Cooling down...

The action may get tiresome somewhat.   The action we are referring to is the weakness in the afternoon and it's been happening for a few days in a row now.   Perhaps, one cure for this is not to have a strong opening.   In honesty, we haven't had any super strong opening in a while either.   This leads us to believe that the cooling period may be coming for this market.    Yes, market temperature and actual weather temperature tend to go in the opposite direction.    There's just seems more to do outside when the weather is good so less attention paid to the market.    At this point, we are definitely not calling a timeout but we'll see what happens after the Memorial holiday.     The game with DJIM here, with regard to summer time, is to trade small and trade selective and trade more sector oriented stocks.   One thing is for certain, the slower the market, the easier it is to be on top of things.  As far as today, we were in preventive defense mode as per our alert at 1:15pm. What ensued unfortunately exaggerated itself be days close in the form of a 3rd straight late day sell off.  This one more extreme.  Fortunately, we were prepared thinking the market would find the 2600 on the NASD brain cramp level, a psyche level that could be used for an excuse to pullback.  A 3rd attempt at the 2600 hurdle on the day failed soon after and this coincided to close to that 2pm tide time when the market seems to switch gears more often than not.   Simply, the characteristic of the market is to show its colors just after 2pm and we weren't waiting to preserve some gains in the biggest movers lately here.   You can blame Greenspan comments after2 pm, but if you look at the intraday 5min NASD 2595 day support was broken and selling picked up before 2pm and that was enough for some.   Mr. G said nothing new today, except maybe you can say it came from a horses mouth.  The market sentiment will not change because of his comments, likely it will come to its senses and snap back...how `bout tomorrow!.   What it did is maybe give the market an excuse to pause and reflect a bit.  Not a bad time with the long weekend coming up.  So instead of taking some profits later in the week before a holiday, we preserved today.  Nothing was beat up too badly, just remember to give the 9ema support a look on your holds. 

Now with 2 days of trading left, we hope the big boys leave their desks early and let us retailers play while we're left home alone.  By this we mean.. we will look for new EPS-news-story stocks that might invite fast retail money for a trading possibility with spreads that are wider than usual allowing the stock to be pushed higher.  If nothing great comes along we'll likely continue to flip CYPB intraday as this story probably won't go away so quickly. For a stock up 100% at the bell, it traded in a very narrow range during the day.  90% institution owned and a short interest of around 15% before today should give this plenty of volatility and trade possibilities intraday in days to come.

2 day correction enough?

We don't think so and frankly are in a position to watch it unfold without worry.  We've had an excellent May in DJIM with stocks like CROX, FWLT, MA, GTI and the small cap runners in NGA, IDSA to name a few and were prepared to preserve their gains yesterday.  So..what do we now?..Ponder the housing-interest rate scenario drawn up today over the long weekend?.  Hell...no!.  We leave those as always to the talking heads in the media to beat each other up on.  Instead, we'll sit back and slowly and selectively continue to look for stocks to play, to pick, cause that is what we do.  Only this time around the strategy has to change from what was profitable this earning season, right now!. What we mean is we do not expect to see the same reactions to very good numbers/ EPS.  Some stocks, some that might look like excellent plays just report at the wrong time and get left out of the party that was just ongoing....this probably only excludes micro small float stocks which still should get some happy money. We'll see if there is still one kicking around soon enough.

We might have seen this type of reaction in TTC today, an excellent report, excellent guidance that just got caught up in being at wrong place at the wrong time as the market news turned everything upside down.  It still closed at $57.95, but its further potential was most likely dampened today or at least the pace of its potential in days to come by the market smell.  The best way to approach the earning plays remaining this Q that are not micro cap is to be selective and not chase.  Definitely taking smaller sizes is important until you see some kind of confirmation of interest.  Most of these have had nice runs into earning thanks to the overall market, so you have to be ready for profit taking as well....selling the news of a good report.  We've kept a piece of TTC through the day, but we'll keep even that on a short leash.

Reports Q2 (Apr) earnings of $1.77 per share, $0.09 better than the Reuters Estimates consensus of $1.68; revenues rose 4.2% year/year to $686.7 mln vs the $685.2 mln consensus. Co announces stock repurchase of up to an additional 3,000,000 shares of its common stock. Co sees Y07 EPS growth of 11-14%, from previous guidance of 10-12%.

We do expect to see a bounce here and there as no correction is a falling knife.  So there may be an opportunity early next week as the big money might prop the market just enough to distribute some more stock at higher prices.  We'd also be careful of what we call here the domino effect.  No small cap is safe that has just come off some nice momentum gains.  If you're holding one that is still in one piece tonight, tomorrow might be its day to falter.  Yesterday you had an IDSA and others, today you had a NGA and others.  Slowly they come down one by one, but micro-small caps just come down harder as buyers disappear and one or two sellers can open the flood gates.

As we noted last night, if nothing great came along we'd look for a trading opportunity in CYPB as it has the markings of a stock and story that is not a one day wonder. Unfortunately or fortunately in the case of CYPB, we had no choice but to keep a close eye on as there was nothing to do in this market from very early on.  After 1.5 days of trading it, you start to see signals every time it has started a move.  We saw one signal possibly a little different emerging around 2pm and then noted later in the forum when it started to twitch at 16.4-16.5.  Anyways, a nice move to give something to a dead day.  We sold some late and held some through to tomorrow.  We need a volume push over the 17.50-60 area which was early resistance yesterday to add back.  Especially now, you want to be volume momo plays if you can find it and CYPB might continue to provide that if earnings plays do not.  A sector rotation you might say..from earning plays to story, special sector plays is what may be the course for the next little while.

MFLO, SPAR showing resiliency but that could change pretty quickly... unless as might be the case of MFLO, someone knows something we don't.

DJIM #22 2007

Maybe we should just tell you about our weekend to filler DJIM#22...;)  After last week, your guess is as good as ours as to what we might expect this week.  All we can hope for is maybe a few more billion dollar M&A deals to kick start the shortened week..anything to put some money to work.   We touched on the major indices this morning, we wish we could touch on stocks!!... Unfortunately, there is nothing of significance to talk about.   Our books are pretty clean, besides a few small scattered positions left into the weekend.  There was nothing jumping out..screaming buy me, buy me late in the week.   We laid out our plan last week to be selective, trade in smaller sizes and just sit back and watch things unfold for a bit.   We're still in earnings and so we still expect plays to show up out of the blue.   Only this time the time span of the play is likely to be much shorter in this environment.  As far as DJIM May earning plays, quite a few are grasping for air and a few are grasping at the 9ema above them.   At this point none of these plays have the potential to give us the points they did already did and so are put on the side for the time being. Does MA have the potential for another fast 15 pts as it did from $127 to 142's?.  Does CROX have the potential for almost 15 points again since being a DJIM buy.   Will stocks like NGA, SYNL now sitting under 9ema give us all the same rush as recently from these new levels?.   Simply the reward possibilities, the point possibilities are not there like they were before..so why play them now?.    A few plays like TTC and VRGY will continue to emerge, except we do not see them being what they could have been a month, a few weeks ago.   This does not mean you should ignore them.   The trip might be shorter but at this point you might just have to accept that as a market feature.  So, a few things traded late in the week include:

TTC, second day post earning saw the stock surge past $60. Not bad for a stock on sale at $56 the day before. A bounce in the market sure helped as this was just caught up in Thursday's selling. We loosened the leash a little and will give it more time.

ATV, this was one was tossed around the forum and the $30 dollar mark was already broken before EPS this Thursday. Anyways, good see readers are taking stocks off our Journal and watch listing them for potential  play.   ATV was profiled early May and we are back to trading it into earning.

VRGY, it definitely caught the right day for a earnings reaction. The reaction was rather lukewarm AH's to its earning, but around noon Friday it busted the high 27's on volume and never looked back closing near$30. Despite gapping 4 points last Q, it traded in a 2 point range for the next 3 months.  We'd like to see if this time is any different before continuing further with it.

CYPB,  if you got on Thursday notes on it, you made a quick 10% to highs of Friday. To us this CYPB is still facing selling pressure in the 17.50-60ish area.  A true break never occurred as the real volume came Thursday afternoon to buy.  You want to see volume to confirm another buy in.  This did not happen Friday morning as it crossed that resistance area.  See chart up for volume comparisons.   Simply, CYPB did not have volume to follow through and then continue to take out the highs of last week.  At this point, we'd wait for a move on volume through the highs now to play further.

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.

Short week..

Boy it definitely feels like a long week to us.  Today's market is typical of summer action with exceptions to a couple of plays.  Really no conviction, somewhat expected after yesterdays move.   Most of the plays, according to our book, were trading in a fashion where we really don't care where they end up at the end of the day.   Hope tomorrow brings a little more action, even some volatility would be nice because today was a real snoozer.

MA, this play looks as though it can rest some here.   We liked its strong action for the past three days in a row but we feel even the strongest stocks should rest after a good move.   Given the float of the stock, there's a good chance that the stock may rest around here.

RCCC, this wireless play just keeps on moving u, fetching $33's today.  Right space, right time.

MFW, is another old DJIM flame that we bit some on late in the day. We like the move it made yesterday off a morning sell off, rebounding to finish strong. Today it carried on.

ESEA, we are adding this one to our watchlist and we've added a very small position today.   This one is in the same business as TBSI and both are exhibiting good strength in this market.

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.

A Good Test...

When a market participant looks for a catalyst that can potentially change the general direction of the market, he/she usually looks at the homefront, where it matters.    Sure, last few days the oh so powerful Shanghai market seemed to have derailed badly but there isn't any talk of catastrophic consequence in their economy as a result.   Hence, the action did not spill over to America and whatever happens there, stays there.   Today we had a little something different and the worry stemmed from within America and the never ending talk of "interest/inflation worry" came up again and many talking heads feel this is the cause for today's slide.    For us, we literally had to check our quotes more than a few times just to realize that we are indeed in a "selloff".    Oh yeah, GOOG just made a new high and closed well over $500.    Maybe, people are just spooked by the fact we haven't had a good ole "whack the bid" kind of day in a long time.   So there, we got the selloff today and it's time to move on.

Aside from the Index action(which is total BS in our opinion), we are seeing some very good and healthy action among few individual stocks and certain sectors.     Ok folks, whenever you see more than 90% of holdings on your watchlist are having a bad day, then you may get a bit worrisome and think about some quick exit strategy.    Good breadth gives us the courage to stay and chase while bad breadth simply chases us away.   In our opinion, breadth is the key telling of whether we should be hanging in this market or not.

TNH, +5%, this one did not disappoint a bit and came out smoking off yesterdays buy in and finished just as strong.    This is in fact a new closing high and it'd be interesting to see if it can challenge the triple digit area.    The whole group seems to be up today and we wouldn't be surprised if this one goes even higher given the sustained movement in the entire sector.

CROX, whenever the other two DJIM big guns are taking a rest, this one takes over the baton and charges higher.    This is almost 20 pts higher since our initial buy about a month ago.    This goes to show that whenever we see a highly liquid stock with a very favorable probability of pulling multi point runup, we just have to go in big and patient.    By the way, during the runup thus far, this one has never closed below 9 ema.   It kissed 9 ema a couple of times but that's about it.   This is a sign of a very strong stock, historically speaking.   As a matter of fact, exact same deal with both FWLT and MA, neither of those closed below 9 ema ever since their EPS breakout.

GHM, this is an old name that came out with an excellent Q.  We admired the effort premkt as some(one) was working hard to prop up the price. buying lots of 50 shares, including one order at 23+ plus.  Unfortunately, they don't seem to know these odd lots don't appear on many trading platforms. Oh well. The action picked up a bit premkt and it traded to $22 in the first 10minutes and $23 in 10 more after the bell.  ,With the market sliding, a CCall coming and we just preferred to play some later on a probable dip later.

A few a stocks off yesterdays buy list hung in tough considering the early market action, but especially since they were up big yesterday. This includes KMGB LPHI  AHD and ATLS which was given a tgt bump up to $67 by FBR

CUB, up over 25% since we alerted May 3rd closed with another NCH, this is probably finally being recognized as a defense name!. Another DJIM defense stock hovering near highs, SPAR also had a nice day up 7%

MFLO LXU,  we are keeping a close eye on these two as both are in our opinion setting up for a potential b/o into new highs.

A true test...

If yesterday was a good test of your holdings against a shaky market, then today definitely gives a true appreciation of how "good" your holds are.     Of course, if we get few more back to back shaky days like today, it probably wouldn't have mattered much what you hold.   Overall, we think the market action is healthy.    For whatever the catalyst/excuse that caused the slide, it's needed to correct this market into a healthier stand.    This is assuming that this is not the beginning of an end for this market here.   At this point, we don't believe it is and we are acting that way also.

We have a number of good closes today and given another hour, we think some more stocks culd have battled their way into the green.    Individualism is running full and strong in this market today.   Breadth is poor but if most of your holdings are in green territory, you'd feel that you are doing something right and will try to keep it up.   Can you imagine if last two days were up?   We'd been asking that question throughout last couple of days...

KMGB LPHI,  these two were the stars two days off their respective earnings announcement and they've held up very well despite the market weakness.   We added some LPHI today because we feel this one has had the best action amongst our holds.

CROX, good stock battles back and this one did exactly that toward the end.     As it comes near its split date and we think the action will heat up accordingly.

AHD, so this one only did less than 40k shrs today.   This stock also has only 4 mill float and probably less if you take into account the institutional holders.    We liked the deal that was announced couple of days ago and think this one definitely has the potential to move up.

GHM CUB put in very respectable green days as well.

Many recent names here such as NTLS MFW LXU RCCC ATLS TTC SPAR MA TBSI barely broke a sweat in the profit taking sweep across the market,  even the volatile TNH battled at over $95 till the last 30 minutes. 

One we added today, VSNT (Co reported May29th,Q2 EPS of $0.52 vs $0.32 in 2Q06; revs rose 37% YoY to $5.2 mln (no estimates). Co raises FY07 guidance to $1.50-1.62) falls into above category.  But as we said at the start, if we get more shaky days it probably won't matter what you hold.  Unless it's cash of course.

...back to Back to Back

If you favorite baseball team pitcher gave up back to Back to BACK dingers, what would the manager do?. Chances are big, he could not watch the horror show anymore and pull the gopher ball pitcher out and send him to the showers!.   In reality, it's not much different with stocks.  How much can you stand before the pain threshold becomes unbearable?.   When do you become the true manager of your team, your portfolio and start pulling some strings to avoid further damage?  Today was as a good start.  Also, if you were thinking of buying today after the morning reversal down....unfortunately, by this time you are bringing in a mop up guy who really you have no confidence in or else he wouldn't be your mop up guy!.   Simply this relates as to why look for another stock to buy in the mid -innings/ intraday in a market like this, the mop up guy might be fresh from sitting on his butt, just like a stock that is up big all of a sudden... but how much does he have left in 'em before all want to cash in, especially those just waiting to dump the gift in a bad market?.   We're not planning to put new money to use.  We don't see the point of looking into buying fresh meat in this type of environment unless we are going to flip the daylights out of the stock.   In that case we/ you better be at the beginning of the run and not going in after a stock is up 9 pts like a UHAL.   What we have now is an environment where we will swing the daylights out of stocks on news or EPS or whatever that day.   These will be the short lived plays until this all subsides.   After a few days of negative markets, today was the day nobody cared what your name was.   There was no 'Cheers' about it.    The domino effect we've talked about was in full bloom as DJIM stocks finally took their lumps with the rest of the market.

Today was actually ugly,  if you want to get into how small we all are!.  Actually quite disgusting if you want the truth.  After 2 days where late dip buying showed there was ready money again, today came a different twist when the market proceeded to bounce strong.  This was a definite possibility for the afternoon considering the past 2 days and considering todays already exaggerated drop... we were waiting for a bounce rally of sorts.  It was the close that really mattered to us..   If the buyers didn't come we thought, then we'd blow off this market by the close.   Instead, it rallied strong until Maria B and the CNBC crew decided to bust out the Gross interview from his site as the last kick today to the overbought market.   Nice timing eh?.    Just when the market was making an impressive run, this comes on?.  Come on!.   This was so orchestrated that it stinks !.   Oh, we're all so small!.    The only thing you can do today is cover yourself before if it possibly gets out of hand.   For some this might be the only way to go.  If you are holding just a few positions, you were probably selling them off today or have enough confidence in a few to continue and make it a longer term hold.    If you are holding a sizeable portfolio, all you could do is dwindle the dollars invested down.   Ideally, you don't want to drop 100% to no positions and all cash, but you do want to make it manageable from here while reducing the risk of margin and or being close to 100% invested.  You need the weekend to at least evaluate and also to see tomorrow's reaction instead of acting hastily and going all cash.   Honestly, as bad as it looks after today (you never want to finish at the lows), we all need to take a chill pill and evaluate our books before drastic conclusions.  In a perfect market world some firm(s), or some big talking heads will come out in the days ahead and put Gross and his comrades into the woodshed with a rosy picture.  We nominate Paulson for the gig or his boy, Bernanke. 

If you really think about it, the overseas fear here and everywhere of the Shanghai, then the UK hike (even if expected) precipitated all of the action on this continent the 2 last days.  An excuse was all that was needed to bring our bond yields, rates on the fast rise to the surface. Guess, it pays to read the subtitles carefully.

Hey...Paris got out after 3 days in the can, maybe we can get out before the weekend too....but our names ain't Hilton

DJIM #24 2007

In Sopranospeak, FUHGEDDABOUTIT! was the markets message Friday.  Unfortunatley, it won't be so easy going forward.  The rally defintely has felt true pressure and last week has fueled the bears.  What spawned the rally we've experienced for months was rehashed as earning (NSM) and M&A (X) activity were again two of the catalysts the spurred the recovery rally Friday. Oil helped and CNBC feeling the uproar from their audience got Gross to appear to elaborate, more like clarify on the headline they spewed Thursday afternoon.  All this closed out one wild week and if you took a chill pill Thursday night with us before drawing any drastic conclusions, you had no need to empty your book before the weekend.  What the recovery rally provided is it drew a line in the sand.   The lows on the major indices Friday will be the area to watch for many.  If we break this area, we will become very cautious of a secondary correction.   If this area is kept away from, we should be able to trade accordingly. One thing though is earning season is over and that major market catalyst is removed for the time being.  Can the market continue on with M&A activity pushing it till next earning Q.  We've got about 3-4 weeks to find out and we will trade in smaller sizes until, especially if playing this Q's DJIM names.   You want to be in size at the beginning of a potential earning move eg CROX, FWLT.  The first leg you could say.  At this point there is no way we would play these in the same sizes as before, we prefer to wait for a new crop and by that time we will know exactly where the market stands!. So for now we'll remain cautious and go with a manageable book.  Not too many positions and not oversized.  If this was a sign of volatility for the summer of 100+/-30+/- pts days, we'd prefer it to the laziness we often start to see at this time of the year.

Even after the tumultuous week there are more than a few DJIM's still trading near highs or making them. These are the stocks we are concentrating on. The partial theme here is to always play strong stocks!. Common sense says a stock that survived last week and finished near highs is a strong stock...common sense also tells you if the market starts showing signs of slipping again, these probably won't stay strong much longer.  Unless fertilizer is the next black gold!...A few of those are...

KMGB LXU TNH are all chemical stocks in one way or another, all showed strength before the rally clicked and so we were buying them again as the market gained strength. KMGB made it to the #40's in IBD this weekend.

CUB CROX RCCC NTLS MFLO still trade 9ema or above, very little damage sustained over the week.  Again 9ema is an area of short term support for most of the stocks we cover. We want to hold stocks above it, not below it!.

LPHI, GHM are fresh names (3-5 days off gap earnings) and of course are trading above 9ema.   

MA got some good news and might recapture the 9ema quickly from it.  FWLT did that Friday, but barely.

ATLS, if sec turns this could be ready to bounce off 9ema level.  AHD, holding up well.  

The shippers got whacked and we'll likely just watch them for now.

Sluggish mkt...except

The only thing last weeks terrible performance not do to DJIM stocks was put a ribbon on them for today's action.  Today was definitely a GIFT as there were plenty of remarkable performances.  You have to figure the bargain hunting started Thursday afternoon and today was just the icing.  With the icing comes some froth, which is always a good time to pocket some points.  That is unless you think a KMGB, TNH, GMH, CROX will put up back to back huge days.   We'd rather not think and just line our pockets first and then consider re-entry.  This is especially true when DJIM stocks are outperforming the market as a whole.   We love NCH's but when you get a intraday 10%+ move in a KMGB or a 8pt move from TNH since friday, we will always take a load off and ignore a potential NCH end of day..... This is especially true if the market is showing signs of losing steam off only modest gains during the day.   You couldn't really call this bargain hunting buying as almost all of these big gainer stocks were already trading near highs, so maybe it was just being in the right place at the right time.  But the right place and the right time require the right stocks!.   Not much else to say about today, hopefully this euphoria over DJIM's today carries over to the rest of the market tomorrow.  We can't survive on our own.

Shaky start ends with a ....

Shaky Finish!    Once again, the relief rally we had two days ago is erased from our memory and we are back where we were pretty much the day before last Friday.    Some can argue that having worries is good and it's called "climb a wall of worry".    We definitely have some cause for worry these days and it's mainly because of the dreaded "interest rate talk" and resulting jump in the 10 year bond yield.   So, now we have the worry and ask can we climb this?    Theoretically, yes we can.   Technically, it's going to be very tough if we don't have any near term positive catalyst that can drive this market higher.    So, we are definitely feeling the heat both from the market and from outside our air conditioned environment.   The key to cope with both kind of situation is to stay cool, and very cool we have to be.

Well, our strategy in this kind of market is  1. We trade very short term and use technical signs rigorously.  2. We only trade those that are making new highs or are in a setup to do so 3. We stay very liquid and will not make any sizable bets  4. Hope is the word we are taking out of our vocabulary which means we only trade on what we see out there.      Basically, you can get the idea that the last thing we want to do at this point is to turn ourselves from traders into investors.    You'd be surprised that how many seasoned traders can fall into the trap with just one little slip.   We just have to stick to what have gotten us to this point and we are taking many lessons from the past summers into incorporating our strategy.

here are some stocks of interest...

KMGB/LPHI,  as much as we've liked the recent action from these two, we've felt compelled to part way with most of our shares as the major indices deteriorates and while there are profits to take this week.   This market is not about hoping but rather acting on better probabilities.    At this point, this market feels about as uncertain as it gets.   With last Friday's low looming around the horizon, we just don't know if the next push will send it lower and spark some more nasty action.    This is not a calling the top shot for these stocks but rather it's just our own defensive and mechanical maneuver to take some good profits in a murky market environment.   We are very glad that these two stocks held up well enough to provide us with some very nice gains.   Of course, if market gives us clear direction that it's headed higher, we'd be sure to have these two back on our priority trading list.

CROX, this is the same story as above except this one has served us much better and much longer.   This one has got everything you can ask for, liquidity, chart and a hot story.   We don't know how much of the rise lately is due to the up coming split but we feel if we don't sell some more here, we'd just be asking for it.    We are still keeping a little and will see how much more it can take us at this point.

RCCC, we guess something has to shine in this market and this unlikely hero is there to give us a reason to get up early tomorrow and trade.   We'd think some of our other uneventful stocks such as MFLO VSNT TRCR etc. may become the "unlikely heroes" in this uncertain market.  We just have to keep a close eye on those day in and day out. MFLO is a dime off a NCH and we picked some up today.

What can we learn from today?

...or what can we learn from the past few days?   We are learning that we can not draw any definitive conclusion about this market.    It just looks like it doesn't take much to push this market into either direction.    The giant point swing is a mere exaggeration of the uncertain status this market is currently in.   Unfortunately, all these volatility isn't creating that many tradable opportunities for most of us.     What we look for here are the plays that can sustain an upward movement for a number of days or enough of a percentage run that make the risk/reward worth while.    So once again, we are just going to take some plays as is and not to extrapolate anything from their movement today.  

here are some notables..

TNH, chemical plays are hot and given a favourable market condition, they tend to out shine most others.    Ok, so we know this is like the beta play when it comes to following the index.   This one can trade very volatile intraday, point wise and you can find a lot of resemblance if you compare to the indices.    Bottom line, this one made a NCH and it's ready to challenge that magical triple digit mark.    Trade this wild one if you can but full attention is required to make the best out of it.  TRA got a buy rating today from Matrix and that got it rolling.  Do take note of the mass defection at $100 once, we tried the other day getting to $99.75 and you could see some shaky nerves at work.

KMGB, it feels like this little one is following TNH and it popped up during last half an hour on a big volume surge.   Momentum is very much alive with this one and we have no choice but to follow through some with this one.

KHDH, this one broke out on a long consolidation base . We added and will be watching this one closely to see if it can muster some extra follow through to give us potentially more over $60.  This has been one steady player since we introduced last earning.

CUB RCCC VSNT,  sure, there seem to be a lot of popular heroes out there today but these three just keep on moving up quietly in their own way.  All three made a NCH.   We are trying our best not to let our eyes off these ones because next thing you know, they are up 10%.   In this market, if you can find something that can get you 10% with a relative low risk within a few days, you'd be considered a champ.

Like we said this weekend....  "If this was a sign of volatility for the summer of 100+/-30+/- pts days, we'd prefer it to the laziness we often start to see at this time of the year".  Opportunities abound with volatility.  Does get funny though when NGA runs on 2 day old information. That's why it's not exactly our favorite environment but it beats the summer lull.