NDX..the market vs. DJIM

Since the MLK holiday, we have seen the NDX go from 1847 to a touch of 1771 today.   Despite this treacherous ride, the heavily followed DJIM stocks have shown not only resiliency but power to go forward.  This divergence with the market only escalated today with 7 DJIM names hitting a NCH and some even had higher highs intraday.  They include USAP CFF VNDA MTRX MBT VIP AMK.   If this was a public space we could probably find something to say on these tonight, but considering it's not...we won't bore you more and hopefully find you in a good mood following some of these recent moves.   If anything use tonight to read back the recent Journals, the alerts to see how this all came to be and the strategy involved in adding/subtracting these positions.   Also, if the market continues to slide, this divergence with DJIM stocks won't last forever and you should be prepared with an exit strategy.  A look over on the charts should help you create a line of support, every stock is different in respect to floats, volumes and should not be treated equally.  A CFF is not a VIP, a AMK is not a VNDA, so some need more flexibility than the other on your part.  The line of support could be a recent breakout price, to some it might be just leaving if the stock drops below the previous open, low or high.  It all depends on the individuals entry price, their time frame, how much they want to pocket etc.  Remember this is just the start of earning season and new opp's are coming up almost daily, so don't get a crush on a stock that turns on you or is lagging.  We've just started and a MTRX CCF USAP have already proved to be quality DJIM earning plays...there will be more!!. Anyways...just a few things

MTRX!!...finally!!...who came out with earning today, MTRX or BTJ?..lol.  Take away the gap in BTJ and MTRX was the better trade to add to today.  Guess BTJ EPS, the Oil spurt and MTRX getting to 17.30's area( see the 60min) all had the makings of the stars lining up for MTRX.  Considering, we've been complimenting this stocks strength through the massacre of the oils since its earnings...todays "interesting" point in alerts was a potential bust out in the making and a holder of MTRX should have been adding to their position once it was clear.  As far as BTJ, the earning is stellar and by sounds of it the growth is to continue in the next Q's...unfortunately the action was quite boring considering all the positives in this secl.  Our concentration turned to MTRX early and BTJ never really gave reason to add just yet.

The point of the alerts/ updates is to catch a potential move.  It could be the start of a hold or just a trade once in.  Lately..all the big moves have originated from that page...CFF USAP, VNDA and the Russian telcos, MBT,VIP yesterday.  The important thing to see in respect to these moves is in many of the moves buying on the next weakness has been very profitable.  So, it's not about the chase, wait for some confirmation, you need to see some momentum.    Also,  ROS, GLDN waited till today to get on MBT, VIP's back.

ENR, we added a bit today in the afternoon.  Prud added 6% to its eps estimate for '07 late in the day. Energizer beats by $0.20, beats on revs (ENR) 75.60 :Reports Q1 (Dec) earnings of $2.12 per share, $0.20 better than the Reuters Estimates consensus of $1.92; revenues rose 8.7% year/year to $959.2 mln vs the $921.4 mln consensus.  We've seen this bunny hop, so we're not worried about getting at these levels. 

CHDX,  just mentioned this one in the Journal last Tuesday as one to watch.  "CHDX, this one was in play a month or two ago and today it broke out apparently on good volume.   Keep an eye on this one for potential follow through or not, it's not the most consistent day to day performer".   Today, it had another big day. The question...can it do two positive days in a row without the usual give up.   We think this might be the start of some attention into ISRG's eps on Feb. 1st,  if ISRG continues to act as if a good report might be in the cards.

EBS,  hanging in nicely after a couple of big days.

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!

In our opinion, today is one of the biggest days if not the biggest day for us so far in 2007.    It was almost near perfect except for a couple of stocks but overall effect is very positive.    Index seemed to be going much more wild than most of the stocks on our watchlist but we think it's understandable given the cross currents of a lot of news out there.   Of course, what we care the most at the end are how some of the stocks in our portfolio are doing today.  We will proudly take this day considering there are many a guru and many a forums complaining about the market and the little opportunities for a good trade... A few things for tonight...

HRBN, big volume but a slight disappointing close.   Does that mean this play is completely over?   Far from it!  We think the volume today squarely put this one in the "in play" category.   So why did it not go up with this big volume you ask?   Simple, in terms of percentage, some early birds that supposed to have bought the "Naz Listing Leak" early may be cashing out and maybe some of you after an alert run from just over $10 to over $13 overnight.   We are going to be adding some on pull backs.   Keep in mind, this thing still trades on BB exchange and the market maker there may not be most friendly.   Hopefully when it gets onto the Naz Global Market, some institutions would step in and give it some orderly support. 

CCF,  boy things can turn quickly on this one.   The only disappointing thing is that this one has to shaken out on a day where most of the other DJIM stocks were having a very good day.    Nothing has changed on this one and the battle is close to the 9 ema.   Next couple of days will be the key to see which way it wants to lean.   At this point, we wouldn't be adding as the sell off volume seems a little more excessive and we'd give it a couple of days to show us which way WE ought to be leaning.  The earning did not change overnight, remember that!.  Don't forget how far this one has come in a short period of time and take these moves in stride.  Recently, we said 'she's a bouncin' and it went from 29 to 33's, so be patient.  There is plenty out there!

USAP, perhaps today is the day this stock is showing us that it should be the #1 holder in our portfolio.   One thing is for sure, this stock is definitely getting the kind of exposure CCF lacks.    Even though the trading can be just as volatile, but at least the support is there to push it back up.  We like this one and would add lightly on break outs and aggressively on pull backs.    By the way, when we say adding on a pullback does not necessarily mean we'd be adding on pull backs that have excessive volume that takes out meaningful moving averages, like CCF did today!.  Hopefully, the HMIN move Friday was fresh on your minds as you read the forum blurb on USAP this morning.

TRCR, it felt like it was just a matter of time.  That thought was just echoing behind our heads as we were just talking about it a couple of days ago.   Does today qualify as a breakout?  Hell yeah!  Did we add some on the breakout?  Absolutely.    We'll see how high the momentum takes this stock to. The volume was about 75K when we alerted to a watch for the $6.75/6.80, a 10minute volume chart shows the love it started to receive at those prices as we were hoping for.

MEND CHDX both of these broke out today but both didn't close near the high so we'll group them together.   Remember, CHDX is the volatile beast, so be careful with it.  MEND received a price tgt increase( see forum from premkt)

VTRU VE NWK HMIN ABM MFW ENR RESP ,  we have to say all these behaved quite well given the wild range we had today with the index.  This is a night we have to say the charts speak louder than anything we can say, so we will keeep it short.  There is a collage up of the big day players up in charts.

If you are spread out in a few of these names, hopefully you spread out your profit taking.  As much as we added here and there, we took some off as well in different names.

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.