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.

 

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.

Pair of Aces...

When you have a pair of Aces, you usually have a pretty unbeatable hand.   In our case, we had Amzn yesterday and Aapl today.    Does this pair of Aces have enough karma to save this market?    Or maybe, is this market really in need of saving?     Some are doing there best to make it sound so..

AAPL is definitely the big enchilada the market was waiting and expecting on today.   What everyone was hoping for was obviously an AMZN kind of reaction.    So far in AH, AAPL is delivering and is up over 10 bucks.    Now we are not going to analyze their report, their ipod or iphone, Mac shipment numbers.    That is really an irrelevant issue to us traders as our main concern is how this thing is trading and what's the likely implication it may have on others tomorrow.    So far, despite the early weakness, we say the reaction has been pretty good.    Hopefully, this can translate into a positive spirit into trading tomorrow with the help of some of the firms morning calls that cover it.    Market was hairy at times today but somehow the indices pulled into green territory.

Bottom line, we want to see that the good earnings report are still being rewarded.   This is the fundamental strategy of DJIM and without that, it'd be pretty much useless to trade.     Fortunately, good eps reports are still getting bid up, so we are still very much in this game.    What we do want to caution to our readers though, is that in light of the recent market volatility, we are cutting down our position number 'considerably'.    We are basically only trading a handful stocks now which we consider have the best potential and the safest setups.  We are also concentrating on new faces, leaving most of the recent winners behind.    We want to trade in a manageable manner so it's time to go back to our basic "be very selective" strategy. We are not in the buy the dip scene either now, so it is better to start with fresh names reporting well and avoid the dips in Solars, Shippers and others that have ran this last Q at this point..  Have a look at VSR, PCR for some more that have beaten up today..quickly.  We want to avoid anything close to this, the best way is with fresh names.  A good report is not going to fall 15-20%, an over extended stock, but a recent runner might for many reasons.  If a stock is breaking out to new closing highs as with LPHI, it is worth another flyer in our book. Still, you have to keep it manageable and in decent size.

here are some plays we are dealing with today...

LDSH, we bought some off its report today and liked the way it closed.   The report is pretty strong and the reaction is even stronger.  This one has basically been stuck around the $39 to $42 range since Feb. so this report is potentially giving this one a good excuse to kick into high gear, for a new runup.    We have been a little aggressive on this one today and we are looking for some multi day action from this one down the road.    Read the earning report, we think you would be impressed. It probably didn't hurt BA was up early with a nice report.

LPHI, how high can it go?  If we just stop asking ourselves that question and pay more attention to its action, perhaps we can get some more profitable trades out of it.   We added some today on anticipation of a good close.  It closed well and we are eyeing the $50 mark at this point.

ANIK, this one reported last night and we couldn't help noticing its strength today.    With its IBD number of 96 84, we think this one is also a candidate for a potential IBD runup. They had a FDA approval to go with the report.  Many of us traded this in the past, hopefully, we could have more glory days with it.

AAPL/BIDU, just a heads up for tomorrow and you case you haven't heard, they are both up multiple points in AH.

..Too close to call..

..25bps or 50bps?...How cares now..!.  Let's just get this over with and move on!.    Last Tuesday, we put a cautionary spin on the DJIM players and therefore the market.  This has turned completely into a lack of set ups and muted action in those players.  Just look at the Russell 2000. Last Tuesday's close was 782, yesterday 775 and nothing more than a 15pts range within this time frame to trade.   You can't do much with that as far as trading opportunities go.   We'd rather have the credit crunch back in the news and trade those small banks on the LSE the past few days than sit through more of this grinding action.    So, that's why we say, let's just get this FOMC over and take it from there.....it might be a case of double or nothing, or doubling up or not  on the bps cut and 50% of the experts who have put money to work..on the line are not going to be happy.   This decision is far reaching as its going to make a significant difference to all the markets from equity to currency.    We've taken a different approach and that is not bet on either and be positioned very thinly as far as dollars invested heading into the afternoon.    Just don't do 25bps today and say ..th-th-th-th- that's all, folks!.    This looney tune from the Fed would send the market tumbling.    It's the accompanying statement that will play a the vital role as we want to hear they will be ready to do more.   So, that is the afternoon, but let's not forget the very crucial morning as the report from LEH kicks off the big banks reporting season.   This might leave this market stained for the FOMC decision if they didn't find a way to fudge the book with BS MS GS that follow this week.  Traders / investors will scrutinise these results from head to toe.  

..as far as individual plays yesterday of interest....

BIDU was definitely the one and really only that was of interest yesterday for us and traders in the momentum space.  Unfortunately, as always BIDU to us is a day trading stock and really not fitting to most of our subscriber base. The price also dictates that many are not going to dish out the bucks to make this a worthwhile trade on most days, so we tend to leave it off the board here.

EJ, last week we said 'volume' will dictate if its worth a further trade.   Yesterday, the initiations started for this recent Chinese real estate IPO and it got the volume going.  CIBC with a $25 and Lazard with a $23.  There were also some huge trades in this at 20 even, so there might be some protection from the usual volatility, especially to the downside.   A possible spin that we are trading now is that the lead book runners of the IPO will initiate in the next couple days, maybe Tuesday...Merrill Lynch, a tier 1 being one of them.

ROS,  last week we alerted this Russian telco again.   It's slow, which might be the best medicine the past week. Yesterday in the afternoon it got highlighted by Briefingcom....New High Profiles: OAO Rostelecom(ROS) .....is sitting just below its all-time high of 61.55 set last Thursday after edging above the top of its Jul-Sep range.........it is difficult to pinpoint a single event that has acted as the catalyst for the shares. However, we note ....recently reported impressive financial results,  FY06 results on 7/19 in which the co posted a 49% YoY increase in net profit and a 50% increase in revs....Deutsche Bank recently commented (8/30) that Russian operators are continuing to benefit from growing usage and a benign pricing environment, after VIP reported strong Q2 results on 8/30...

CMED, SIMC  are a few names played here before making new highs intraday without faltering by close.

..out of breath?

Early on yesterday it seemed like many DJIM plays just carried on Friday's action as if the weekend never came.  We saw action continue in the Shippers..DRYS, EXM...Solars..LDK JASO..Chinese..JRJC,BIDU stocks rolled, Russian stocks...GLDN, ROS had good days and a few like GRMN, and even CROX finally broke to the upside after a long period of consolidation.  Some lasted, some didn't and faltered as if out of breath.  Some definitely felt extended and if anything switching into names just breaking out might be a way to go now.   Basically a switch of asset classes you might say.   On Sept 13, we said a trend might emerge..."A possible theme emerging in our bored minds, even if it this play really never left  is the potential for DJIM foreign stocks.   Primarily, the Chinese and Russian telcos because some might be seeing the US' slowing economy and a faster global economy as a reason to get into foreign stocks.  This fact is just clearer now after Fridays employment figs and some might see it as a way out...".   Have you seem the dramatic recovery of the emerging markets since the low's hit on Aug 13th.  This is mostly driven by the BRIC economies..Brazil, Russia, India, China.  This BRIC index already was up 29% last friday, outperforming the emerging markets as a whole which was up just under 10%.  We definitely can't do all the letters of the BRIC, but trading the Russian and China has been a way to go.  A look at MCSI index will show this bubble like action.  This might be a bubble forming, but the underlying economic and earnings growth is there to support it for the time being and trading the China, Russian plays might be the safer bet right now than the high flying shippers, solars.......

DRYS, EXM..lets' be realistic. The last few days is money just waiting to be taken off the table. Don't forget the volatility swings both ways and when these rest..they really rest.

LDK, JASO, and the solars. We are actually surprised  by the strength exhibited by LDK early on.  Reason being a downgrade came in the morning, but it did come with some good news.  Eventually, the downgrade and the recent action took its toll and it succumbed to profit taking in a big way..as did JASO's run.   Let this action serve as a reminder of what we face trading these high flying shippers...solars.

IRBT, was a open speculative buy alert that ended on a good note. There is a possibility IRBT might be given a 2nd chance for the contract given to another company that sank this stock recently. We'll see as news is impending and that gap looks juicy on good news,  if it gets to that level starting over $19.

With the stocks talked above that show or showed signs of being extended, we'd turn to closely watch the potential in some names that came back up on radar yesterday..GRMN CROX APOG VMW  GTLS  ANW (new..but if shippers falter, this may too), for more trading possibilities in the right trading environment.

Bulls on 'roids and Pigs can fly..!.

Those seem to be facts now!.   This is what we saw yesterday as the Chinese bulls roared off the Asian markets, even when left at home alone with the SHANG on holiday's.    With every Bull shot there is a pig in it's footsteps.   Meaning speculation on junk ones was wild and you need to be careful at this probable late stage in the game.    Back at the ranch, the market was doing better than expected with not a lot of profit taking.   We added this footnote to a post before noon,  "Considering yesterdays action this hasn't been bad at all or meager for the small caps /RUT been green most of the day. Bunch of those sorts here having good days WX EJ BIDU JRJC LULU MELI ROS GLDN FSLR EXM TBSI..AZZ might still " .    The day turned from good to very good late in the session for these stocks and a few others like GS, VMW, CSCT.    The market continued to trade sideways and finished mixed, yet for consecutive days now, we were in the right place at the right time.     Hopefully, our morning Journal steered you back home if you've strayed!.     This was the true Bull shot of the day, the DJIM index.    There is really not much to say heading into today trading, except that hopefully we all played these shooters smart and took some off the table.    This is especially true with the gains generated by the Chinese stocks covered here.    Even the good ones will get nosebleeds.

A member noted and what is probably a good way to understand the Journal is to see it as us thinking 'out load'.  One thing is to shadow plays, another is to shadow our mindset, which is probably the better way to go.     We can't give buy/ sell advice, all we could do is show what we are buying and thinking.    Hopefully, it rubs off on you and improves your trading ways.    When we noted yesterday.."Now, we just ask WX to get some game and it will have our most recent China plays on even ground. Oh yeah..where was BIDU yesterday?.     Lets no forget this rocket ship when looking for a good intraday trade.".    You need to ask yourself why are we even mentioning these two that under performed the day before.    Simply, we are thinking ahead and with a big overnight Asian market these just might come out and play with the rest of the kids.   Trading is so much a psyche game, you need to think ahead and think what others will or might do.   Your gig is to get there in the early stage or even ahead of the herd.   We gave the below leads yesterday, clues into where we might be leaning and why.  All you needed was one or two to have an excellent day.  The language is simple and we'd all should have been prepared..

TBSI got back in the hunt and is close to highs.

VMW, we don't cover much tech, but VMW has been the one we have traded the most.   Finally..this one is acting with the sector

which is leading the recent parade and not playing on its own terms. $90+ is in reach now

ROS, GLDN our Russian telco plays are not be forgotten as long as they cling to highs and therefore offer more upside potential in the near future.

WX and BIDU( wasn't all JPM initiation), it was a matter if you build it, they will come!.   The build up was the overnight markets and these were prime candidates to play in the mud with the others.    Anyways, yesterday was a day for us to daytrade these high flying Chinese stocks and it occupied most of our day.    Now, we need to get back to basics and deal with reality and concentrate on the others like GS, FSLR, VMW, AZZ etc.  The EPS winners and ones to come and the potential set ups that we can all get in early on. 

We all need to be a realistic after two days of solid gains!

Shaky Start and a Steady Finish

Although it's still a little too early to write off last week's action, we are definitely off to a pretty good start this week.    Monday always sets the tone for the week, doesn't it?    Ok, superstition aside, we are glad to see that there was no follow through to last Friday's sell off today.  Another big fat red candle would not have been a pretty sight.    Even though some of the names on our watchlist felt a little shaky in the early going, many of them all ended in a very rosy way.    This is somewhat reassuring because we didn't want to see last Friday's ugliness get carried over into this week.   Momentum can get built up on the downside just as easily as on the upside.    Honestly, we still couldn't see the reason why the market was sold off that hard last week.    Many of the issues the market pundits were calling for were known for a while and there is really no quick fix to them.    Still, we have been managing to live with some of those issues(credit crunch, high oil, low dollar) for a while now and most importantly, fed has been willing to pump liquidity into the system and adjust the monetary policy when any unfavourable situation does arrive.   What's the big worry?    If you believe the entire stock market and corporate profit are centred around the housing market and high oil price, then you may have already parked your money in t-bills and shouldn't even care about this market.    For those of us who trade names like AAPL or RIMM GOOG BIDU , things don't get any better than now.

The point is, this market is not just about the 3M or CAT or BAC.   There's a bull market in quite a few other sectors and that's what's keeping the game alive.    You can also argue that there's just so much liquidity out there that there's always institutions looking for some hot (growth) area to invest.   We just have to be on the same page as those money managers.

AAPL delivered a nice report and should benefit quite a few momentum names.

CRNT, this plays has been on our watchlist for quite sometimes now.   Today the company reported earnings which beat the estimate and it also raised guidance for next quarter.   Stock saw a flurry of buying and ended near the high of the day.   We really like this kind of earning reaction and we are playing it fairly aggressively.

LULU JASO ISRG HMIN, these three have traded to their recent highs today and we particularly like their action compare to some of the other names on our list.    For the sake of momentum, we think as long as the market shows some favourable action, you'd want be trading these names aggressively.

Momentum stocks

"For those of us who trade names like AAPL or RIMM GOOG BIDU , things don't get any better ...AAPL delivered a nice report and should benefit quite a few momentum names".  Nothing could've have been closer to the truth as momentum stocks ruled yesterdays action.  It all started with a gap up open and then after some shake and bakes midday,  the momo carried into the close.   What we wanted to see yesterday was the follow through that occurred late, the reason being we somewhat feared a repeat of the GOOG earnings.  Seemingly, we were not the only ones as the NASD gave a few shakes before exploding in the afternoon after it took out the morning highs.   Unfortunately, as we all know this market is a jittery one and could turn on a dime with new headlines and this will likely be the case early today as Merrill Lynch will put the credit crunch back in the headlines early on.   It also won't help a few familiar names couldn't keep up to the AAPL's and disappointed after the close.   If you were trading the momo names yesterday,  the action we got was a weeks worth and there would have been some profit taking either way this morning after the big 2 day reversal.  The action yesterday was reaffirmation of why we trade the stocks we do, momentum stocks rule and it is not only the big familiar names that grab the headlines.  The action in the BIDU, FSLR, DRYS's was incredible the past 2 days and the rebounds in the EDU's CETV WBD have not been that bad either.  The melt up to a high of $110 from SPWR was pretty good as well.

Today...we will get a clear indication if the market wants to play the credit crunch game or move on and feed off the many good reports yesterday and maybe give us a rally of sorts during earning season.  No doubt the yo-yo day to day action will continue, but that is something we all should be prepared for after the last few months.   A wait and see this morning... we won't be looking to add positions, but we also won't be selling the ranch at the open.

A trading note,  no matter how well a small cap acts one day as in the case of CRNT...a downgrade the next morning by a small firm should be taken seriously as it can burst a bubble quickly.   It doesn't have to be a tier1 firm, it could be a firm you've never heard of.    It is always better to exit such things early before the news spreads and the selling hits harder.  You can always get back in the game after the dust settles.

...in front of the Fed

Not surprising to see some profit taking in front of the FED yesterday, especially after a 6 day rebound from Oct 22 lows.   A surprise to some maybe was the late round of selling led by the "dry bulk rate", Chinese games taking down the momentum shipping group hard in the last hour or so.  A few other groups caught the coattails of the dump and sold off as well.   In reality, this was a non-event and all eyes and ears will be on the 2:15pm decision.  This was not a true reflection or a hint of what may come today.  

As far as the shippers, we haven't covered this group on the daily Journal since mid October, ..."This story ain't going away heading into the New Year as we've noted before, but after this latest binge momo run we are more cautious and prefer a pullback to go with a worthy position overnight.   Lets just say, we liked a TBSI more at $50 recently than at $60 now.".    Well.. we haven't missed much action since those words, except one sell off and rebound and now we definitely got a big pullback, but it is too early to say we are looking for an entry back into this group.    This group story isn't going away unless the Chinese don't need ships (if that's the case everything on the market is in trouble).  These are cat and mouse games to get rates down and it is something worth watching now if you are thinking of going long for more than a intra day trade.   When selling hits, it is always best to rid yourself of the stock and ask questions later such as to the reasoning.  You have some political games here now and you need to keep updated.    We don't have the time and will only react when the coast is clear.    Many firms recently raised this groups price targets and will be going on the defensive tomorrow, a bounce here and there should happen.      Nothing could have been more dangerous than trying to find a place to park your money as this group started to sink, looking for an entry and not knowing what is the cause is praying for some blind luck.  Just in the last 30 minutes EXM fell another 7 after giving up that much already.   The 9ema short term was crushed here and it is a second pullback late in the month, this one more extreme.    Hopefully, our constant warnings of this possibility hit home as this group was having yet another binge recently, included was the information given that their are large amounts of hedgies playing a derivative market here in this group.  A dangerous combination,  just waiting to Titanic.  This ain't no Mom and Pop selling yesterday, this was led and taken apart by the bigger money......We`ll let this cool off..

We are about to get a load of EPS reports from recent DJIM names in the next few days. (see earnings link).   Hopefully with a favourable FED reaction and some nice earning we can continue to go forward off this latest bounce.    There is really no use discussing what could be strong in the morning based on Tuesdays action as so much is riding on the reaction in the afternoon.    But a few notables yesterday heading into the morning trade are CETV into earning , EJ YGE BIDU were the Chinese stars on Tuesday and AAPL fit in with the tech sec having a good day.  A few remain near highs like SPWR should remain in play as well.    One thing to possibly watch for in the upcoming days is where is the momentum money flushed out of the shipping group is going to go.  It might sit on the sidelines if the FED reaction is muted or terrible, but if its not,  we'd closely watch the other momo groups such as the Chinese, Solars, IPO's to start with.

La lidia......art of bullfighting

...and we got ourselves a toro bravo (fighting bull).  We said he ain't dead this weekend, Tuesday was proof....and you know what?...the bravery, performance surprised not only the shorts, but even some of us longs....the scale of it in one big swoop as the bloodied bull fought back was great to see.

We recently noted this was new skool trading..Oct 26th...and finally we got one of those on the long side.
...."let's just accept 100+ /-Dow and 25+/-  point NASD days are old skool.!!!     This is intraday stuff now and we don`t think it was a good day or bad day till we see 250 +/-and 50 point days at the close..."   

Are we jiggy wit it?...We've had all summer to get wit it and now we will most likely close off the year in the same fashion with volatility!

Lets not kid ourselves and admit this was great to see.  It doesn't matter if you made money as many purely gapped.  The reason is,  if you want to make money going forward on the long side this was the medicine you were looking for.  You could not have rolled a better one....This was much better than expected as it came in one nice shot to give the QID's 2x,(-8%) the FXP 2x (-15%) inverse thingy a slow burn...mmmmmm.  Somewhat off topic...but if you want  to short the market don't do it on day 3-4 of the biggest pullback you've seen in recent history.  We doubt many can keep to this game of shorting any index 2x, the FXP 2x without jumping ship as soon as a reversal is in sight or worse a wake up gap up.   If you do want stick to this game plan, do it earlier so you get a big piece of the drop we've had since last Wednesday and not go in the following Monday when the conditions are way oversold short term and risk the great possibility of a technical bounce.  Too many inexperienced traders are entering these plays and getting burned.

Will this move continue today? ..All that matters right now is it was a 'feel good' day, showing the market is capable of a fight.  The bull has some fight in it and this action will open some eyes and most likely bring a better trading environment back.

Before the morning open, we noted we thought the Asian hooligans had some fight in them soon.  Soon was yesterday as many led the way...EJ before eps, hey remember WX moved before EPS ...so who's next today?....  We will also get initiations on the STV IPO today, possibly just at the right time.   Yesterdays action should bring some life into earnings plays as well, before and after the report.  EDU, BIDU, JST CSR YGE led with 10%+ days yesterday and a few followed.   The point here is they are not DEAD,  not if you caught a piece of the action.  The HANG SHANG up around 4% overnight.   A note on WX, the expectations were simply too high.   After a few months trading this must be valued at market prices to a certain degree amongst its peers in the industry.  It is way over the top already with it's PE and had nothing left to do but fall without amazing growth guidance.

In this market, we need to look for opp's that may not be the norm.  One example is a QSC or an E-trade.  Monday morning, we were laughing this QSC might be $3 the next day if we dont mention it.   Guess...the laugh was on us as we saw this late in the day over 2.50 and up over 50% after Briefing profiled it's earnings.   Still, not late, even at 2.90 note as it seems to have traded as high as 3.35 AH.   What we think is as this trading enviro becomes possibly more difficult,  we will turn to some 1-24 hour plays like this as an alternative time killer, money maker.  This is something we all can participate in and skin a cat or two on, so as we suggested during the China revolution a month back...give us..the readers your junk and we'll throw in some as well.   This is just the idea of throwing something out for all to decipher, investigate as they please.  Nobody will judge you, its all speculative..We also have Thanksgiving holiday trading coming up which usually gets some junk flying around as the retail traders play while the desks empty at the firms.

DLB PBR PSEM MELI  are a few names of trading interest.

..some calmness

Seems many gurus are writing off the market saying this latest liquidity plan is just for the big boyz to get out higher and fry us all.  Hell, many have predicting doom since summer or years for different crisis situations, but we just keep playing along with many of you as we have done so for 3-4-5 years.   We love conspiracy theories , but we don't trade them unless they are ours and we won't give up now thinking this market can trade up still.   Maybe , we are too simple and too simple in our methodology... We/You are not giving our neighbour a loan and they won't give us one and so the banks have the same situation.   They don't trust each other and so the liquidity plan comes to fruition.   Simple...  someone steps in and helps both sides.   We are in favor of this intervention and think this will help soothe out things eventually.   It's a start.   The last time anything close to this being done  on such a worldly scale was after 9-11.  That puts things into perspective in more than one sense.   The severity of it all now and the ability to fight back is there as we've seen before.    Day by day things will clear... if the market can't hold a13500 DJIA or NASD 2700 close in the short term, we'd start to worry more from a technical standpoint.   But...until then we are ready to jump on Santa's sleigh and go for a ride with a few of his helpers.     Well, the DJIA did hold 13500 (barely) and the NASD is still some 30 pts away, but we all know what 30 points is like and that's a half day of a run these days.    The way RIMM, AAPL BIDU performed makes it even more plausible soon and therefore an opportunity to strike these names up again will come.   We are encouraged by today's action, the lows of Wednesday were hardly touched on the indices and we worked higher into the close.  A little grit and determination was seen today and everything held together after yesterdays big intraday slide.  ' If ' we get a manipulated CPI number premarket, we could have an added ingredient for a move starting for next week.   We are getting to the biggest time of the year for manipulation as the volume will soon start to dry up.  This is the time for all the manipulators to step forward..big and small and boost year end totals on all boards.    Surely, a BIG lot(s) will be there to help out the market.  You help us out with liquidity....we'll help up you in other ways, guys!.. told you we love conspiracy theories, we just like'em on the bull side.

LRN,   K12, how cool a name is that!;).  Anything/anybody to help the kids from Kindergarten to grade 12 surf online other than us is a great concept!.  Okay, so its a little more than that as LRN offers a 'real' curriculum of educational services, lessons.    A virtual public skool alternative to supplement the kids education.  A recent educational IPO, APEI serving the military/law enforcement had a big run since it IPO'd as we noted with LRN today in the $22's.  It had nice full day trading to the $25's and we were trading/taking positions throughout the day.  A 6mln float makes it attractive to boot.

MELI, a long standing citizen here and a recent alert this week at $45 was making some people very happy last night as it traded to $58 AH's off Cramer.  It's only a recap if you are not trading it this week as it's held its ground near highs through all the volatility we've seen.  We have always liked to sell to an incoming herd from another source.

MA,  another long term play here and again highlighted a few times this week hit a NCH with a $224 close with a converted touchdown and field goal day..10pts. No yellow flags with this machine.

Solars, we highlighted this bunch into the trading day and it was really the only 'group' action going with FSLR, ESLR leading the way off the upgrades mentioned in the morning.  JASO, SOLF, YGE all held green as well and if we keep seeing this group up, STP, SPWR will join the ranks again.

MBT, VIP, after making NCH's recently they have tested 9ema and seem ready to resume if the market gives them a chance.   The telecom sector has been one of the leaders on bad days in the market and with Russia's political picture clearing up it should bode well for these ADR's soon enough.  These have always held up during the rocky days of November.    ROS,  a secondary play on the above when we started coverage back who knows when is a clear beneficiary as its practically a 'state owned co'.  The other two offer volume and so we'd continue playing with them.

RICK, so this is where all the bankers are striking up liquidity plans these days!..No wonder they have no $$$$.  This one just keeps on doing a slow dance up.

GXDX,  no big surprise the traders didn't show up the day after EPS.  We've outlined numerous times recently that small/ float EPS plays are not getting the love immediately as we have been used to in the past. The chasers are still not there as we saw today and since this stock had a very nice pre earnings run, its really not surprising to see profit taking come in.  Keep it up there on your potential playlist.  A pullback always balances your risk/reward out.

Oh yeah, RIGL,  wait till phase 3 comes out, it will go to $100..;).  The beauty of this action is there's crazy foolish money out there still to play feverishly and we like that.   Along with interest seen in the IPO LRN,  it gives us more hope in the coming weeks for plays as there is a willingness to put money to work.  It's sporadic now and sometimes doesn't last too long , but that could all change as spreads widen in more names when the volume starts to dry up into the New Year.

DJIM 50, 2007

As the year winds down with this upcoming last full week of trading, we find ourselves at the crossroads here.    We are here because there's definitely two distinct possibility in front of us.    One possibility is that we roll over from the recent gain and try to test the November low and who knows what happens after that.   The other possibility is that we stop going down right about here and churn our way upwards, in an apparent and somewhat violent manner.

Lets talk about what happened in the past week first.    The action from past week is purely centered around Fed decision and we can understand how market participants feel after the decision.  They have a hangover.  In our opinion, unless Fed surprised us in the optimistic way, this market would get sold off regardless because  as we had come off such a good 2 week rally from the November low.     In terms of Fed's decision, in our opinion, they are doing the right thing even though it may not be "instant market friendly" kind of decision.     The bottom line with the Fed is that we have the Fed on our side still.    They aren't being ignorant contrary to many people's thought and they are simply being patient to help out the financial crisis.   This of course isn't being bought by everyone because many wanted that "magical potion" from Fed that can solve all of the problems once and for all.    Believe it or not, many if not most of the problems associated within the financial sector still need to be addressed and resolved by the companies involved themselves.   In other words, market needs to do the most to bail themselves out.    This is only healthy in the long run.

Too many people are too negative toward this market and too many shorts have piled onto the recent upward momentum in our opinion.    Basically, we believe that when you want to trade this market down, you definitely want to do it with good timing.   First of all, you want to go negative really hard at the beginning of the crisis and in a seasonally slow environment.    Right now, there's definitely no saying that we are at the end of the crisis but we are definitely far from the beginning of it.     People are fully aware what the problem is and measures are being put in place to correct the problem.   It does take time.    However, you don't want to go really short when things are being fixed, slowly but surely.  

So against all odds, we think the second possibility is that this market churns upwards has much better probability.    In order for this market to dive and take out the November low, you'd need some really disastrous news or the proof that we'd go into a real recession to do that.    Somehow we just don't think any of those two things is in the cards at this moment.    At least, not during the Christmas shopping season, we might add.

Earnings Earnings and Earnings!    What more confident catalyst you need other than earnings?    We have them coming up and the way this market has been setup, anything better than the lowest expectation can cause a good rally upside.   Of course, that also depends from company to company and sector to sector.     Last week we had LEH reporting and we have to say markets reaction has been very positive, despite the drop of all major indices.     In the coming week, we have GS reporting and this is considered best financial house there is.    Again, the way it sets up is that the shorts wanted to push it below $203, which is the recent low and knock it down for good.     If this stock is at $240, we say the odds of getting sold off is pretty high regardless the earning number.    In our opinion, the trade definitely calls for the upside when the number is released.     The next important report in the coming week is RIMM.    In our opinion, the recent 20% drop from the $122 area took away any bearish surprise.    It feels that shorts have pressed a bit too early going into this report on the heels of a couple of firms analysis of RIMM.    It is "unlikely" that RIMM would report a slowdown in its business and we can almost ensure a massive squeeze if it doesn't play out the way bearish camp wanted.     There are quite few other reports in the coming week which include  NKE FDX MS BSC BBY ACN JOYG GIS... quite a few different and important sectors.   This should provide us a good picture whether our economy is heading into a recession or not.     Again, we believe in our thesis that market rarely goes into a crash into an earning season.     Basically, we'd be much more nervous being short than long at this point.

Now some plays....

Solars, is it us or does it feel that most if not all solar stocks are being setup conspicuously on Friday?   Just look at some the chart setup from some of the popular names and we swear they are all setting up for a good run-up in the coming week.     By the way, they are being setup(in a very positive way) on a day that all indices dropped well over 1%.    This is simply amazing which tells us that people want to own these things at year end.   Basically we still have a bit over a week to window dress these names and it isn't a myth that the best stocks get owned at the end of the year to show them on your book.

STP/FSLR/JASO/LDK,  these are what we considered the favourite solar names to trade last week.    With the exception of LDK EPS Dec.19th, which we are still waiting for the audit report to cast away the cloud, a start today as (independent Audit out according to LDK concluded allegations incorrect), the other three are being setup superbly going into next week.  YGE, IBD #92 is also enjoying a nice trend change.

SOLF/CSIQ, these secondary solar plays are also setting up nicely, especially with SOLF.  The 9 ema has just caught up with SOLF and the next move might be big and will likely get this thing out of the recent trend.   With the entire solar sector heating up, we feel the move is very likely to be up than down.  ESLR had 2 nice days after Thursday premkt upgrade and follow up news.

Asian stocks, as seen in charts this weekend they took the week off after a 2 week recovery, following overnight numbers from HANG/SHANG they will most likely continue to be out of favor to start the week. 

LRN, 300k volume and a higher finish on day 2 of trading. If this thing had any volume Friday, it might be already looking at the high $20's.

MELI, this is the play you only can wish we'd all bought more of before Cramers mention.   On the other hand, this is no longer a strange name to traders and with its tighter float and story, anything is possible.    Basically, this one is better now with Cramers exposure than before which is largely an unknown stock to many.    The trading in this one is rather volatile so we'd continue to be inclined to buy on intraday dip and sell into strength.   It has worked beautifully in the past so there's no reason to change the strategy with this stock.  The trend is firmly to the upside since the break at $45.

RIMM, we've been buying some late in the week looking to hold up to the earning report and then play after its EPS is digested.    Again, in either case, if this company reports a good number or the market rallies, we'd be all over this beta name along with other heavy favourites like BIDU AAPL GOOG etc.

VIP, MBT..also seemingly against all odds these were green on Friday, closing around highs of day.  Another Russian stock, WBD pulled off another impressive Q with what looks like their best EPS number yet. Again as we 've seen too many times lately, nobody was interested in earnngs, this time because of CPI data headline.   Simply, you had pockets of strength to buy...the solars, the biotech, the russian stocks late in the week despite the volatility to the downside in the overall market.

Bottom line, this is the time where you have to be playing the most popular stocks.   We have seen it that the small caps aren't exactly working so you might as well join the crowd.   The more crowded it gets with a good mover, the better.    We can even see it with some of the recent story stocks from the biotech sector like RIGL SVNT BMRN etc.   You trade what others trade, when a stock is showing upside momentum that is.   Only then, you'd have a chance to outperform others.