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 #8 2007

Three days off from the markets almost makes you forget what a happy little place you were at!.  That is until you look at your trading account gain over the previous weeks or the charts of DJIM's closely followed that we/you own to put yourself in that happy space again.   You see there is no excuse to be stuck in the mud after the last 5-6..trading days.  Opportunities have been a plenty and the market has been with you.  If you are not ahead in the game, you are not taking advantage of what DJIM provides for the day tripper or for the investor.  What opportunities?.  Well..lets go to the alert-forum pages and see what was there.  A week ago Friday, there was...

CSV at the open and $5.50, we said to look for confirmation at $6 for interest....it was there and it has touched $6.80...

ONXX buy in premkt on forum when the phase 3 was released just below $20 and now it sits just off $28.

The same day we mentioned the stellar earnings of BW around $41 and the buy of a starter that night, it has traded to $46 since.  Then there was the sooo timely mid week note on TRT lagging the field when it shouldn't have and the kick ass move to nearly $16 in less than 2 hrs on rally day.  This is one example of not chasing the 30% gap on earnings and instead waiting for another entry.   If that wasn't enough, we introduced CYNO low $23's...now almost 10% higher and IBD #28 by the weekend.   Friday's seem to be made for small cap earning and last week didn't disappoint as HURC released their earning.  We alerted we'd be buying early and another 10% was available after the gap open as the stock ran from $39's to $44. If we started the day on a good note, we might as well end it on a good note.  KRSL on the reversal and an alert just under $18 for a potential kick come Tuesday was the trader alert.  Well, it looks like it came in the last 20min and AH's.  Again, this is an example of not chasing if you miss a early entry off earning on a small cap/float stock and instead waiting for the next entry a few days later.  Last ...we checked this was trading over $20 AH's on Friday.  So, this was just the new plays last week, we can't forget the steady climbs on most DJIM's holds to new highs all week.   The long term holders should be happy with DJIM steel, aluminum, lodging, Internet plays...USAP CENX OEH VTRU and even our Euro play in VE, now from low $68's to $74.  Hey even a licorice/banking stock in MFW.   There is a mix on DJIM for any type of trader/investor.  You're not expected to catch all of these plays from last week as there are many factors involved, including size of account...but you should be sticking a few of these trades hard last week.  This is NOT about selling you that DJIM works, you are already here and so the only purpose of regurgitating last week is for ' hopefully ' not many of you to see the potential you are maybe missing and figure out why!!.  We simply want everyone to enjoy the same success.   So,  if you were not in a happy place late last week,  it's time to re- evaluate your strategy as we said last weekend and send us your recent trades and confess to your bad habits.   A very few have done so and hopefully last week they exercised what we discussed and profited.  Count how many of these DJIM plays mentioned today you hold this weekend or traded last week,  this could be a simple test to know why you are not ahead of the game.

HURC, this opened nicely with not a lot of fanfare as the volume indicated. This provided some early entries at a decent and not runaway price.  Soon you saw the potential in how fast this stock can move.  We touched on what we like about HURC in alerts. There is nice growth of 14mln yoy in revenue plus over 2mln in net.  The estimates were beaten and sequentially there was some growth which we like to see.  Considering 2006/2005 yoy Q was flat last year, this is impressive considering they did .84 v.48c.  Seems like they are back on track with operations in China to take hold in 2007.

KRSL, seems every Q we go through the KRSL hype off earning and most of the time it does not last.  The 775K float is always advertised as the the holy grail on this stock.  You see it has been beating YOY numbers Q over Q for the longest time and the same story starts.  This time many will put their EFUT in their mouth and say this will become such...Hey,  weren't they just saying that with FFHL and the happy smiley price targets on it.   Simply, the numbers are good but there is nothing tremendous about them.  But that is not the point here,  it is only about how much the traders want to play and drive something higher.  It depends on the mood and right now its seems to be craving a runaway, just a feelin'.  The volume the first day makes us think this might have a longer life span this time around.  This is for traders unless you want to take a $2 dollar lotto ticket on it.  You can see the drop to 15's and the pop to 20's as to the volatility.  Anyways, we got our trading boots on with this one and will trade accordingly.

With over 90% of the SPX probably reporting already, you might think it's the end of earning season.  In reality, this is when the small / micro caps quietly start sneaking in with reports, so this hardly the time to get complacent and tie up cash in laggards.  It is always good to have cash ready and not be anything close to 100% invested as you don't want to be selling something in order to get at another.  First, you will never get the price you dreamed of for the one you've been holding and by selling you won't be getting the new buy at the price you wanted if it runs quickly anyway.   Still, this has been a very productive earning season so far as we conclude week #8 of DJIM weekend updates.    To name a few nice ones from this Q, we need to start with USAP as the big winner from $36's.  CCF VARI VTRU ENR AVZA MTRX, a few quick 20% runs in the cheapies like TGX TRCR and some that are fresh like SYNL CGX  CYNO etc. that we are looking and hoping for more out of.  The charts paint a good picture of the recent DJIM closely followed,  nothing we can really add than what you see from last weeks Journal, Alert follow ups and Forum notes.

Happy trading and a Happy Chinese New Year to our DJIM friends...

Year of the Pig!

We are definitely enjoying this first trading day of the Pig year.    Of course, the word Pig in Chinese is usually associated with prosperity as opposed to our association of greed.    But today, we are just enjoying being a pig, in either association. lol      Action is pretty broad across the DJIM land and many stocks gained momentum as the index crossed into the green territory.      Here are some highlights...

KRSL, we highlighted this one late Friday and suggested a possible gap up today.   Well we got a gap up and the stock spent plenty of time above $22 today.   That's almost five point play from where we alerted.    We aren't being greedy here and sold most of the trading positions and left with a small trading position.   If this thing gets further momentum tomorrow, we'll definitely chase it but with a controlled pace.  The play as noted was to take advantage of a potential gap we thought we could already see in the $17's Friday being formed....How?...big fat crystal ball!..lol...okay more like a gut of experience.  We did give out the same trade in EFUT, FFHL for gap po'!.  Sometimes its not the length of stay but what you get of it.  If you can get 3-5 pts in 1 day of trading, you're not going to risk it the next day(s).

KBW, we were also surprised by its earning and thought it just seemed to good to be true.   This financial company IPO'ed not too long ago and currently have 4 analysts rate it as a hold with low estimate going forward.   This in our opinion will sure change as analysts will have to raise their estimate based on its report today.   The stock also has a very small float and financial stock in this market cap range always look attractive to us.   We are gonna be trading this one higher.

HURC SYNL CGX BW TRT,  all these recent earnings play have enjoyed some nice follow through and made new closing highs.  FSLR FCN are two more we are trading but have run out of space to discuss lately.

EDU, this familiar one which priced its secondary has broken out today on pretty good volume.    We chased some and are keeping a close eye on any further strength.  If this wasn't enough, recent Russian DJIM stocks made NCH's VIP MBT and GLDN is right there.  This is why we started a hit/hold list so your list starts to resemble ours and we all recycle when the time is right.   At this point the lineup at DJIM closely followed is a World Series lineup and there is just no reason to alert/ forum recent DJIM plays like these.  Hopefully you've listed them to trade or still have them in your books as holds. 

ONXX MFW USAP CSV SNCR, these familiar DJIM stocks all have enjoyed some nice gains and we added appropriately with some of them.

The bottom line is, if any stock did not go up in the DJIM land, then it's really considered as a laggard and we are better off just cutting them lose.   Today was not the day to play a 9ema level bounce. When the market is this rosy and most things seem to work, the trading strategy should be focused on "making most bang out of a buck" and we gotta hammer those stocks with the highest momentum.     We are looking forward to trading tomorrow.    A nice reversal of 35pts on the Nasdaq today and the close over 2500.  Now, let's just stick it!

Expectation!

We are almost two months into the new year and many of us have been asking the same question.   Is this the kind of market we have been expecting?   The truth is, nobody can really answer this question.    Just like an individual stock, the overall market would spend most of its time in the consolidation mode.    It seems we have been stuck in this mode for the longest time.    Unfortunately, there's really not much we can do about this and we can only do our best to cope with this situation.     Today it started off as if the market wants to go down hard but it ended up in a meaningless way.    Our DJIM stocks have fared better than most in this market environment and this is the exact sort of things we liked to see to end our trading day.      Here are some highlights...

FSLR TSL JASO, even though we are grouping these three together since they are all solar plays, we do have to point out that FSLR is the only one that we have considered as an earning plays.    Solar plays are hot and there's no doubt about that.   We think these three represent the best in the solar trading world where both the liquidity and technical signs are top rated.

CSV, this little funeral service stock broke out today on pretty convincing volume.   We didn't think those insider buying was meaningless so we added then and again some today.    It's hard to speculate how high the institutions will take this one up to but one thing we can all agree about its business is that "it's just a proven business".

BW OEH VTRU HURC TRT CGX,  again we are grouping these together b/c these are familiar names that always seem to outperform the rest of the market.    Steady as she goes!    It's nice to have a 20%+ mover in your portfolio but it's the steadiness of some of our stocks that make our portfolio really shine.  All these have been early earning buys this Q at DJIM and OEH, is a sec play on other hotel earnings plays that came out with nice reports.  Now, it gets some takeover speculation with the CEO departure. We thought this speculation was already underway due to industry conditions and company internals, today Bear Stearns added some fuel to it.

CENX survived earning with a NCH to boot and shows this aluminum play is looking for its 52 wk highs down the road.  A couple of recent faves CCF, HMIN are now over 9ema and back on close watch.

Things are definitely looking pretty rosy at this moment and we have seen no shortage of leaders among the stocks on our watchlist on a daily basis.    Does this mean that we are committing heavily into this market?    At this point, we feel we are committing more capital but only on a selective basis.    Things can get out of hand when you add too many positions and it's easy to lose track of things.     A good strategy is to limit our portfolio to a certain number of positions.     For example, when we get to near the close of the trading day, we always ask ourselves a question, "are we going to be holding the best 10 stocks on my screen overnight?"   If things do check out then we can end the day happy but if one or two stocks seem like a laggard then we just cut them lose or replace them as in a CXW yesterday.    This is of course assuming the market is still in a pretty good stand and there are stocks on our watchlist that are outperforming.     Basically the point is that we are always extremely picky about what we hold in our portfolio and this means ...yep, we'll say it again thanks to MFW finance biz...no holding into earning. 

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. 

Bounce in index...

doesn't necessarily mean that there are opportunities in individual stocks.     We are looking at some pretty wild swings in the index's today and this has to be expected given the magnitude of the sell off we had on Tuesday.    There's a camp of participants that just don't believe that the correction is done and refuse to chase any bounce/rally so soon.    Even though we don't have a bias on market direction,  we do maintain a very cautious attitude and refrain ourselves from tip toeing back into the this market other than maybe a quick trade here or there.   Frankly, it's very easy to go back in and start buying and it's just as easy to start losing.   The question is... do we see any opportunities to buy right now given a lot of the "opportunities are abound talk by many of the gurus out there"?    One thing we need to have is trading opportunities WE are most comfortable with and are familiar with.  We just haven't seen it yet!.   For those who have a 3 year or even longer investment horizon, everything may seem like a bargain compared to 3 weeks ago.   For us, we are short term traders and that's what got us to this point and we'll stick to it.   Our discipline saves us from making unnecessary risky calls/trades and that's the way it is.     Come think of it, making good trades in a good market is not that hard of a thing to do,  but not losing a SINGLE penny in a bad market is probably the hardest thing for any trader.     Trading is often like fighting a battle, you only go in when you sense favourable odds on your side.

There are a few facts about this kind of market environment.   Market won't go away, market participants won't go away and we won't go away but the only thing that can go away is your capital if you don't know how to protect it.   Opportunities will come sooner or later and when it comes, your capital better be there to make it good.    Regardless how big your portfolio size is, we just don't believe in buying anything now for better days ahead.    We just don't know how much worse this correction can get and we are definitely not putting our own money in to find out an individual stock we loved a week ago has another 10 or 5% downside left.     Also, when the markets do bounce back meaningfully and resumes its uptrend, how do we ensure that the stocks we buy today are even going to participate in the rally?   At this point, we don't know and we can only wait and see.     Strong EPS plays are only good when the market is in a favourable condition and there is money chasing them.   Take GEF today, we said.. "What the market will do with new earning play possibilities is up in the air as of Tuesday, so we will be cautious and go with what the institutions are doing with this today".   GEF would have been up 10-15% a few weeks ago on the numbers they did.  This morning we dipped in to see if there would be any earning momo as the market started showing signs of a reversal early.  It moved a quick $3 bucks, but that was it.  By the afternoon the market showed it didn't give a damn about NEW earnings plays and this is what we feared in our cautious note on it.   Simply, we followed the institution flow and traded accordingly which included letting the small piece go.  Let time be your friend and not your enemy at this point.  Knowing that we can afford to wait on plays like GEF or any other play is our biggest advantage here.  Now its on radar again and we shouldn't miss a move up if it comes soon.  If there is no momentum shown, what use is it hold and risk downside at this point or just sit in a flat stock.   Perhaps by next week, we may all be in a buying and holding overnight mood but just not today and probably not tomorrow, a Friday.

There were some stocks near(ing) 52 week highs such as CSV ENR ABM,  but in our opinion these are NOT the kind of momentum movers that may benefit once the market does turn around.    Once again today, we mostly sat in front of our screens to watch the volatile action and listen to CNBC to be amused by their guests.     We are simply looking forward to the weekend.

What's next?

The indices poked their neck out today and broke out of their trading range from the last little while.    As we were saying yesterday, market was looking for a catalyst and today we got one.    Does that mean that we are ready to challenge the old high next week?   Ah ha, if market is predictable like that, then we all should be running multi billion dollar hedge funds.    The truth is that we just had a good old relief rally today and what comes afterward is usually trickier than what most people would expect.    One good thing about the reaction of the fed decision today is that we are that much farther away from the recent low.   Today can be used as a good indication that we've just had our bottom for this correction.   The sub-prime issues are being sorted out and worked out slowly and many institutions now have a realistic expectation of what to expect from some of the firms involved in the sub-prime lending.    This is good news!   Uncertainty tend to raise fear and certainty raises optimism.     Seasonally, we are ready to kick off another earning season.     What?   It seemed like we've just finished our last earning season.    Yup, this gig is literally all year around and right now we are back to focus on finding earnings plays that fit into our criteria and trading theme.      In a way, we are kind of glad that the big drop happened before the earning season. Does anyone else feel like "we just got rid of a monkey off our back"?   In plain words, now that we just had a correction, bears can all suck up and go away.   Hopefully this is the case but we do need confirmation from market action during the next little while.     The best case scenario for this market is to inch up slowly and digest any big market gains like today with time.    The absolute last thing we need is for this market to go up in a few straight days and then to get smack down hard which will for sure shatter investors' confidence.

Now onto our small cap land....  When the market is in a good mood generally, the small caps always tend to get busier and see an influx of funds.  Here are some of the stocks we are noticing today...

CSV,  we have to crown this one tonight as it joined the 25%+ gainer club today.   This one is such a sleeper that despite the fact it doesn't generate any buzz among the momentum traders, but it generated 25% during the last month or so.   And do we even have to remind people that last few weeks hasn't been the most friendly to many investors. The same goes for HTC, the Euro Telecom which has produced 25% too. The reason we bring these up tonight is after today, it is time to look around at past DJIM stocks and see which survived through the turmoil best.  It is probably best to start doing some homework and expanding your tradable watchlists.   Another reason is just a reminder that despite the volatile stocks we mostly cover there are plenty of quality crawlers that work for the longer term investor.  Last Q, we had EML, SYNL, AMIE's and this Q the CSV and HTC have already stood out.

HURC HDNG,  yes keep on going and make those new highs.    Market really owes those two as the market environment was not friendly when these two came out with stellar earning report. UEIC falls into this boat as well.

FSLR TSL, we wish these two had done a little better prior to today.   Nevertheless, whatever it takes to kick-start the momentum is fine by us.

SIMO SNCR UEIC,  had new closing highs and we are definitely gonna look more on the tech side of the plays as the earning seson goes on.  SNCR was probably towed by AAPL today.

AMAG, we used to trade this back in early 06' with great success under a different symbol, it's a streaky stock and if you get on the right side..at the right time this one can be quite the winner. It's in late-stage development for iron deficiency related anemia in chronic kidney disease and that is the speculation part.  We started very small and will see if the small float and big short interest can dance with the Deutsche Bank $100 target put on it today. Wait for confirmation of a turn here before taking on a play like this or just start very small and make sure you have many more plays before it.

Folks, market definitely seems to turn for the better last couple of days and especially today.   With the earning season coming up, we feel like we should get right back into it 100% and pick up where we left off.   This doesn't mean that we are gonna be committing all of our capital.  It just means that we are gonna be committing 100% of our time and focus in finding trading opportunities for the next little while.    Hopefully we'd get some really nice plays that'll make up for some of the lost time that we incurred from earlier this month.  Just remember, we might need to curb our enthusiasm as traders soon after a day like this and that simply means taking some profits before kicking it up again.