Tough to shake off earnings enthusiasm...

It's almost unthinkable that we'd start the earning season with a nasty drop which begins the long decline.   What happened yesterday simply gives many traders a dose of reality that nothing goes up forever and pullback/pauses are very common even in a seemingly bull market.    Hopefully, you just relaxed watched the All-Star game and watched our Blue Jay star make a catch late in the game!...Wow, wasn't that something..lol...Guess the manager thought his arms were too tired after the HR' derby the night before to let him get an at bat.   Thankfully, today proved that nothing has basically changed since the day before yesterday.     Good earning plays are still being rewarded and bad ones are being dumped.   Things are about as orderly as it gets.     Also, for most participants, it's irrational to sell before the optimistic expectations they have with respect to their holdings.     For DJIM, it works the opposite because we only get excited AFTER an earning has been announced.   For us, there's no optimism, no expectation nor any feeling toward any up coming earning announcement.    We are just excited over other people's excitement so we can take advantage when the actual trade comes.

There's no shortage of plays on the table today.    For us or for most traders in our loop, we'd like to point out that we have a habit of working with the green plays.    It's not only easier to do but it also makes a lot of sense regardless of the market condition.     In an up market, obviously you want to hang with the ones with the best momentum.  In a down market, anything green pretty much makes them stand out and you sure want a piece of the action unless the market is in a total distraught.    Buying dips, on the other hand, is definitely not our favourite strategy and we'd try to stay away from it as much as we can.     When you buy a dip, you couldn't help but thinking that you are just taking a chance that hopefully you are buying it near the intraday low.     The planning of the trade as well as the execution will be tough on your mind when you go against the trend.      That's why in an up market or when the market is in a clear bull mode, it's always better just to ditch those "buy on (#)ema dips" and work with the new highs and break outs.

LPHI, you are probably wondering why we weren't being aggressive buying the dips on this one when the "clear" outcome is for it to go challenge the new high.   Well, there's always the probability that it won't.     We basically want to strike when the moment is right.   Today we got that moment between $35 and $36 and we got in.    Instead of being in this one for a while and waiting for a move to happen, we'd prefer watching it until the move comes.    Now the chart looks good and it looks like this one is ready to challenge its old high and beyond.     We'd be adding more of this one aggressively if and when this one strengthens up.

CCF, our old friend did it again.   This one came out with pretty good number as noted last night and stock acted correspondingly.   We like the volume this one exhibited.    As we have mentioned earlier today, this one has an IBD rating of 85 93 before the report.  If the number gets revised up, it can mean a whole new world for this play.   Again, it's just a possibility and not a sure thing.

ASYS, finally, this is a new  play we are adding to our list after its tremendous "look at me" volume today.    This one has a very small float and since they are associated with solar plays, we think this one is way undiscovered compare to others.   Sure, many traders have started noticing this one today but we think the fun may be just the beginning.  If you played it off the alert, you got 2 runs of almost a $1 intraday...we're looking for more and so just added on the dips.  This little company is profitable, revenues growing and a very small float and not a one trick pony that was trading under 50k share day after day (2.2 mln today). This is the type of company when it reports that has the markings of potential yr. over yr numbers that will get it attention...but we're not waiting for that day off this volume. We said, we are seeking more attention for anything solar from the firms, news to keep these going, anything with solar has a ring to it to us, even if it is something like this today on a semi/solar like AMAT, which ASYS also happens to be...BofA believes solar opportunity transform AMAT into growth stock, BofA believe is AMAThas closed another solar thin flim deal with a European co. They est the size of the deal is 40MW with the initial investment in the 60m range. Firm believes the latest deal is particularly important as it is an emerging application, "building integrated photovoltaic". Total value of solar thin film contracts won to date, firm ests, is in the 540 mln range.They think AMAT will now win 600-900m in contracts in FY07 vs guidance of greater than 400 mln.

DRYS, this one was mentioned a couple days ago as our favourite shipper now before TBSI went tipsy.   It's been mentined here many times before that as well.  We felt TBSI needed a pullback but this one looked better chart wise, anyway.  btw..TBSI is back to $31 after yesterdays sale.  But it was DRYS today who showed us who's the boss and took on almost 10% and a new high.    Again, we wouldn't want to chase this one blindly as the risk/reward ratio is not nearly as good when it was around $45.

AZZ, to us, this thing for sure is going to break $40 and beyond.   Action looks superb in this one and we are adding.

DJIM #40 2007

All the fist pumping, Q end dressing by the funds managers of all sorts didn't amount too much by the end of the week on the indices. The DJIA was up just over 70 and the NASD put in a 30pt week. The markets coming up to July highs coincides with the start of another earning season. The earnings will tell the tale if we break through.  Unfortunately, last Q didn't provide many stellar plays in the EPS world, we hope this season is better as it typically is.  The Shippers, Solars, Chinese stocks we follow will certainly provide more trading opportunities, but we hope there will be some fresh EPS stocks to trade in.

AZZ, seems every Q this stock starts off earnings season with a good report. This time was no different as it reported, Q2 (Aug) earnings of $0.66 per share, $0.18 better than the Reuters Estimates consensus of $0.48; revenues rose 29.8% year/year to $81.6 mln vs the $78.5 mln consensus. Co issues upside guidance for FY08, sees EPS of $1.95-2.05 vs. $1.82 consensus; sees FY08 revs of $315-325 mln vs. $316.31 mln consensus.  This stock is based on the US economy but its presence in new markets should provide stability if things dry up here. This really doesnt matter to us as AZZ has a tendency to binge to the upside or downside as evident in the charts making it a pure trend trading stock.

FSLR, despite the daily intraday up and downs this was the best looking of the big 3 solars here (LDK, JASO) on Friday.  Volume has been quite heavy on consecutive days and it is very close to a NCH.  It seems the solars are in the news daily now with price targets, contracts and if there is anything on FSLR in the days to come this could drive through its highs nicely.  This is one solar that hasn't pull backed the last two trading days.  BofA raised EPS estimates for FSLR on Friday. Earnings are end of month.

GS, this continues to be a good trade since we picked up coverage of it in the $190's. Volume has slowed down and the daily trading range is getting thinner. With more FED interest rate talk this month a stock in this sector might not be a bad idea going forward.

ANW BIDZ CLDA, are the A B C's of what traded well on Friday.   As far as SSTR, we think more digging is needed in finding the value of this company. A listen to the CC might be in order to get a better picture, it is not as simple as the headline number might suggest. We'll watch from here to see if this does have substance. That's easier then getting all muddy calculating the private placements/Outstanding share dilution.

..Boy Scouts

We welcomed a surprise Fed minutes stimuli in yesterdays Journal to get us out of a meandering market place and we got it good!.  Well..pretty good as the volume still sucks out there.    The policymakers acted like boys scouts in their last open committee meeting as all agreed.   A united group they stand.    As much as anything this shared analysis, therefore a determined effort by all on the correct response provided the kick we needed, included in this was Poole's comments that for once didn't rattle the markets.    There were no differences as earlier and this was probably the most important factor seen by the big players.   Equities simply rallied as the FED did not see broad based weakness in the economy and the market said let's get on with it and put the credit squeeze behind us.     A few M & A deals were overshadowed, but this was also a good sign.   Again, as discussed in the weekend edition of DJIM# 41, good trading is a case of being in the right stocks that would potentially move the best when the market gets a lift and therefore gives a lift to your stocks on the good news. ..."....Simply,  if you had the right stocks the probability was they would be the ones that would give the strongest day.   You have to feed off good news and use the lift provided by news to lift your stocks.   What stocks will be the beneficiary, which have the best chance of catching volume???.  Always ask yourself.   We should all know from the group of stocks we cover".        If you have your hand in these closely monitored stocks you'll know what we mean...starting with...

DRYS TBSI  EXM and the secondaries noted yesterday premarket ESEA/PRGN.  All up 5-10% on the day with DRYS the volume monster.  It was already a good day for all of these before the minutes gave them another round of kicks higher.  The Baltic Dry Index the gauge of freight costs was toying with the 10,000 point level.   The demand from emerging markets is incredible with port congestion in many a country.  The capacity is drained and these boys can kick up rates.   This is nothing new as this has been expressed here constantly, including yesterday.  A possible good sign is other smaller plays are participating in this last binge buying and it all started with the, ..."The shippers, notably DRYS TBSI moved off 9ema yesterday. EXM should follow if this small reversal holds" noted Friday morning.   A helluva run from that short term support area of the 9ema.  Maybe this FREE can catch on if the micros piggyback action in recent days continues, unfortunately, that bloody ARCA on level 2 is still on the ask and not showing his hand.  Once removed this could really move just off its tiny float. 

GS,  if you want a barometer for this market lately look no further.  The drift, the lull of fence sitters was evident in the action of GS proceeding the minutes.   Interestingly, we thought this was setting up to hear a clue of more interest rate cuts in the near term to drive it higher yesterday. Instead, it fed off the news and took a different approach as to signs the boy scouts gave.  To gauge the minutes reaction all you had to do was to watch GS's reaction.   It was evident instantly, we might be in for a good stretch run late in the day.   If we had to pick a large cap, we're glad GS has been a fave here since those recent $190's.

VMW,  recently we talked of this having a shot at 90+, yesterday we talked of $100..what next ?lol.  We're happy to have this as the tech stock of choice if the techs continue forward off good earnings.  Again, you don't need a lot of stocks, you just need the right ones.

STV,  a simple follow up is that it held the morning open prices after retracing to them midday. We'd keep an eye on that level in the short term if breached as a possible exit before re-entering at a later point. Otherwise ...have fun!. Just don't forget there is a market out there beyond watching the minute ticks of this all day.   If STV has you on the edge of the seat because you fear the drops it already has given, take a smaller position.  You don't want to miss other opp's this market gives daily.

A few others from our Journals.....LDK, trade it, flip it..we just won't hold it overnight.   A day turnaround does not make an uptrend in our minds.  Company can say one thing, but a few want to see the independent reports and simply the problem there is not yet solved or the stock would be up much more.     Looks like a lawsuit or two is coming already.     AZZ, maybe closed the gap created by earnings and will act like the earnings guided stock it should be..maybe not.   GLDN,  not sure why this reacted this way to a raising of guidance, this is a low float stock and sometimes you lose sight of that because of the group its in and make more of a move than you should.   One thing to consider is while STV might be the Digital play in China, a huge conversion to digital tv is going on in Russia where TV penetration is at 97%.   GLDN is not a pure telecom play, it is a Digital TV play as well and that will be slowly recognized over time.    CETV, this euro stock was a big winner here before and we took a place in it yesterday as it approaches old highs.     A focus here was creating a new watch list of tradable stocks for our members, over time this list has grown and some might be page on 2 or 3 now as those plays wore off.   As noted yesterday in the forum,  it's good to have past flyers around as they may fly again.   History is no mystery.  If a stock was a fast mover that we once liked, it might be again.    AXR might have been one the last few days, but there is a bigger past mover out there in AMAG $55-72 that has had a great month so far.       FWLT, GHM, GTLS might be ones to stick on closer watch again.

Despite the action in afternoon, volume is still a concern.   A few fell off the fence on to the long side yesterday, but not as many as we'd like to see.   What you don't want to see is a continued divergence in the volume with a ladder walk up in points on the major indices.  This is what we are seeing in the NYSE and SPX stuff.