Breakout action vs. Pullback action

We have touched on this subject many times on this site and older forums.     Today is a typical example of chasing the breakout action.  Here's a trading idea for some of you.   On a strong index day when a lot of things are up, you definitely want to concentrate on the "GREEN" stuff to participate in the rally of performers rather than to anticipate the recovery of the "RED" stuff.   Because when you are debating whether to add on a pullback, there'd be lots of opportunity passing you by with strong gains, especially on a good index day.   When the index is not doing much or down just slightly, that's when you look at pull backs more assuming there isn't that many "strong green" stocks to play.   Always prioritize your trading list and go with the strong beta first.    Just because you bought the stock couple of days ago and it isn't doing much for you doesn't mean that you can't cut it lose and go into something else.  We did that with OSIR today, we're not going to give up what we earned the last couple of days and blow a call from between 25's to 28's.    It's definitely easier to play break outs than to play pull-back.    The strategy is also dependent of your portfolio size as well.   We knew a guru who would hold 200+ positions on a day like today.   For most of us that would just be impossible to manage.   The point is, if you have a big account, you can afford to hold many positions and even consider buying on pull-backs.  If you have a small account, consider going with the stocks with the best action on a daily basis.   There will be a lot of trading for you but unfortunately it's part of our strategy and part of the game we play.   When a stock drops below 9 ema, it simply looks less attractive to us, pullback or not.   When you have so many stocks breaking out, the last thing we want to be doing is to be stuck on a consolidation play and "hoping" it'll breakout.   When it does breakout, we'd be there.     Our mentality is that we participate a run, but we don't anticipate one.   Also again, before we are moderators and writers of this site, we are traders.   We spend most of the time trading for our own accounts and writing-updates for this site is just an extension of what we do.    Of course, our priority is to write and alert/update on the stocks we think that are showing the best action(opportunity) for the day.  Whats there to talk about SNCR or AAPL today?.  The fun was had and now take the consequences of a stock going 14's to 17.50 in less than a full trading day or one going mid 80's to high 90's the next day.   Going through the entire list of DJIM watchlist every day may need full time attention.  Use the charts to help paint a picture.  Maybe we can do a weekly recap on some special requests on some of the stocks we seem to have missed..so far we have not heard back from those public requests..if we don't know the stocks, we can't help.   Now onto some today's movers....

VOL, this one probably overwhelmed the most optimistic traders given its 3 day action.   Again, we are not saying today is the end of this run-ups but it does feel a little tired at this point.  As far as trading tactics, there was a question and answer in the forum yesterday.  In the example you can see how you can take profits around 60 and then buy the strong close which leads to another 3-4 points today. You sold the 51-59's run to lock in partial profits, then buy maybe the same 1/4 back into the strong close and walk away with another 3-4pts today on the full lot you played.  This is what we did reducing our exposure and now are in a wait and see mode with a very slim position.  In fact, how can you not resist taking some profit at this point?..

CCOI, This one has institutional prints all over it today and you can see the large number of blocks traded from its time and sales. It wasn't over at $ 19. Plenty of people buying a stock up $1.50 at $19 early, these traders are not contemplating a pull back, they are buying a ticket on a train!.   Same goes for SNCR yesterday.   The first thought of a successful trader/investor cannot be when and where is the pullback going to be.

MFW, it seemed as little as two days ago there were concerns of chasing this stock in the 26s or 28s.   Well we had a dip and dip was quickly bought on that day.   What followed is today's advance and if you blink, you'd missed it. The pullback you saw the other day off a NCH is one of a few you should consider. You know its a hot stock and a pullback is extreme.  Thats called opportunity. A .50 cent pullback on a 20 buck stock is not a pullback in our book, it's life..life of a stock.

EDU, now out of all of the China based(quality) stocks, we like this one the best today and yesterday.   See, sometimes we don't have to predict, we just let the stock show us the path.   This is actually a new closing high and we believe it's ready to challenge its all time high. Instead of looking for a pullback what has been happening for months is we trade a EDU for a MR and back and forth with HMIN. They take turns it seems and with these names there is no need to wait for a pull back. A move comes and that's when you buy back.

ABM, it sure tried to breakout today and it closed about mid way between the day high and day low.   At this point, we think this is the right direction and momentum is definitely on the upside.

HLYS, we alerted this one late in the day only because this one has had a history of intraday fake break-outs.   Hopefully, and keep our fingers crossed, that this one may get some kind of follow through after today's near day high close.

GLDN, was a rocket again as it climbs with some news.  MTRX is a piece of work while this oil massacre continues, just one nice oil day should pop this higher.

PTT from premarket is a 'trade' like NWK was. If the flow keeps on we'll be there, otherwise we have no love for keeping this long.

DJIM #3, 2007

For investors the best thing about a 3 day weekend is it gives an extra day for M&A activity to kick in. This weekend surely is not disappointing in this department as lots of activity is coinciding with the markets playing with highs.   Hopefully, this gets us off on the right foot into a shortened,  but what we expect to be a busy week.   The flurry of earnings will hit us this week and hopefully we can hit back hard by buying into DJIM type earnings winners.   This is the time we/you might want to reduce sizes of holdings or get rid of stocks completely stuck in the  'hub' with no immediate flight plan.   It is best to have cash ready and not be forced to sell things off to get in on a play early.   There is always more than one opportunity to get in on a DJIM stock, but sometimes the first is just an easy gift you can close early and then look for another entry..examples might be like a SNCR move last week but one with earning or an explosive VOL off earning.    Also...don't forget to look for earning dates of your stocks!.  We have enough on hands here in Canada following US holidays, so help us out on DJIM stocks...we knew EDU had earnings Tuesday,  but we didn't know we had a holiday today till about 11 am on Friday..lol. We almost broke our 'no holding rule' into earning with EDU!.

Heading into Tuesday,  these are our top hold/ hit lists plays at this time in no order..

CCF-  Chase Corp is one of those small float (2.3mln float) Amex stocks that hides with pretty darn good earnings.   Friday it reported its profit doubled on a 26% revenue increase.  This .62c Q follows last Q's .69 on similar revenue.  We also like Fidelity owning about 50% on the the instit. shares( 400k).  If they want more, they can get ours now in the $30's!

OSIR- made a nice comeback late in the day Friday.  It seems this one besides the FDA news last week is starting to be looked at as a stem cell stock of sorts.  This explains the volatility the last 2 trading days, Osiris is also developing stem cell treatments for cancer and heart disease.  A new NCH has us looking for more in this name, but now we are looking for more volatility that made us run out of it, Thursday.   Easier to deal with volatility if you know why its there, we didn't Thursday.

CCOI- just a steady follow up Friday from its big day the day before. A NCH and a stock that is up 4.5 points in the New Year so far, almost 30% and is sure to be picked up by more eyes, but it also should consolidate sooner than later.  So be careful jumping in!.  Some of you are getting in a tad late on some plays and expect miracles too fast!.

ABM- we are satisfied with this steady performer.  A NCH to end the week, don't forget we have been on this since $21 and the big push the second day after earning.  This is heavy on institutional support,  so this pace is not unexpected.

MR,  is back in the picture... we like the move Friday and the fact it held it by the close.  We added some near the finish and think this one might be one of the better plays to start week as it has climbed nicely above its 9ema.   It could be just MR, it could also be EDU following earnings and HMIN might not be far off ( we would like to see 40+ before really taking another stab at it).  FFHL should get some play but there is that supply of ones wanting to get out overhead to consider.

AMK, might be the other top play heading into the week.  This is a small float with a nice earning story that is reporting early February.  It just looks like a typical 9ema play at this point heading into earnings.  Wish it just take out Ceramics from its name from its name!.  Can't help but think pots when you first come across it!

INFY, we like it for its EPS, its business and where its at (India).  A few targets in 60's already out following EPS. This might be a nice longer term hold.

CENX,  a play we noted off AA earning is doing well but might want a rest in the 43's. It opened just below $40 on Wednesday following AA's eps.  Again, if you want a nice aluminum stock to hold for the AA story, this is it for the longer term.

MFW,  looks to be one to pick up more of on the dips. At this point as it has some interesting intraday moves and sits close to a high.

SNCR,  seems panic has set in with some, yet its only finished day 3 off news and is only 6% or so off highs. There is two camps here,  one that was getting in $15's Tuesday AH  and then early Wednesday and the second camp that was procrastinating and moving in mid $16's and higher.  Basically first camp has been distributing and the second camp just needs to be patient through it.   If you don't believe in the story then just move on.

VOL,  momentum begets momentum and that is what happened to the upside...and to the downside.  It works both ways, kids. If you've never seen it before, you just passed MOMO 101 last week...hopefully in one piece.  Violent sell offs are nothing new in something that goes up so fast.   Now we turn to giving this a look around the 9ema area.   At this point its only a look, we like to see a reversal begin before considering a entry.

MTRX, MTRX, MTRX one fine oily day it will move.

Some notes on other stocks in Alert/Update page. 

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.

Resiliency

There's really no need to talk about the overall market today.   Dow notched a new high and Naz followed with an impressive gain.    We are not going to delve into why and how of the overall market behaviour.    As a trader, you cannot battle against the overall market trend.   Rather, you can use the market sentiment to gauge the behaviour of individual stocks.    We couldn't help but noticing that across the DJIM land,  most if not all of the stocks on our watch list ended up in the green.   This is actually not rare considering how the market performed today.   What we find most encouraging is to see the resiliency of some of our stocks,they performed well on a good day like today but also just as well last few days when market wasn't as "hongy dorry"!     We have quite a few stocks making new 52 week highs and some making fresh break outs.    This is definitely a sign of a good market here, but we know this can change on a dime.  Here are some stocks that we thought are worth noting...

VIP MBT, incredible strength for the comrades the past 3 days..7 to 9 points on each.  The short term RSI is almost out of this world and we think this is unsustainable for a 4th day.  We sold most and will likely finish doing so early on tomorrow. These two charts are a great study on a breakout on earnings, the pull-back and then the higher high breakout we just witnessed.

AMK, volume has been a little slow last couple of days so the momentum is not as strong as we would liked.   The price action however, is pointing to the right direction and we are still sticking with our thesis for a pre earning runup.

CCF, we really like this one's steadiness and basically are not overplaying it.   

USAP, is holding steady after earning and is using the strength of the steels in holding these levels.

CCOI, the leading secs today were the internet related issues, couple this with a Lehman upgrade on another Clec and Merriman's bullish comments on the CLECS and CCOI  put the shelf offering from last night to the side.  See the chart for the possible break and/or resistance point.  As per our update/alert, we added and will take the chance this breaks out with some pop soon.

EBS, not a bad day for the other biotech in DJIM land introduced this weekend.  Volume speaks volumes today, you could say. Oh yeah and VNDA, just keeps inching higher..

HMIN, as if we are tired of seeing this play popping up on this journal. lol    This one again broke out today and closed at a triple high(intraday high, 52 week high and all time high).   This combination coupled with a good market and a strong base it's had usually indicates a very bullish trend.   But of course, we have been tricked by this one before so we will keep a close on it tomorrow for any sign of weakness.  One thing to watch out for is the China stocks doing offerings, it seems the price starts to bounce to old highs and then the news hits. Sneaky.

DJIM #5 2007

Well, it's been a pretty decent earning week for us and opportunities were there to grab.    That is, if you didn't get distracted by the index action.    During the earning season,  it's rare for the market to pullback significantly since there are always funds/institutions waiting for their favourite stocks to report.   At the end of an earning season, however, things may be different as there aren't that many things to look forward to for another three months.   By then, interest rate talk, economic number and as well as the seasonality will be big factors dictating the market movement.  Still, there are small caps that periodically surprise with the timing of their releases, so it's almost earning season 12 months a year for us.     Well, that's how we've been viewing things.   

During the earning season, the only thing in our opinion that should be dominating your trade/watch list are the earning plays.    Basically keep an eye on those that have had good potential of releasing strong earning and keep a tag on those unfamiliar names that just reported strong earnings.   Pretty soon, your watchlist will expand from a couple of dozen to literally few dozen stocks.     Again, the point of having this kind of watchlist is to simply making trading decisions easy for you.   Basically, when you have a list full of strong earning stocks, it's just a matter of picking the ones with the best momentum, best charts, best float and best sector.   Fortunately, we are here to give everyone a heads up on what we think are the best so we can all be on the same page and trade the most out of those potential winners.

Here are some of the stocks of interest from past week....

HRBN, so why start off with this BB stock you ask?   Simply put, going toward the end of Friday, this one had the best momentum.    We alerted on the fact that it's going to be listed on Naz on Jan. 31th and given the quick glance of its fundamental and float, we thought it has a very good shot to make some good gains at $10.   Well, an hour later Briefing.com picked it up and we hope some of you have picked up in the low 10s.  We said the yahoo's could spread the story quickly, that's why we wanted to get this out to you first.    Volume on Friday is still a tiny 200k and given the fever Chinese stocks have been getting lately, we think this one is far from being discovered.   Float is 5 mill and co. is profitable for a few quarters in a row.    Not much else you can ask for.    We think it should get some more upside action before and after the Nasdaq listing.

USAP, buy the dips!   This strategy works the best with strong earning play.   If you missed the first run from 39 to 43, getting in at the low 40 is not a bad thing.   We added some on Thursday and now the stock looks better than before.    It showed that there's interest and support when the stock dips.  

CCF,  maybe this one doesn't have the kind of crazy momentum of some of the Chinese stocks but we just like the way it is.   The point is, this is the kind of stock where you don't have to check every single tick and knowing that it'll probably make new high sooner or later.

HMIN, we think this one is definitely getting more and more interest everyday.   The IBD profile we noted Friday before the bell sure helped the cause.  It's no longer a simple Chinese play anymore, it might be an Olympic play as well as IBD noted.    As long as the major trend line does not get violated, we'd buy some on the dips and sell some on strength.    If you have a fast trigger, you can definitely buy on a breakout and make a point or two that way.   This one is still very much in play.

TRCR, we think we have written enough on this one and we are keeping a very close eye on this one.   We'd like to add some in the low 6s but if it doesn't come down, we'd be just as happy adding some on strength.

VARI RESP VTRU ENR,  how we play these earning plays are simple.  We get a starter position in each one and add to the strongest one.   If one position lags, cut it lose and add the funds to the stronger ones.   This actually remind us of a race where you get to bet on all of the horses.  The only difference is that it's rare you lose on any horse since they are all winners to begin with.  Here, we are playing with more institutional money and sometimes the trend is easiest to pick up.  VTRU, besides the EPS number it is also a speculative takeover target, for you home gamers of the dating scene they are of the Lavalife site and others.  lol. $50 are the digits being thrown around.

NWK, this was a play on pre-announced earnings. Usually, they sell off once the numbers are publically released but for whatever reason this one keeps staying strong and the action just seems right.   We're set up here and looking to add more on a break.  It got painted down at the close and some sellers wanted to get out for the weekend, so we'll see what it does early tomorrow before proceeding further.

CCOI, our last alert on it said there were some favorable ramblings on the CLEC sec including TWTC.  TWTC had a very nice Friday and we are looking for more out of CCOI on TWTC heels.

ABM, is back in the picture. One look at the chart shows we could be looking at another test of the highs and a further break.

IPGP, this is looking better on the chart with a close over $26 and as posted by a member in the forum this company is starting to get recognized for its growth earning potential. This is the discovery we talked about...slowly happening.

Bascially in breaking down what we have is quite simple.  Our sector play in Aluminum, we have CENX that is up 5 pts since we touched on the subject on AA's earning.  We have USAP, as our steel play with earning.  So you want to keep an eye on the whole sec action with these.  On the cheap speculative trading side, we have a TRCR and HRBN.  There are new earning plays like RESP, VTRU, ENR to test out and hopefully see them become long term plays.  And there is the old reliable DJIM recycling program working with the HMIN, CCOI's of the trading world.

Just a note... the market is a complex dynamic with uncertainity at every turn.  What we do here is trade on emotion, mostly what our gut(s) is telling us might work or not and we react to it.   We trade when and what we feel gives us the best probability at a successful trade, we don't expect you to have this gut as for many of you its not your full time gig...so leave that to us and worry only about proper risk management of your money.  You don't have to be a rocket scientist to see which direction our selections go first,  if anything work on your timing so you can get the most out of a stock.

..Big day>>>Boring day

Yesterdays BIG day followed by a BORING day is just fine with us...We can live on the adrenaline rush of yesterday any day, but sometimes coming off such highs can be quite the ugly trip the next day.   We've seen it before where the gainers evaporate one by one the next day and this is why it's never a bad thing to take down some positions in size on days like yesterday and even today when it is quiet and you can sneak in a better sell.    The boring action from yesterdays runners didn't stop us from looking for the next new stock to trade.    We found a couple this morning in ALGN and TGX.   The first hour of the trading day,  we are not thinking what potential this has 48hrs from now or next week.   If we see potential for further gains today off a good earning report..we will jump on it with a starter position and add to it if the action gets better during the day.   You could've had yourself 5-10% on the ALGN and TGX off the alert time without ever having to add these to your book overnight.   Some make a nice living just chewing off these intraday trades day after day.   Of course,  it's not that simple as it's about discovery more than anything.  Being able to find the play is what it is all about, even if the stock has gapped 15-20% by the opening bell.   Too many are simply afraid to enter at those levels and sometimes never get the pull back they hoped for.  These are not the sexiest stocks but they will do for sloppy days like today,  especially if the action is right with volume.   

Align Tech beats by $0.14, beats on revs; issues upside Q1, Y07 guidance (ALGN) , Reports Q4 (Dec) loss of $0.01 per share, $0.14 better than the Reuters Estimates consensus of ($0.15); revenues rose 7.8% year/year to $55.2 mln vs the $54 mln consensus. Co issues upside guidance for Q1, sees EPS of $0.02-0.04 vs. -$0.05 consensus; sees Q1 revs of $56.8-59.8 mln vs. $54.75 mln consensus. Co issues upside guidance for FY07, sees EPS of $0.15-0.27 vs. -$0.01 consensus; sees FY07 revs of $240-255 mln vs. $238.37 mln consensus

Theragenics reports Q4 revs up 30% (TGX) .Co reports Q4 (Dec) EPS of $0.05, excluding a deferred tax asset valuation allowance, vs $(0.01) a year ago. Revenue rose 30% yr/yr to $14.8 mln. There are no analyst estimates. Co says "In many ways we have just completed our best year...and Q4 was our highest quarterly revenue ever...we delivered four consecutive profitable quarters in 2006, something we haven't done since 2002.".       

MFW,  this was the 'trade' in our book off yesterdays alert and buy in.   The action kicked off from the bell and it ran to a high of 33.69 off yesterdays $31+ afternoon prices.  These are the kind of trades you are most happy with!.  Ones where you believe in a stock from the extended level of $28,  our first buy here at DJIM..... to these days when you time a breakout almost perfectly.  Whodathunkit this still had 20% in it from that $28 buy in?.  We did and that's why its been on the chart board every day.

CENX CCOI , also part of the alert..We had nice days with CENX climbing to over $2+ at the highs and CCOI $1+.   If you've been long these,  you're happy.  If you day traded the alert...you're happy.  Actually, we're happy on both sides by adding to the move and selling some later without touching our longer term position in each.

Besides these early morning alerts,  it was quite boring.    But... boring is good when nothing falls apart after a big day.   Anyway, there were enough plays to keep us all busy today.

same recipe..new ingredients

Yes, we are  referring to our trading strategy at this moment.   Basically, during the earning season, what else are you going to play besides the earning plays?    The key for us here, is to recognize a good earning play right AFTER they announce the earning.  There are many beating, raising and the masses chase the gap and then churn all day like an IVAC in a .70 cent range...Boring!...  Here, we try to recognize more upside short term ...gap or no gap...same day or within days.   It's easy to get sucked in by a pretty EPS number, many did with IIG today at $23,24.  It's not that easy to recognize what will work, headline chasers get whipped and it only takes one bad entry to leave you marked and bruised!.   Of course, initial earning reaction within minutes may not be the best indicator and that's why we usually get in a small starter position right away in a selective one and monitor the progress of the action through out the day to determine the playability of a particular report.    Unless of course, we have this special "gut feeling" that the earning report is sooo good and we just have to buy it with a decent size no matter what.     As we all have experienced before, strong earning play don't last just a day.   If an earning report is very good, it sometimes takes days if not weeks to really sink into people's mind.    It means that there's plenty of time to buy even after the strong "gap up" reaction of a stellar earning report.    Also, believe us, not all institution can buy all of the shares off the earning report in one day.    Here are some new ingredients...and what was cooking!

MDCI, this one hit our radar in pre market but we had no clue how the street is going to react despite the fact we liked the report.   So, we get a starter position and wait.  This stock was alerted in the low $35 and it finished up about 3 bucks from that point on.  Of course, we added to that starter and hopefully you did too.  We have to say that the performance of the stock is definitely more impressive than the earning itself.    The split is also coming up so we think that's also an added factor as well going into the close.    The stock will trade on split adjusted basis on the 9th and we have been trading this one very aggressively today. MDCI reported .38 beating two estimates by .08, revenues 67mln vs 59mln.

EML, well, we got lucky and unlucky. The co' had a release the other day saying earning release was the 8th but then we got this early move to $24 and sold the majority of our alert from Monday.  Looks like one wire had the results, but most didn't till about 10:30.  Luckily, we were still watching the action and jumped on the surge still not really knowing what the heck was going on...but hey, you go with the flow!.  Something had to be up and it had to be good!.  How else do you explain the rush of volume into a quiet stock?.   If there's only one downside to the earning reaction is that it did not close nearly as good as MDCI.   Is this something to get worried?   Well, unless you feel their earning report will get reaudited down the road, we feel that there's absolutely nothing to be concerned about today's close.  In fact, it still closed pretty well and given the thinness of the stock, this one can climb up with some meaningful percentage in no time.   Again, valuation looks even more attractive with EML compared to CCF and we have a gut feeling that this one will trade better than CCF, less choppy that is.  This is just an example of a thinster being discovered, we like to think we did that last Q as these numbers were somewhat in the cards.;).   Don't forget why we got in Monday...Jefferies picked up 54k shares from the co'.  That was the look into the keyhole of EML and todays report..The Eastern Company reports Q4 EPS $0.96 vs $0.23 in 4Q05, revs +76% to $49.7 mln :"2006 was a very good year. We set records in Sales and Earnings and our backlogs have increased. Notwithstanding the positive impact of $19 million dollars of shipments toward fulfilling a military contract, the Company's "core" sales increased 10% for the year and 17% in the fourth quarter, the 17th consecutive quarter of improved year to year sales. We are optimistic that trend will continue into 2007... The military contract to deliver door latching components to be used in retro-fitting the up-armored military Humvees will continue into 2007.  These activities will be positive factors toward sustaining.  http://djmarkets.squarespace.com/journal/2006/10/2/eml.html

CGX, this one we did not alert but feel that it also came out with a very good report.  We think we had enough today and don't want our readers to get confused with 3 similar alerts.  There's something about these "expensive" stock that we like since they just tend to be less volatile than the "cheaper" stocks once they report a similar strong earning report.   We added this one to the top of our watch list also. We have seen this trade well off reports before and think it has some legs after this jump.

USAP/CNS, basically even the strongest stocks need to rest when they had such a good run-up since their report.   Just look at their chart, neither stock has closed below 9 ema ever since they came out with their report.   Things are still looking very much intact with these two but we feel we all should be paying more attention to the newer earning play.  Basically, we're still eating up the reports, it's just not same restaurant every day.  But considering these are two of our core plays this Q, we're surely to be back buying in size soon.

Watching MFW early tomorrow with a chance of adding..hunch

HXM has had a nice few days, CCOI had a very nice day

The bottom line is that nobody needs to be stuck on an out of favour play.   With the earning season, you are almost guaranteed that there'd be something new and fresh coming around the corner.   There's really no need to be afraid to play a new stock because no matter how unfamiliar you are with a company, the trading of that stock should always be familiar to you.    We are looking forward to tomorrow.

cheers, 

Seeing is believing...

Basically, when dealing with a market that mocks your intelligence more often than you would ever admit, the only sense that we have to rely on is our eyes.    Throw away any predictions and throw away any bias, what you see is what you get and the best movers may not be the ones we had in our mind sometimes but this is definitely the fundamental concept of stock trading.    Had we predicted with 100% accuracy with 100% correct timing, we probably wouldn't be trading stocks as what is the fun in that? lol     Then what is the important issue here?   In our opinion, the ability to quickly spot the ongoing trend and recognize which plays are working better than the others and act on it with a sensible strategy is the key to survive in this market.     We think the market has definitely got tougher compared to a couple of years ago.    As they say, the tougher it gets, the tough gets going.     Market always behaves in a dynamic environment and our trading minds will somehow adapt to this ever changing environment and trade accordingly.   The worst thing when dealing with a dynamic market is to be stuck in the yesterday's frame of mind.    Plays come and go and change constantly, our methodology will have to be improved all the time to adapt to the newer plays and what's working out there.    Ok, lets tackle some of the working plays here....

CYNO, we noticed this one a couple of days ago off their earning report and wanted it give it a day or two to see how it reacted to the gap up.   Obviously, gap is being held and that's a very good sign.    We looked at it a bit further and realizing this one has a pretty small float and that's another good sign.   After checking the IBD #, with 96, 90 A rating, this further ups our view on this stock.   So the decision was quick and easy and we grabbed a starter in the low 23s and added more as the stock strengthened up.   Cowan raised estimates and WRH is a big fan now as well.

CSV,  DJ news reported a whole bunch of insider buys on Feb. 13th.   We are not sure if they are open buys or not and look as though they are not.   There were a total of 120k shrs bot by 6 different insiders and they were all bought at $6.40/shr.   So one thing we can definitely rule out is that there's won't be much or any of the insider sales anytime soon.    This is just the common sense that if all those insiders were willing to put in their own money into a stock that just made a new 52 week high after an earning report, there's no reason we shouldn't either.    A business is a business and as long as the business is legitimate, we are not going to give anymore thought to that.

MFW, this is one stock which we are officially giving a "kick a$$" title today.    There will be sometime before they report so as long as the market is in a neutral to bullish mode, we trade it on the long side.  We've had this core hold and USAP up every night this week as the reversal started.

USAP, a new 52 week high today and only as little as two days ago, this one is fighting off 9 ema.    Strong stock, nothing more to it.

VTRU, we aren't disputing anyone's claim of how much more this thing is worth so we are sticking to "seeing is believing" attitude.  First in the $43's off earning here, we said we'd back. Today the chart cried for a good look.

A few others we reminded to keep watch on today, SSRX from last week, CXW, AVZA made NCH but we'd like to see some more volume to sustain this.   Also, if a stock like EML is to bounce from 9ema levels it doesn't mean it has to touch it...it's just too thin to play that game.  CCOI might be worth a further look as it comes to highs.

We have 3 days off coming up and there will be some profit taking into it, but if that's your worry...you should have been selling into strength these last few days.  After a week like this, dip buyers will be waiting for your shares tomorrow.

DJIM #9 2007

What was a 4 day shortened week felt anything but as trading seemed to have come to a stall by weeks close.  The week definitely got started on a bang but by weeks end the buyers seemed exhausted and/or just not interested.   So what do you do?.   Well, if you can't buy anything with potential it gives you time to evaluate your holds and maybe sell some into the 'Green'.  It is not the time to get nutty and turn away from what has been working by chasing something just to make a trade.  It is always better to draw down you positions into the green then having to hastily sell if this lacklustre tone continues and we really have an exhaustion day when the selling hits hard.   What the week provided was for some orderly profit taking and by looking at performance of some DJIM's closely followed in the past 5 trading days, so it was not such bad thing or idea to scale down or add to a strong one or two like CSV.

KRSL 28% SYNL 13%  ONXX 12.1  CSV 8.7  TRT 7.3  BW 6.5  CGX 5.9  USAP 4.0 CCOI 4.2 OEH 3.4 GLDN 3.1..and HURC at its highs was up 15% since alert buy in.  Taking into consideration the last few days, these returns at the end of 5 days of trading is nothing to sneeze at.   The week was not all pairing down positions,  there was some buying and adding to these percentage gains in the likes of KBW and to a lesser extend HDNG.   The only one that got away was CYNO, it looks the Directors got a hold of the hacked version IBD too and decided to sell in bunches this week.   Actually this looks like planned selling again and it has never stopped CYNO before from moving upwards, so we expect this to be a hiccup as well.  You could plug your nose and hold your breath till it goes away or you could just sell when a stock is feeling pressure such as this.  We prefer to sell and not feel the pressure possibly take down a stock of ours.  The stocks above are the primary hit/ hold list for DJIM, we might have reduced exposure in some like BW after a big run but these are also the first we'd be looking to throw money back at in the upcoming trading week.

What probably got us through the week was the continuation of the solar plays. Right now, JASO FSLR TSL are providing more than ample opportunity to swing a trade. The good thing is seemingly there is always one moving, so at this point we are hitching a ride here and there and not asking for names.  VTRU VARI , we are waiting on patiently to make a drive for new highs and jump in with some enthusiasm.  The problem is the techs just don't want to lead this NASD to higher ground. 

So...despite the selling in most sectors for 3 out of the 4 days, the NASD and Russell finshed the week up about 1 %.  The Bull/ Bear fight in full force, except the fighting ain't that strong in either direction.  Hope this week is a little more interesting and some conviction comes back.  In the meantime, DJIM will be stay in its own ring and will be after new earning stocks to punch out some profits with.