..nice day in select group...

Another round of M&A activity on a Monday gave the markets reason to bounce after Fridays sell off.   However, the taste of disappointing tech earnings lingers on as the NASD gave up most of its gains by days end. Somewhere in the middle of all this were a bunch of closely followed DJIMstocks that had some fabulous action.

TXT, after consolidating some of its gap gains off earnings, today it showed some of it's potential by climbing a steady 3%. Now we see if it can take out the highs on earnings day and gain some momentum to which we can add to.

DDUP, we`d love to see what this one could do with some volume. Could easily be a 2-3 point day in store for it if the volume actually showed up.

TTPY, this newbie from last week pushed hard early to mid 26's on the heels of its late day push Friday.  We'll see if this action puts this IPO on some trading screens by watching the volume before adding more.

TBSI, DRYS, this incredible action continues. We`ve outlined previously how we`d approach trading these at such lofty levels.

LDK, we talked about the targets this one got, well today at least one of them got hit. Unfortunately, it is really the only solar doing anything at the moment.  Maybe this is the way it will be until FSLR reports on the 31st.

PENX, looks to be back in the game as it closed with a NCH.

CMED, tacked on about 6% and could be the beneficiary of some of the ISRG action.  Reason being it has been mentioned as the next ISRG.

With AAPL to report on Wednesday, we`d put good ole`SNCR on top of your trading list for the next couple of sessions. Today it gapped off an upgrade related to the iphone.

Focusing on the sure plays...

Index is doing a good job confusing traders today and it looks as though it'll take a while for some conviction to kick in.    Most of us aren't counting on a major rally at the moment and we are only playing things off a tradable bounce.    As long as we are aware that this is the situation we are in, we then have to look at plays that offer us this kind of tradable opportunities.     There is really just a few obvious plays worth watching for today and we will go through them here...

VMW, we pointed out last night that the break out area is around $59 and boy did it explode after it broke through that mark.    Again, it's about emotion and momentum at this moment and there's really no need to even look at its fundamental aspect of this play.    The ones who paid $66/share only care if he/she can get out at $69 or higher.    Pay attention to the technical sign and intraday movement as they are the only necessary things you need to trade this play at the moment.    With its strong close today, we carried some position home and we'd be at it again aggressively tomorrow.     This one has the kind of liquidity and price movement we haven't seen in a long while.   Take our word for it, this kind of play doesn't come often and do take advantage of it.

ISRG, this one poked back above 9 ema today and closed near the high.   We are keeping our  eyes close on it for a potential follow through.   Unfortunately, many plays on our watchlist are very sensitive to the index movement and it's impossible to forecast the index on an hourly basis.   In another word, playing these kind of plays can be risky so we'd do small lots to cut the exposure down to minimum.

DRYS/TBSI, after DRYS eps report tonight, we'd keep our eyes closely on this pair tomorrow morning for a potential trade.    This group was taken down like others last few days and it'd be interesting to see if they can recover some off this DRYS report.

Bottom line, the index point movement  lately may not show the true potential of this market's volatility.    We shouldn't let this seemingly calm action lower our guard down.    The market can turn badly literally off one piece of bad news and we have to be prepared for it.    We are far from out of the woods  and it's definitely appropriate to trade lightly.    Keep the plays simple and short and we'd able to finish this month on a high note.

Shaky Start and a Steady Finish

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

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

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

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

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

No second chance...

It seems these days, the market isn't giving people much of a second chance to some of the speculative plays.    Of course, if you aren't into them, then there's really nothing to worry about.    Market opened weak but ended way higher today.   Again, we have the big techs and financial companies to thank for.   While indices seem to have a blast today, it's actually quite difficult for us to find good plays from the smallcap land.    Now only if we knew how this market would turn out, we'd have ditched all our small ones and we'd be gunning for the big ones.    Unfortunately what's happened has happened and that is something we just have to live with.

Here are some plays we are tracking/playing..

China Plays, most of the China plays did not really participate the rally with the exception of EJ.   Speaking of EJ, even though it's had a really good day but we think the run-up is a little extended at this point and we'd wait for a better entry point.    While most of the quality China plays stayed relatively unchanged, some of the speculative ones are just way more wild and did not fare that well.    Is this the end of the sector move?   We don't think so!   However, we should point out that you still have to distinguish the good quality earning related China plays from the speculative ones. VISN, is a quite cheap for an IPO, unfortunately after initial 10% run gave it up and starts from scratch.

Solar Plays, with the exception of JASO, pretty much all of them went down today.   We think it's best for them to find their footing for another day or two before taking a look at some of the setups.    There's absolutely no rush to buy them right away.  Still, note two buy ratings on SPWR/YGE this morning to stick in the overall picture.

MA/ISRG,  out of the expensive names, these two(recent eps winner) managed to not only break out, but notched a nch.    We chased some during the day and feel they are very much part of any index rally.

PSEM, this little technology company finally made a move today.   It's currently sitting right near the previous high.   It's going to be interesting to see if it can really bust out this time or not.   We got our finger on the trigger and if it does kick it up,  we'd be right there to chase some.

DJIM #49 2007

Tis the giving season and Tuesday afternoon,  we're gonna get some in the way of a FOMC rate cut.   Following Fridays data, a .25pt cut is the most likely outcome, but there are enough still in the .50pt camp.  One thing is for certain is the decision won't be unanimous as we'd all like and all eyes and ears will be fixed on the statement attached.  Unless there is a knockout grinch punch to the market in the language, we think the market will move forward and set it's course on continuing the recent rally into the holidays and New Year.   Basically,  just get this over with and lets move on the heels of last weeks bullish days as the indices finished near the weeks highs.  Last week many quality stocks continued to get out of their bases with many more bouncing off the 50MA with follow through days.   Also, recent quality earning stocks showed some life as quiet a few closely followed at DJIM broke to new highs during the week.    They include...

MA, ISRG, AAPL,  we have always preached set ups with NCH's in place or in sight.  The market started to provide these trading opportunities once again after a long lull as these leading stocks in the past regained their lofty positions.  That's the kind of action any growth investor or just any trader wants to see and trade. 

VIP, MBT, SIGM, WDC, PSEM are the other recent EPS stocks that reported very good numbers and are now being recognized and given spurts of buying leading to NCH's almost daily.   MBT and VIP have an overweight initiation out from Lehman this morning.

SOLARS, the picture was not so clear heading into Fridays trade, but as we noted there were a couple of buy upgrades on YGE and SPWR to possibly play a part ahead of the trading day.  These upgrades definitely fueled the solars up again as many had nice days, including JASO again and STP...FSLR ran up on rumors of a contract.  We've seen the firms 'lead' this sector forward before when they start with upgrades, initiations. We might have some of that starting up once again.

Our closely followed China stocks LFT, STV, WX, EJ, EDU snailed to a 2nd consecutive week of gains since we turned our focus back on them. The volatility seems to have been removed for the time being and we started to call this group of stocks a Mutual Fund as they creep slowly higher and higher.

After weeks of trying to find a decent play, the market has started to give us plays that fit our methodology, eg NCH's and we welcome it and will concentrate on the above sorts with the usual sector (solar, china, shippers) tossed in.  It is a time for all of us to look at the 52week high lists and find more names that might provide a good trade while they trade at these levels.  You will start to find many former DJIM site names thrown around in this crop of stocks as you do your nightly homework...BOOM FWLT FSTR GEF LIFC PTT RICK TXT VE WGOV etc.   You want to trade strength and get out of any bad habits you've found yourselves in trying to trade a corrective market, such as bounces etc.  This may really be the time once again,  if we clear tomorrows FOMC hurdle in one piece.