November, finally....
Friday, November 2, 2007 at 07:25AM So, Thursday's drop is the kind of action we should've gotten yesterday? Perhaps some will say! In all fairness, people should focus on the sector that is growing and making profit for a change. It's unfortunate that we live in a world where media plays such a big role on every day affairs, including the stock market. Today, we had the spin cycle start all over again. As we said yesterday...we have things to do and that is only trade individual stocks and mute out the talking heads. In our opinion, whatever things need to be done by those financial institutions, just get it done and move on. If you don't relieve the management team that's responsible for the credit loss of their duties, and if you don't disclose in transparency what you've lost, you are always inviting those sneaky analysts/market pundits to jump on the bandwagon to call out a doomsday scenario. Things just aren't that bad, we think!. Take a look at MSFT, AAPL, GOOG, RIMM... and you'd see a pattern developing. If you are long just those names in your portfolio/fund, you'd wonder what's with this 362 pt drop? Ok, the names above isn't the entire stock market and they represent just a specific sector, but it is a very important one! The point is, if we all move away from the attention of the Citi and Exxon's, there are stocks out there that can be traded higher, with sizes. Not just traded, but made money on!
The money comes out of a troubling sector will always flow into somewhere else. This time around, yield is getting lower so the interest bearing instrument won't look attractive. The only place you've got left is still the equity sector. That is why we think the market is still going higher. As we have said before, companies like Citi or Exxon can afford to take a 8 billion dollar shortfall in earning where as companies like Apple and Rimm can't. Lets just move on with it....We do remain bullish, just understand we are extremely selective at the same time seeking out plays that produce like CETV, GLDN, SPWR big gains in short periods of time. We are not holding 10 positions seeking out a paltry return from each and then falling hard on big down days like today while waiting for such. As we've said this ain't old skool market, it's 250 DJIA ...50 NASD +/- days in the hood! Selective...the right groups/ sectors is the game.
Tomorrow we have the job report and it seems media is playing it again as if the market can go triple digit either way depending on the outcome of the report. Our game plan is that if the report sets a negative tone in pre market, we'd most likely go aggressive on the long side in the early going.
Some stocks..
CETV, we've had some nice runs in $100 stocks the past month from GLDN, WBD, SPWR and of course CETV an alert buy Oct 9. CETV already had am impressive run to $119 and with Wednesday's big dip we couldn't avoid it for a spec buy into earnings as per forum note. If it wasn't for the selloff prior to earnings , we wouldn't have moved in. The drop gave some room for error and provided lots of upside if the report was just good as it may go back to highs just off that. Yes, we don't recommend buying into earnings, but once in awhile the temptation is there for a few shares. Looking at the headline today this looked like a big miss on EPS, but the market action dictates and premkt it was trading up. So the idea is to never just judge a book by its cover or in the case of stocks by the headline number. Let the market dictate and do some digging inside the report and/or listen to CC to get the big picture before jumping in. We noted some aspects of the report in a forum note while everything was getting beaten up, yet CETV was still strong and only a few dollars off recent highs. We liked the impressive revenue beat of expectations and took into consideration the EPS miss was in large part to currency translations. A few dollars here can go pretty quick and after climbing some more it then spent a lot of time eating at 119.50 before exploding to a day high of $126.50. Yep, thats 7 points from morning note or about 16-17 off yesterdays low. So on a dismal day this provided some fire power to offset a lot of the gap down loss. At this point, we're resting CETV and as with the streaky GLDN's WBD types, we'll look for another entry down very soon.
PSEM, this is a stock which came out with a pretty nice report the day a few days back. We like this name for the fact it's in the technology sector. It also did extremely well in Thursday's environment. This is a fresh name that currently sports a 93 95 IBD rating. We will be getting more aggressive in trading this one tomorrow. Note: NTCT is also in play for IBD and as well as SIMO potentially.
LFT, based on the trading today, it looks as though it put in a short term bottom today. There's strong reason to believe that any weak hand who's holding this one would've been shaken out today, as evidenced by the drop around 2 o'clock. Toward the latter half of the afternoon, it looked as though there's a bidder or two sat there and scooped up all the shares that's available which inevitably caused a rush to the upside near the end. This isn't to say that this play is ready to bust through $30 and beyond right away but we are very encouraged by its action last couple of days, given the circumstance of this market.
STV, does anybody feel there's just a magnet at $38 for this stock? The company announced that it's releasing earnings on Nov. 15th and we are thinking there's a high probability of an earning run prior to that. Notice the last minute finish as it climbed and actually hit $39 before some fancy footwork a few times to get the final trade back to $38 even.
GA, in terms of profitability, this is probably the most profitable Chinese IPO we've seen in the recent history. This also explains its giant offering of 57.2 million shares. We are putting this one on watchlist to trade as it did extremely well relative to the market action today. Given the size of the offering, the action looked pretty impressive. Just don't overdose on all these China names that are fresh.
Some notable EPS to investigate, potentially watchlist this morning..NRG, ATRO, NTLS, ATNI, SWIM, GFIG, HAIN, MR