are more waiting for a move from these prices than ones who got in the first move of a max. of 12-13 points from DJIM time on it.   Basically, those admired the move from a distance so much that they think it can be replicated once they're ready days later.    Why let it slip through your fingers the first time and be left hoping for sloppy seconds!.  To a lesser extend, this holds true for a USAP and it's potential following earning last week.  Like CENX (if you want some aluminum in your diet),  if you want a steel play with a connection to Boeing etc there is not a better longer term hold in this sector.  They are a little volatile but also give a better bang for the buck.  Again, we are not here to make predictions on commodities or anything else...so we are here with the flow.  Right now, its a little positive.

USAP, you saw this stock here before most likely.  It had stellar earnings last Q and this Q beat all expectations handily even if you take the nickel pricing that added about 10c to the EPS.  The 97c was 80% growth and guidance is nothing to sneeze at either.  How to differentiate a stock and its potential for a fast move.  Compare a stock like VE with a 200mln float and USAP with a tidy 4.2mln and 80% instit ownership.  This smells like a possibility of a fast move and volatility, so if you want to the chance of a 3-4 5pt move, stop procrastinating if the signs are there...VOLUME is always one... Why not start with a starter like we did below $37 and then add as you see the momo come.   So, if you watched like many watched VOL, Monday might not be the best time to enter but on the other hand you might want to take advantage of the profit taking end of day and price decrease as a new start.   Again, we are not here to figure out and suggest if a pullback is sufficient for you to enter...our gig is to introduce you to a potential move and in this case tell you our entry.   Now is where you might want to use charts in your decision process.  Of course, we took some points off the table during the nice run, we all should heading into a weekend with a fast gift when its given.  There is nothing not to like here,  but it does not mean you don't take the points.  You're in the market to make money and nothing else.   We will follow closely to take back a full position.

VNDA, here was another opportunity in a stock we know from our own experience the power it can generate.  We know its bloodline, we know this can be that thoroughbred sprinter.  The history of a stock is simply the chart, so if you missed the DJIM run before... a quick glance at the chart and the previous 2 moves should have made you to put this on top of your trading list to watch after our mention of the funny biz in the 350k lot at highs(Wednesday), the snap back action to highs Thursday was another clue to something fishy, yet smelling good.    An offering at the highs of a stock is always positive, it is not the offering with no price that we are seeing from MR and EDU that make the investor apprehensive or even scared that it will be quite lower and also cause dilution.  In a up and coming biotech with at least 2 promising drugs,  dilution is the last thing on anyone's mind.  VNDA will have to partner with a major as they said again Friday, we feel  this should continue to keep the stock steady in anticipation of the inevitable event of a hook up with a major.   What has always been impressive about VNDA is its ability to hold gains after the initial big run.  The finish was strong as it pressed the days highs. We noted our intraday sell and the potential to pick it up back with a break of the days high.  We ran out of minutes to see if this occurs on Friday and will take it minute by minute Monday to see if we add back what we sold.  Remember, we fear the 'negative' news that might come overnight in a biotech,  so use caution and only sleep with what won't break you.  Look at it this way, you could have played VNDA 3-5 days so far and slept fine in between the big days.

What else for the week ahead?.

9EMA..you can make a list off the charts posted of the stocks below this short term support line.  Starting with the Chinese stocks like EDU MR and others like DLB and know what we have no interest in now.  No need to list them all.  Then look at those stepping above this point like the Russian telcos ROS VIP MBT to put back on your potential trading list. Just watchin now more closely.

OIL, really hate to turn to ALY, BTJ if need be, but they do still offer nice trade potential.  MTRX has been incredible through the massacre and considering we have held some through, we'd definitely like to see it move with any sector move.  This is the safer bet and one you can hold through the night.

ATNI was one of those HUB stocks as it did nothing but wait for a flight plan after the initial  BIG run!. It got grounded!. We discussed these tired plays may be a waste of cash at their recent high levels.  Well,  ATNI finally collapsed late last week, but might be a buy opportunity again at 50 day.  More than any other reason is ATNI made it to 2 publications as a 'top' small cap (motley and street.com), Friday.  Just a hunch, if the market is good.

MFW AMK MEND, 3 buys we have listed here on the Journal in 2007, have been steady performers yet do provide some swings and dips to buy before continuing back to highs.  We continue to hold small.. adding/subtracting as we go along depending on the trend.  Trying to catch a bigger move here.  CCOI is another that seems to have staying power, best to look at it again if it comes to highs as 9ema area is still a possibility here.    CCF, a one dollar move in a stock like this is .20 cents on another, so take that into consideration when dealing with thinsters and be prepared to stick it out if you buy these types.  The earnings are not going away, even though the buyers are not lining up last week.  Maybe a few will at the 9ema area.

VE, moved a $1 after our alert on a hunch it might move because of news relating the Suez. Seeing the float, you know this won't be a quick mover. If the news is not substantial and doesn't put the stock in a uptrend soon, we will release that starter position.  A break of $70 is what we would like to see, if it doesn't come soon...we'll say good-bye.

EBS, introducing this IPO to consider for a potential trade tomorrow or one to keep on radar for future events.  This is a recent IPO that is profitable for a biotech, it provides an anthrax vaccine contract for the stockpile .   It moved late Friday and we want to see if there's any follow through or any news.  The OS is 80% is controlled by one big head in the company.  There is not much left for you and us, so there is potential for more moves.  We could be at the beginning of a move, or we could be at the end of a short one.  If we take a starter position early and it turns against us, we won't let it go too far in the red before selling.   

Look at IPGP, as an example of what could be a 2 day run and the potential to get in too late as some did here in the 27's,  instead of buying the 25's and the potential break we spoke of before and after it started to move.