Resiliency

Even Dow's winning streak has been as long as our Blue Jay's losing streak, we know that one of these days their respective streaks will end.   At least in the case of Dow, it's more probable.    Today's the day?    In a very dramatic fashion, Dow closed just 4 points lower.   This might as well be a winning day for both indices.   For those of you that haven't kept the score, both Dow and Naz were off to some good downside action earlier in the day and managed to climb all the way back.   Is this resilient or what?    Again, we will have another test tomorrow with both the CSCO reaction and Fed meeting.    In either case, we think this market will probably go higher still.  During this streak, the majority of the gains in the indices was in the first hour or so with the rest of the day seemingly distribution going on.  Today..that all changed as we saw another side of this market!

In terms of DJIM land, some of the stocks were down earlier but were managed to climb all the way back and some.   What we do here is to make a note of those stocks that managed to come back and those that did not.    For those that come back, we kept some and even added to some.  For those that did not make the afternoon rally, we pretty much cut them off from our position list.   Still, we had about a dozen or so stocks left in our account.    A day like today gives us traders a perfect vision of how strong some of our plays/picks are.   When the market is really green, it's just that much harder to tell.   When the market goes through a shakeup earlier and comes back, you do want to see your favourite stocks to perform exactly that and maybe then some.   If not, time to move on.   There's plenty of good candidates left and new candidates coming up down the road.   There's never no need to be hung on any particular play.   After all, these are just stocks, we don't have any sentimental feeling toward any of our plays.  Just a game!

Here are some notable ones...

NGA, this one definitely surprised us today.   Normally on a weak morning like we had today, a stock like NGA which had such a strong run-up would definitely feel some pressure to pullback some.   Well, it did, sort of, on very pathetic selling volume.   Maybe, everybody has the same play book as us or maybe, this is just one hell of a strong stock.    In any case, we have to be quick to recognize what is going on and act accordingly.   The action, of course, is to chase it higher.    We chased some from low 13s all the way to high 13s.    Bear in mind, we have also lifted our aggressive buy on dip points from low 12s to high 12s, or maybe even higher depends on how it performs next little while.   So basically, when our somewhat conservative attitude toward this one proved to be an incorrect call, we just had to correct our approach as quick as we could.  This is a high stake game where opportunities don't wait for you to make up your mind.   They come and go and you as traders, just have to grab them to the best of your ability.

LXU, this one reported earning yesterday and that was the catalyst.   Boy, would you look at the volume past two days.   This stock has never traded this much volume according to our memory.   Believe us, we have followed this since the $8 range.  It was one of the first DJIM Journal pick entries back in August 2006 or was it 1706 as Mr. Bush would think and slur.    Basically, we like this action a lot.   Sector is on fire with POT SQM TNH...  So why not with LXU?   We think given the valuation of this one, which is still a baby, institutions are getting in big time.   We call it an instant lift of valuation.   How else can you explain the volume?.  From what we recall there is incredible value if this company gets broken down into different segments.  Maybe this idea is again refueled.

GTI, a ha, another IBD play you say!   Well, this is just added bonus we feel.   Whatever is happening with this one, it's going toward the right direction. One thing this is..is a turnaround story that is being liked.  The volume suggests it isn't common retail folks like us that are getting involved, which is good.  

Besides the above, we also like the setup in CUB NTLS TRCR TNH EDU.

What's to come...

We aren't exactly sure what may be in store for us from this market the next few weeks.   What we do feel comfortable of doing right now is trading on reduced size with selective picks and if and when we say `morning trade opp`...`flip` this means , we are looking to trade those first,  not get in bed with at this point.  We state our intentions.  Those not in the trading hood yet....time to get with the lingo.  This all should be obvious from the last few Journals.  We are happy with a one night stand at this point because of what we have said on the market.  A quickie ain`t bad either.  If something was lost in the language the last few days, maybe this just cleared it up.

We don`t like it the past few days, but we keep on looking for a point or two, here and there and everywhere..  If you can`t flip or be there for a morning opportunity,  just leave it alone and wait for something more than a trading opportunity.  We had members throwing up today and ones checking for news if a bomb had dropped on a Jack in the Box because the stock we gave at 78 premkt was at 77 in a falling market.  If trading causes such reactions in some, seriously consider stacking the Zantac or do something completely different.

To us if finally just feels that this market needs to crack in order to get the monkey off lots of people's back.   Did you notice the SOX was red end of day, while the NASDAQ finished up 22 and every other sector was green!.  You cant go forward if this one doesn`t show leadership of some sorts.  It all looks a little screwy now.   As we said before, we are thinking it is the overseas markets that will spook our market here overnight.   If we can`t do it ourselves, someone will do it for us from the other side.   Just a hunch.   Seasonality favours a pullback here and the run-up from this market also suggests some consolidation here too.    Despite our feeling, we aren't going to walk away from this market completely but instead, we are just going to be trading lightly with a cautionary hat on.    There definitely seems to be lack of a theme now that the earning season comes to an end.   From our experience, there's almost always some jittery at the end of the earning season.    Ok onto the plays that are keeping us interested this week...

GTI, this one just amazes us!  Sure, the performance of the run-up isn't killer like but the steadiness of it makes it a quality hold.    We added a bit of this one today near the end.   Again, this one is also an IBD play but we think there's just much more to it than the IBD crowd.

TBSI,  a new EPS play that came around yesterday that also happened to be yet another.... you guessed it, IBD play.    The chart looks very  powerful in this one and we can feel the momentum crowd having their hands full with this one.   Take it or leave it, this one is in play and we are getting involved as well.

NGA, perhaps our feeling has been exaggerated by the split announcement and maybe all is still well with this play.    No matter, we can not let our own emotional feeling from making good trading decisions based on the actual action of the stock.    This one did come back very nicely and in fact notched a new closing high.    We bought some back today and feel the IBD theme is still intact with this one.   We'll see how this one develops next couple of days.  Again, we`re back but we`re not back in sizes that we carried since the $10`s..11`s..12`s

FWLT, we are watching very closely on this one for any sign of pickup in volume/strength.   Perhaps this is the one with the highest probability of making it to the triple digit club on our watchlist.

Bottom line, we are being very selective in this market right now and try not to get carried away with sizable positions.

DJIM #23 2007

Last weekend the hope was a few billion dollar M&A deals to get the market stimulated again. A few billion turned into 60 billion worth of deals or more brought back from the Hampton's. Our one concern to stymie this market was if the Shang' would sooner than later unravel our market again.  A few did their best trying to make the stamp tax a double shot of the Shanghai surprise we saw early in the year. We didn't even touch on this in Wednesday's Journal because we saw it as a non event. As far as we're concerned, the Chinese government is gonna do things their way and it will take a few more maneuvers of this type to cause the bubble to burst and spread to here.  Likely they'll be careful now after the early year swoon.  Soon after the FOMC minutes came and we were off to the races.  Well...races, but not what we would call a sprint!.   Still...what last week did was provide some DJIM stocks an opportunity to come of their shell and play....So on to some names heading to the trading week...

TBSI, we are all familiar with this shipper now ( #8 IBD ), we were adding late in the day and think this is ready to resume upwards. While ESEA looks quite extended, TBSI keeps putting in tails off the 9ema (showing support).

ESEA, this shipper intro'd Thursday night turned into a 16% move come Friday. Yes, a full 16% as the open price (13.40) and later a dip gave a chance to catch most of this move. Of course, we took some profits but we were back for more during the day. The PE seemed to be below the norm for these shippers and probably helped out its cause.

DRYS, is another Greek shipper we took a position in.  If this sector continues to climb, we like where this one sits on the chart to play along. This is a good and fast mover when caught at the right time.  We took a smaller position as we wait to see if this has the ouzo to bust out.

MR CYNO, a couple of names here for months made it to IBD's front page this weekend as both busted out to new highs. CYNO was basing between 30-32 for about a month, while MR is getting quite jumpy, you really have no idea day to day what it is going to do.  Sometimes with quality names you just have stick it out.  The front page coverage might get them some more air this week. We'll see...

PCS, TTC, MFLO recent pick ups closed at NCH's or close.  A few others that have been around longer at DJIM.. GTI NTLS RCCC TRCR also remain strong.

FWLT CROX MA continue to get DJIM trading dollars, mostly on positive index days.  Not much can be said that hasn't been said about these stocks since their earnings.

NOVC, as we said, the easy money has been made and we are only looking to trade it when there is some signs of life. The biggest mistake you can make is trying to get a piece of NOVC, if you missed the first move.  Too may are looking for a repeat move.  It's not going to happen to that magnitude without more news, so there is no need to feel left out.  Also, do understand it is inevitable with biotechs that firms come out and raise targets to very high levels. They have no choice as now there is finally news.  These targets, sometimes 50-100% higher are looking a year and more down the road and are calculating a perfect storm of everything going right to that time.  The chances are a biotech will leave your mind in a week or two as another takes it's place.  It does with us.    Unless you are a long term speculative investor, you are unlikely to see those price targets hit for NOVC, CYBP etc.this summer.

PLPC, bought a few shares to tuck away, maybe this has a little HTC, EML in it. These types are only if you have space and time to spare in your book for some not so liquid stocks.

Carnage in the far east...concentrated

Fortunately, the damage in Shanghai did not spill over to North America.  On the contrary, we actually had a pretty good day for a lazy summer session and many DJIM type of stocks were particularly shiny today.   If the market was to get a shake, you'd have seen the beginning premarket.  Nothing of that sort happened as the FXI stayed calm and a few Chinese stocks were actually green. Instead of any housecleaning, we were buying most of the day.  Does today's action mean it's a sign of things to come?   We'd like to hope so but we aren't wagering all of our eggs in anticipating anything.    Basically, our game plan is not to get too over our heads in worrying about the big market movement, but rather, focus on individual plays and sectors that are attracting hot and momentum money.    Afterall, we are not economists that emphasize on theory which goes into the far future but we are traders that focus on the live battlefield level action day in and day out.    There are quite a few interesting plays today, so we are not going to waste anymore time and just go right into them...

TBSI, this is a play that we have been involved in the last couple of weeks or so.    What we really liked about this play is its text book style of action.   Sure, it doesn't have the heart pounding NOVC like of action but this one gave us the kind of setup that most traders would be happy for.    This one built a beautiful flag pattern last little while and it shot up today and closed near the high, with some good volume.    This is the kind of play we love b/c not only it gave us enough time to get in during the setup, but we are also able to built up a comfortable position that mattered in a very controlled, conservative, and highly probable way. A nice 5-6% day.

KMGB, this one came to our attention before the market opened and we immediately put it on our watchlist.  We actually put this one up back in 2005 and it doubled by the next morning.  That was its first stellar EPS Q.  Today it came out with earning that not only beat the analyst's estimate by a nice margin, but looked very good year over year, and sequentially, by our book.    After further checking its IBD number (92 98 now), we just couldn't help but start buying up shares.    Now, every once in a while you get a high calibre, high momentum IBD play that gets lots of traders' attention and we think this one is a very good candidate, after NGA that is.

ATLS AHD, a few weeks ago ATLS came on our radar after it acquired some assets and made a nice move. On the weekend, we had put AHD on our watch for the week because the chart made a NCH and was related to ATLS.  Before the open this all came together in a different way, the idea behind these names and a trade on news.  ATLS, which owns partner units of AHD announced the APL (Atlas Pipeline, LP), had made agreements to acquire assets of Anadarko and then Atlas Pipeline would distribute $$ per limited partner unit and increase distribution....LOL. Confused?. Hell yeah and all this doesn't mean anything to us!.  All we know is this was another 1 billion asset deal that was liked once, so why shouldn't it be once again. The fact the charts were prime and the trading action called for an entry in our book.

LPHI, this one definitely caught some wild fire after it guided up intraday. Early this year, we put this one up after a good EPS Q to look at. We wondered if a life settlement stock can actually get that sexy look.  It didn't for traders, but quietly it had almost doubled since.  We really couldn't speculate the true effect today until after the initial excitement settled down. This one can have some whacky spreads.  When it looked like there isn't any sign of pullback, basically there's only one place to go and that is up.   We are also trading this one aggressively. Co sees Q1 EPS to be approx $0.49 per share vs $0.11 single analyst est compared with earnings of $0.05 per share for the same period last year. The co also expects Q1 revs to be approx $17.5 mln vs $8.4 mln single analyst est compared with revenues of approx $6 mln last year.

TNH, after about three weeks of consolidation, we think this one is ready to break out again or at least test the high area.    Yes, it's a $90 dollar stock and we aren't discriminating any stocks that we feel have the potential to pull a good move. We all know the power of the MA, CROX, FWLT expensive plays now, don't we!.  We are monitoring the action closely. The mid May high is around 92.50 after the sell off.  Today was the first day it closed over 90 since.

There were quite a few new positions /stocks taken today.  This shouldn't take the spotlight away from this Q's DJIM plays that had a very good day.  TRCR +14%, CUB +6%, RCCC 3.9%, IDSA +4%, GTI +2%.  Not bad for a day the DJIA up 8pts and the NASD up 4pts.

.6 .6 .6%

Guess we should take those % gains from the DJIA/SPX/NASD yesterday as a sign from the devil that we are going to have a down day to follow.  It wouldn't be a surprise, but on the other hand that is what most expected yesterday and we just didn't get it.   The herd was playing catch up and the profit taking didn't hit till quite late in the day.  By this time, we were sitting pretty as we had done as promised before the open and that is, " we will be selling lots and lots of yesterdays buys before catching our breath and possibly repositioning".   The good thing about yesterday is the morning catch up lasted longer than anticipated and it gave ample time to sell and get a price.  The repositioning of the sells really didn't happen as the market slid too late in the day giving the impression a little more selling might continue into today.   So why reload at that stage, is our thinking.  Still, there were some stocks worthy of intraday plays and others worth holding to see what's further up possibly.  Also, instead of adding to stocks recently talked or alerted to the day before like the GS that went to a morning high of $207, EXM mid 48's, DRYS almost 76, BIDU almost 285, TNH to 123 which we sold in the morning...we went went after a MR late in the game because it was making another new charge to highs and because the Chinese stocks is one area that held up the best during the day.....

EJ, is one we keep on holding. Yesterday, we noted possible accumulation. This was even more evident as this one churned and rolled all day in even another tight range.  Either this a forward to ML's initiation or something else, or its just a fine piece of China making a dandy cup and handle.  This is not trading as before when volatility was huge, don't ever forget those days. A shakedown is always possible and don't all get shaky knees if it comes.   We've had a nice week and considering Chinese stocks are holding their own, like JRJC, MR its worth some more time.  As said before, we added back MR and as far as JRJC, we are only flipping it here and there.

LULU, MELI, and even WX, interestingly the recent IPO's had very nice days, actually some of the best out there and we have put these on our potential trading list.  MELI, is a new name here.  It got initiated yesterday and is of the foreign AMZN, EBAY biz nature.

GS, as a follow up to possibly hold a portion into earnings. We got a very nice price/ gain and after MS's report, we'd prefer to stay out and play it in the morning if they announce nicely.  For markets sake , we hope its great and so we can live with any points we might miss.

ICOC,  we'd just like to point out the concept here has always been playing the possibility of "IBD100 inclusion".  The main idea is finding and getting to them early and going big early into the $15 level late in the week.  Remember NGA, GTI, IDSA even SYX???.  If not go back to April, use search and see the prices we started and read up on the strategy.    So, if a stock is already at $15+ on a Wednesday, it really offers us little incentive at that price.   Also, do consider that a $15 stock with a beautiful run has been drummed around and pushed by either other stock forums, hedgies...or whatever and if they use the strategy as us in the NGA, GTI plays, guess what they might be doing here?.  Well, at least we would be dumping to newbies after getting 1-2-3-4-5 pts. We'll watch for now and if we get a nice dip we might add ..anyways, we'll see how it trades these last 2 days and deal with it hour by hour.

At this point, even if we didn't reload our sells late in the day, we'd look back to these names as soon as we see the buying of pullbacks starts in the market.  And it will as any dump will be seen as a buying opportunity for those who missed this move and think this market will be going higher in the days, weeks and months ahead.  Buying the dips in this market will again occur.