Bulls, Bears on a dime..

So the market pulled back and gave up pretty much all of the gains it had from yesterday.  It changed on that dime!   We didn't want to be Rah -Rah yesterday, we don't want to be Blah -Blah today.  The question we have is, did we give up all of our gains from yesterday?   Hardly!   Even if you are reckless on a day like today, you still wouldn't have that bad of a day, as long as you traded DJIM stocks.    The point is, don't get caught up with this battle of bulls and bears.   We really don't need to be concerned about the interest rates at this point.    We really don't want to be the casualties at the expense of the institutions' inability to making up their minds.    What we really mean is that since none of us have billions or even multi millions to trade, we should not trade as if we are the market movers and shakers.   They are the Bulls and Bears and we are the Mice coming out for chunks of cheese!.  As long as we stay selective and take profits more often than not, we should all stay intact in this volatility and make some money!  What we should be doing instead is to be smart and be alert, and keep an eye on what stocks are the casualties of the market weakness and what stocks are performing irrelevant of the market action.

Our conclusion for the last few days is that we HAVE TO stick to earning plays, and more recent the better.    If you look at all the DJIM stocks that were green today, most of those are the ones that just recently came out with strong earning report or the ones that came out with good reports today.     Yes, it may just be that simple but it takes lots of discipline to stick to the same winning strategy.  There are hundreds of reports coming out now with stocks beating estimates, raising guidance...we are trying to pick out the ones we think have potential even after a 10% move.   Many times, we are simply trying to challenge ourselves as a trader,  but more importantly, we should be challenging ourselves to stick to a winning trading strategy.    Here's the rundown..

USAP, despite the pullback, we thought today's a good day to add some to our positions.   From previous journals, we've noted that for a couple of days USAP has extended itself and pullback might be inevitable and today we got our wish.   In fact, if it's gonna pullback, we are glad that it pulled back today, as opposed to yesterday.   Why?   It's natural that an extended stock pulls back on a bad index day.   Volume is relatively light and action is reasonable.   We added some back.

CCF,  couple of days ago, we noted that CCF had a better setup than USAP.   It showed everyone that point today.  Market is down big and this stock held up really well and notched a new closing high.   Even though the gain is so tiny, but it's still impressive that it did on a day where the major indices took a tumble ..did we mention a new 52 week high? lol

EBS/VNDA, these two had similar action to USAP and their extended action just could not keep up when the indices getting trounced.  But, before they backed up nice new highs were reached especially on EBS to 17.75.  We are not in a rush to buy back but will wait until they stabilize before re-entering.  If you recall, we exited a portion of VNDA and then returned as recent highs of $30.30's were reached, at this point we alerted to buying back in.  This is similar to what we want from here.  We turned our attention to picking up some fresh EPS stocks instead.

HMIN, ok so the close was not as encouraging as expected.  You've heard that before and seen this stock at work ; lately, so this action is nothing new to any of us...good or bad market.  The intraday move is enough for anyone to make a point or more though.   Basically, we have learned our lessons way too many times with this one.   If there's gain, we'd take it.   Tomorrow is another and different day.  Pullback on this one is just way too common.

RESP VARI,  again some of you may have remembered us saying this phrase from before, "the actual earning report of a company is one thing, more importantly it's the reaction of an earning report is what we care the most"!   We like the action and we followed steps with many others.   Based on the reaction, we assume that there's plenty of ppl who liked their reports.    One thing we've learned from our early trading career is that we just can not disagree with the collective force of ppl, right or wrong.

TRCR, we are definitely putting this one back to the top of our trading list again.    So there's this visibility problem, right?   Well, the problem is that the visibility issue won't be a problem for us next few days or weeks.     We are sure that when the visibility issue comes into play come this summer Q2/Q3, we probably won't even remember what this company does anymore or this Q4.   Again, following the stock action here and we think this one will get its playing time for the next little while.  Yesterday,  we addressed this in the forum on a post regarding TRCR.   Basically the earning will give the stock a base, a new base and traders will play off it..its cheap and float is small.  The CEO also said this Q is a "quantum leap" for the company and Q2/Q3 is seasonally slower, so its about now!!.. The sell off yesterday was the briefingcom chasers, first chasing the juicy plug and then the CC follow up printed...really.. they don't really read..what this created was a possible 2 trades, one yesterday and another today for some nice change. Chances are better this comes to recent highs than the lows printed the last few days.

Again, the key for us is to follow the individual action, not the market action.   You may end up with a basket of funky names or wacky business' on your watchlist, but the bottom line is that they NEED to perform, and that's the only thing we all should care about.

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.

Fed Day

This is one of those days where we wish we were institutions rather than retail investors.  Not!   Up until the Fed decision, the market seemed like it was stuck in mud.   There was hardly any action and most of the entertainment was provided by the special guest on the NYSE trading floor.   We had to double up on the amount of coffee we drink just to get to the 2:15 p.m. mark.   Then it felt like there's a jolt of energy injected into the market and everything becomes alive again.   You don't think the guest of honor would address Wall Street and then have FOMC ruin the day?.      Let's just say the stars were lined up ...Bush...Bernanke and not accidently.

Speaking of jolt, the Chinese market was rocked the night before and it's definitely spilling over to all of the flavours here in North America.   The familiar ones we cover all suffered to one degree or another.    However, we see little correlation between the market over there and the Chinese stocks trade here as most of them only trade on North American market.   Still, we prefer to see a trend change here.  We'll see soon enough if this is mere a distraction and provide people here some opportunities to add to the strong ones.

TGX, this one had the best follow through from all of the stocks yesterday.   Sometimes you just simply have to be surprised by the kind of stocks that are performing in your portfolio.

VARI, this is one of the earning play that obviously enjoyed the Fed day more than the others.  Action speaks louder than words and we added during its strong performance today.

CHRW, this is a new one we are throwing into watchlist as this is the rare earning reaction for a big(relative) co.   Volume is huge and stock finished near the high.  Whatever the institution is seeing in this thing, we think there's going to be more to come.

CNS, we think this one is finally ready after excellent earnings to move forward.  We picked some up near of end of day

ABM MFW, these two DJIM's just keep serving up excellent days.

CCF is turning slowly...as we said... patience these earnings are not going away.

The market got a late day upgrade,  if we are to continue this longer term uptrend there is no better place we'd rather be than in strong EPS stocks. 

SWIR, we added a few times AH, the earnings are quite good and considering SWIR was just 15+ getting a position in the high $15.60-80's is a treat.  Maybe we should listen to the CC to find out why this didn't trade higher, but instead we'll let the action in the morning dictate what we do.  We think we might see a 5++mln volume day on these numbers, if that happens the share price will be quite higher intraday.

Reports Q4 (Dec) earnings of $0.09 per share, $0.02 better than the Reuters Estimates consensus of $0.07; revenues rose 81.8% year/year to $68.3 mln vs the $66.3 mln consensus. Co issues upside guidance for Q1, sees EPS of $0.12 vs. $0.08 consensus; sees Q1 revs of $82 mln vs. $65.83 mln consensus. Co states. "Based on strong bookings, we have solid visibility on Q1 2007 revenue. This guidance also includes a sizeable increase in operating expenses related to new product launches and major trade show activity expected

Post Fed Day

Normally, or many times in the past, the "Post Fed Day" has not always been kind to the market.   This time the market definitely had a change of heart.    When it comes to DJIM stocks, we actually had a much better afternoon than in the morning.   Many of the stocks we are familiar with just simply strengthened up toward the end and some of them had pretty good closing actually.   We'll pick out a few and highlight them...

CCF, perhaps this one is the most surprising one out of the bunch.   It was very ironic that only a couple of days ago that we were worried about its above volume sell off.   Again, we pointed out that we'd give it a couple of days to let it show us which way it wants to lean.   Volume today isn't spectacular but we think it has potential.   We added back some shrs today and no doubt also contributed to some of the rise today.   Nonetheless a new closing high is a new closing high.    What this does is that it actually puts this one back to our top watchlist and we'll again be adding aggressively.   The conclusion is, let the stock show you how strong it is before making up your mind of adding/chasing.   There's no need to be overly optimistic on "the best play" if the action seems uncertain.   If uncertainty occurs, reduce position and sit on the sideline with a little exposure.   Once the danger is over and the trend is clear, then jump back in.    Actually, this is more like the strategy for surviving in the jungle. lol   But in all honesty, trading the market is like surviving in the jungle.  There's really nobody else to look after you other than yourself.   Making kills (plays) just don't come easy when you got so much competition out there.

MFW, it's been up three days in a row now since our alerts on it Monday and of course the little alarm might tick off for a possible pause in this latest runup.    It doesn't mean that we have to go all out and sell it out.   Just be prepared for reversal and when it happens, don't be hesitant to reduce.  Recently after our initial buy in, MFW provided one quick trip down and that has turned out to be one of the best trades recently for us adding in the $26's.

SILC, ok so this one sat there for a couple of days and today broke out on pretty good volume.  There's not much to say other than the fact we added some toward the end.   Why at the end you ask?    If a breakout does not hold till the end, then it may be a fake one and we simply hate any kind of fake break outs.

HRBN, what to expect tomorrow?   Ummm, there's a chance it may follow through and start some momentum.   We are keeping our fingers crossed and if there's any sign of momentum picking up, we'd be adding aggressively.   We are watching it very closely.

TGX, time to let some go today.   We all had a chance after alert at $4, 20+% in 2 days is just too good to ignore.    We reduced most and looking to add on pullbacks.  BT noted in forum some technical analysis on it today.

A note on tech earnings on the Nasdaq, a definite theme has developed that started with AAPL, a few names early this week and then GOOG today.  You can put SWIR in this bunch of sell offs off excellent results.  Last night, we talked of the slows action in AH in the 15's and up only 10% on SWIR..."Maybe we should listen to the CC to find out why this didn't trade higher, but instead we'll let the action in the morning dictate what we do".  The action early showed SWIR had no chance and why.  Simply these techs are selling off the stellar earning news.   As we always say and said last night, wait for the market to dictate what you should do on a earning reaction.  If you do take a position early make sure its a starter, something you can rid of without much of a loss quickly.   At this point, we are carrying between 10-15 positions on any given day and blowing out a small starter position as in SWIR from AH is nothing when you have positive action in so many DJIM stocks.  Cut the laggards and those behaving badly.  If you are one to carry 2-3 positions at a time, you definitely should not be going large into earnings plays until the market shows you what it thinks.   It tells you pretty fast as with GOOG and SWIR last night and today.  We are looking at DLB's earning with all this in mind tomorrow despite how attractive it looked on paper first.

Other stocks showing strength, some more than others.. include ENR ABM GLDN VARI CNS OEH NWK FSYS ALB CENX TRCR ... so most of them are eps plays and all of them you've seen at DJIM over the past 5 months.

DJIM #6 2007

We thought we'd get this out today while we're all in a sober state before Sunday's game..

Now that we are in February,  we'll save you from listening more about USAP CCF MFW our core of big winners in January.  Well, maybe for a few days only!.   Nothing has changed since the last write ups, so glance back if needed.  Instead on Super Bowl weekend,  we'll discuss some new and some neglected DJIM names...

CNS, this asset management co' has taken over our money after the demise of GROW.  We've been in and out before recent earning and have been waiting for a signal to enter after EPS.  The day came on FED Wednesday (Journal) as it attacked the congestion in the low 48's seen after earning.  A quiet Thursday and then a nice move Friday.  We like, We like as a core hold.

ALGN a buy in alert low 16's off earning that knocked out estimates has playing ping pong between $16 and $17. We've never traded this before and are closely watching trying to figure it out.  As of Friday, we think there is a possibility of some action if it gets just a little bit higher. BT has confirmed this with a chart look as well.   If we don't get a move early in the week, we'll cut out if we don't see some momo established again.

AVZA an alert at the bell Friday that we soon bought into.  We're not so thrilled with techs but a turnaround is seen here with this profitable Q and guidance equal to this Q.   A nice pop from 5.50 to 6.50 before tailing off.  We traded some of AVZA and kept some to see if we can make it 4 for 4 on cheapies following on the footsteps of NWK, TRCR TXG!.  Basically, we are using the same strategy on all of these.  Best to see the latest on the TRCR, TXG's first days.

SILC, is an Israeli tech just small enough to avoid the institution rush to sell off after earning.  We are very familiar with SILC having traded it from the 6's and were in no hurray to pick up till Thursday buy in alert end of day.  This company is what you call a comeback story,  the founder brought in a top manager and marketing exec.. Yep..the stock was less than half a buck ...4 or 5 years ago with a market cap less than a million, now its probably over 100mln.  They reported a .20c Q/.49c on the year.  Maybe this becomes an IBD contender?.

T'N'T, talk about cheap thrills'!.... we have to group these cheap DJIM winners together.  First there was NWK we started in the 6's and alerted last Friday before this 10% week.......then there was TRCR and last week a spec buy in alert at $4 of TGX.  We noted Thursday on TGX and taking profits with a quick 20% in a week,  we did the same on TRCR again Friday which we started at $6'ish and alerted again to look for action in $6.70's last week.    We are looking at these day to day now with bigger pieces being sold.  There is nothing wrong on the fundamental side but we feel they are getting a bit extended short term.  A nice pullback or two, we wouldn't mind in a few of these after the 20-40% moves.

We got the cheap cornered,  but what we really like most is the classy ones to hold tight.  They are expensive in many a traders eyes as some just can't see past a under $10 stock.   We love these types.  We bought the starters in ENR at 83's, the VARI 52's, the VTRU $43's and have been adding along the way.   These have produced nice charts since entry and returns of 3-8% between them quietly.  We 've sold most of the VTRU the last few days after 4pts in 7/8 trading days but we'll look to buy back in if NASD internet names get some love.   If the market continues to go our way, we expect the institutions to want these types of companies on their books and that's why we consider them nice longer term hold potential.   RESP had the best start but now is lagging the bunch.

OEH , the lux lodging stocks have throwing up good numbers (HLT HOT), eventually this hits secondary names and one we started in again is OEH as revenues per available room look to be higher in '07.  If the institutions do their homework, they'll likely want to hold this one into earning this month.  Actually, this one has so much institutional interest(96%) already it might allow them to walk it up.  We are looking for this type of discovery here.  A slow and steady move into earning off these new highs.  If this 96% ownership is too much or the price is a little expensive have a look at..MHGC

MHGC trades under $20 and we started a position late Friday.  Think Super Bowl, think The Delano and then you'll see what MHGC is about.  The chart looks jus' fine and the 25mln float is jus' fine.

It's pretty easy to break up the trading stocks between those you want to hold over the longer term. We have the core which now includes CNS added to CCF USAP MFW,  the last 3 may need to rest here and there as January has been nice to them and us all.  The cheapies are to trade NWK TRCR TGX, you can throw in HRBN AVZA even ALGN till we see a trend or not.  Plus, we have the not so volatile more expensive names such as the ENR VARI VTRU VE.  There is a fave steel play USAP, a fave aluminum play CENX.  A fave oil play in the steady MTRX.. if you want to carry such, a fave Russian telco in GLDN, a potential lux lodging play in MHGC OEH.   Basically there is something for all types of traders/investors.   We're not throwing out the SWIR's out of sight, instead we'll be digging for these types that are not getting love off earning as potential plays in the very near future.

More choppiness?

That's what we feel at this moment.    When we say choppiness, it means the market will behave in a very volatile and adverse way.    We have been saying for a couple of days that we feel sooner than later we may see a big movement out of this market.   It seems that we've been stuck in the same range for too long.   Sure, there have been some good earning surprises and individual action kept us busy during the last little while.   Still, we still have to keep our eyes on the index just to feel if something big may be cooking down the road.     When all things said and done, a big market movement would drag a lot of stocks with it, up or down, regardless the type of stocks.     At this point, we aren't 100% certain about which way the market will lean but it's just hard for us to see a sudden rally into new highs and beyond at this point.    At this point, if it wasn't for some new earning play and couple of story stocks here, the market would actually look down right lousy.   This is what we have to be prepared for, mentally.    We basically have to be prepared for the possibility of a "woosh down".    Believe us, it's much easier to deal with a rally than a sell off.    With a rally, the worst you can do is not to make money!   But with a sell off, you  not only can  lose money, but your confidence as well, and it unbalance your cold emotion as a trader.     Basically for us, it's better to be prepared ahead of time and when the hit comes, we'd know exactly what to do and won't get caught.

So what have been doing now?   Other than getting up early and play some stocks off the news, we are looking at laggards that needed to be reduced and cutting down our # of positions to a manageable level.   Of course, every trader's account is different and this is how we do things when we get cautious.   So what are considered the laggards then?   Basically, those stocks that have released their earning report for a long while and haven't done much of anything, are considered laggards.     We are keeping those earning plays that look technically strong but will keep our sizes at a comfortable level.   Basically, we aren't over betting in any particular play.    Then, we have to keep a note of those stocks that may trade independently of the overall market movement.    Lastly, keep an eye on new 52 week high and to see where people might be stuffing their capital into.     All these may sound a lot but it's actually an ongoing thing for us.    At this moment, we are doing what we can to stay ahead of the game.

ONXX, this little play caught some serious momentum fire today.   The huge gap up is not enough to deter buyers and it inched another 20%+ intraday.   This is not a typical play we'd hold overnight so this is more of an hour by hour thing for us.   Again, if you have fast finger and a suitable appetite for these kind of plays, it does pay to get into it early in the day.   Other than that, your understanding of the news release is as good as ours and we'll just leave it at that. This was simply a headline you cannot pass by early.

BW, speaking of another gap up, this is actually an earning play.   The company guided up for 07 and stock behaved very strongly.   Other than a starter position, we'd have to give this one some more time and room just to see what it's made of.

Okay reversals in USAP, MFW (MDCI continued its bounce) today but not everything reverses.  VARI also did alright but a lot of stuff is lagging any punch.   Watch these 9/14ema levels carefully as we pointed out last night.