Looking for an edge...

Traditionally, market will begin to slow down right about here.    So what are we going to be looking for the next few months?    Well, we know that some participants will take it the easy and take on a vacation, literally.    For others, they'd still grind it out day in and day out, but at a much slower pace.     What we at DJIM are going to look for are plays that aren't beta, but rather look for those plays that move independently from the market.    Of course, that is assuming that the market does not make a dramatic move in either direction.     So,  there's the big rally strategy, there's the big selloff strategy, and then there's this slow action, lazy summer kind of strategy.

How do we approach this market then?    Assuming that some of us have a sizable portfolio, we are going to commit 1/5th of the capital into work, as opposed to the usual amount we'd commit during a busy earning season.    This is just a form of discipline we practice during the slower market.   We found it that when dealing with a slower market, it's much easier to manage fewer positions and smaller sizes.   So at the end, we try to make our trading life easier.    However, managing fewer positions does not mean that we track fewer positions.  On the contrary, we may be forced to track more positions just because we have to expand our watchlist to include not only the smaller caps, but mid caps and some bigger caps as well.

The market may head into a uncertain direction, but our methodology and discipline do not change.   The intensity of trading may not be as high as a couple of months back but our focus is still right at the top.

Here are some stocks of interest today...

TRR, we bit a little bit of this one today.    We liked its action lately and felt it's in play and can last a little longer. The company reported recently and has climbed about 40%. Co reports Q1 (Sep) EPS of $0.01 vs ($0.34) in yr ago period; reports gross revs of $102.9 mln vs $110.6 mln in yr ago period. Co reports Q2 (Dec) EPS of $0.05, ex-items, vs ($0.37) in yr ago period; reports gross revs of $114.5 mln vs $96.2 mln in yr ago period. Co sees Q3 gross revs of $115 mln.  This is a turnaround story as the co`restructures that is seemingly liked.  NCH

TATTF, finally, this is no stranger to DJIM Forum, IBD talk and we have played this one numerous times before.  It reported its best EPS-Revenue Q yet and after taking a beating from $28 Feb- March, this looks like it could make up some of the lost ground off this report.

PCS, is one of the best IPO`s of 2007.   It traded 20mln shares on its opening day and has not stopped moving up since. The wireless carrier is showing tremendous growth as it offers a flat monthly fee for unlimited airtime and other combos including internet access.  Today's action was selling on the news.  The news being the lead brokerages quiet period ended (actually last week) and four came out with price targets between $41 and $46, including 2 buy ratings.  You could see one determined seller in the morning that wouldn't go away, you dont need level 2 to see him. What happens many times is a few load up into the end of the quiet period to unload into the brokerages coverage. This was clearly what was going on today and you should always back off a little if you see a dude throwing up 3-5k consistently to sell.  We think this will hold the 9ema and turn back up once the seller is driven away.  We will look to add on such action as this stock is in the right space with great growth.

MFLO,  this is a stock we were buying around $21 a few days ago and have been in with smaller positions for a couple of days now.    We added some today given its relative strength compare to the rest of the market.   It notched a new high and we like the way it held up most of its gain through the end.  Like we said the other night, we think something is up here that we little people don`t  know about.

TBSI, last couple of days proved to be a good test on this one as it bounced off its 9 ema.    Today's strength may suggests that the run-up is not over but we aren't certain at this point what kind of follow through it'll get.   The good thing about this one here, is that it's only a buck off its high.

MA/FWLT, these two, despite their strength among the bigger names we follow, follow the index much more closely than many of the smaller caps.  You can almost see the intraday correlation between them and the index.   To us, we can still scalp some nice points off them given the volatile nature of this market.

Be prepared...

Summer trading may be dull but days like today cannot be ignored by market participants.    Perhaps, since the majority of the traders expected a non moving and slightly lower market trend with slow volume the next little while, we may just get the opposite of that.     Of course, one strong day in the summer does not mean that we'd be starting a summer rally monkey chant.     What we feel, at this point is that we cannot rule out the possibility.     We had two market moving catalysts today, the sell off in China and Fed. minutes.   Both news bits could have potentially sparked a sell off over here but the market managed to shrug off both bits and shot up as a result.    To really put this into perspective, it means that we as traders will have to keep up with our A game and not to let up on potential days like today.    One thing that's obvious here, is that when the market performs strong, the beta stocks lead the charge.    Some of the small caps, momentum or not, may eventually play the catch up game.    The key here, is to recognize which stocks are in play and which one are not.   It's absolutely critical that we do not take our own personal opinion in speculating which stocks may be in play. You have a watchlist of recent winning plays that you can and should easily turn to again when called for, like today   Let the volume show us, and let the market decide which flavour it wants to put in play.    Follow the trend closely and act decisively, we may just have a good summer ahead of us.

MA FWLT CROX,  oh yes, the big guns of DJIM earning plays this Q were just glamorizing the indices move today.   Of course, it'd be strange and potentially worrisome if these one do not participate in the rally today.    The game with these is simple, when market turns green and stays in course, it's almost a given to scalp some nice points off these.    But of course, if you were in these since the day we alerted (EPS), then you'd be in good shape whether you scalp or not by now. The big and easy points have been made here as it stands now, this does not mean you can`t make more points on these in a good market.

PCS,  if you took anything away from the Journal last night, well then you probably were on your way early today to a nice close and a 6% day. A NCH is not far away here.  TTC, another recent EPS buy in closed with a NCH.

RCCC CUB TRCR, call these DJIM crawlers or whatever you wish, they all managed a new high today !

ATV, this one had a very nice pop going into the earning tomorrow and it's capped by a late day sell off.   Understandably, nobody here wants to hold through the earning.   At least, those who have rode it for a few points and those who have a rigid discipline like us would not hold through the earning.   If it so happens the stock gaps up off really strong EPS tomorrow, we'd be right there to bid it higher.  

Well that's it!...nothing else is worth mentioning........NOT!. There was little Novcea..

NOVC, wow eh!....was that not the most exciting 30-40 minutes!!.  This turned into momo momo.  The most important ingredient in trading is recognizing the potential of a stock, so you can fly with it if-when it takes off.   You have 5 tool baseball players, B.Bonds was one but became just a tool...well this was 5 tool stock!..cheapness, float, news, big pharma, big $$ involved.  We've had some amazing moves here, catching a few at the bottom before a big fast move.  These include the FWLT bust out, the CMI squeeze, the MFW ride last Q and now NOVC below $11 before the huge pop to $17+.  These one day moves are powerful and we don`t give a damn if they last 30min or a day.   The result is the same.  You can do in 1 day, what takes some weeks,  months to do in the way of a return.   Our summer was made today in less than 30minutes, but being the idiot traders we are!..we were looking for more to trade within minutes.  From the emails we received today, quite a few did very well too and might be going on a summer vacation..lol.   The rush of a big win just keeps us going for more day after day, so we`ll stick around and look for more.   Usually, we would just leave a play like this after giving it one big whirl.  Instead, we were buying some back as volume picked up late in the day.  CNBC always helps.   Like the ACOR, VNDA, DNDN`s plays,  we put NOVC into the speculative DJIM room and will trade it day to day, hour to hour now.  To us the easy money has been made and that is what we first look for in spec stocks.