DJIMstocks.com- DJ Interactive Markets

Nobody likes consolidation, especially after a run-up and especially those traders that did not participate.  Simply, it's because they have money to use, it's money on the sidelines waiting for the next tick up.  Also, the traders that did play are antsy to get started up again.  The grinding action is aggravating, frustrating to watch for all but it is a necessary course and most importantly allows stocks to set up for the next kick up.  It is the time to do your homework, separating your potential winners from those that just went on the coattails of others. The next move up, if it happens, will not be of the same vigor and so many of the coattail stocks will probably not set up during this action now and /or participate when the time comes to do so.  The days leading into a FED decision are always quiet in nature as both sides set up or just sit on the sideline as we've said.  These days it just that more quiet as we go through turbulent times.   What this leads to is a game of give and take, in this case meaning trades are very quick in duration as they give a point or two and then take it away just as quick in a few hours or less.   It is not a time for those not watching the market on a full time basis to be entering into positions.  Many of you in this position have taken the right road since the morning Journal on November 8th when we wrote on the possibility of CSCO breaking the camels..donkeys back.  It happened, it broke and those with a longer time period than an hour or a day have been the lucky ones preserving their gains and cash while the rest of us grind in our accounts.  The days of 10 trading choices a day are long gone for the past month, you may get one now and it doesn't last that long.   EPS winners are hardly recognized,  just look at the grinding action of a SIGM since earnings day.  It's a different ballgame now and everybody should get used to it until the Bull comes back.

Early last week, we focused on the China stocks and they continue to be the steady lot.  The gains are not huge but you should be happy to get anything on the long side these days.  The Shang/Hang had a good session, but now comes more word out of China shifting and tightening their monetary policy to prevent 'overheating'. This is nothing new, everyone will have a spin though.  We'll continue to trade the lot of them...EDU, LFT, EJ etc.

Solars, this used be one big happy family. Meaning when one moved, its brothers and sisters all went for a joyride. As we saw yesterday, this might not the be case now and makes trading this sector harder as it's not so cut and dry.   FLSR had a terrible day, STP was down nicely, while SPWR provided a prime example of what you could do with a intraday day, but serves no purpose for those not able to sit and watch the market all day as it climbed to 133, 5pts off open and almost 10 points off early lows.  On the other side, there is SOLF who seems to have looked in the mirror and saw JRJC, guess that says it all.   A hedgie or two gone wild taking a bunch of gung ho traders with them.

There is no expectation of new plays or earnings plays emerging in a corrective market as they did this summer, one after the other.  It's the nature of the beast.  It's also quiet logical.  This has been the case since early November.  It comes with the territory and you have to live with it, it's as simple as that until the trend changes.  In the meantime, you concentrate on what you know, your watchlist and trade around it and/or preserve your money.  This doesn't require intraday alerts/comments, we all should have our favorites by now from those traded here and know which ones you can trade without making a mess.

There's going to be whole lot of consolidation for this market.    Granted, it's possible that this market can just shoot up again like last week.   The fact is, it takes a market ALOT longer to move up the same amount of points than it takes to move down.     The majority of the time in an upmarket, is spent in the consolidation mode. Just look at a daily chart of the indices for the year.    This time around, we are just glad and maybe a bit fortunate to be in the consolidation mode.      Right now, we are monitoring the financials closely as they may be the catalysts to pull the carpet from this market again.    The good thing is, that it would take some substantial negative news to get the financials to break the recent lows.      It's not an unlikely event but the odds are diminishing if Fed is on the move to help things out.    Market is currently pricing into a 25 basis cut but some are expecting more than that.    What we think is important from the Fed is its language going forward.    Giving less attention to the inflation while paying more attention to the current financial crisis from the Fed is what many market participants wanted.     We'll just have to see how it plays out a week from tomorrow.

Back to this market!   While some of the bigger tech names have been in the profit taking mode, many other plays on our screen showed resiliency.      Keep in mind, plays like AAPL RIMM have almost climbed back to the level before the sell off started.   Some profit taking in those names is understandable given the magnitude of the recovery of those stocks.    Solars, with the exception of FSLR (analyst day), held up really well today.    We can see the result from the speculative action of SOLF alone.     Many China plays held up as well.  LFT is in the initiation phase from the firms.

We are going to continue to see some pullbacks and consolidation from this market and we feel playing conservatively is the best thing to do before the Fed meeting.    Essentially, we want to see if this market can sustain its recent gains and build a base around here.    With a willing Fed and a batch of never ending negative news, we may be able to finish the year on a high note. 

In typical Friday fashion, we were exposed to quite a bit of profit taking, except in this case it was probably more justified after the rally and another early move up Friday. The market ran on interest rate fever and now most likely it will trade sideways and consolidate till the FOMC decision on December 11th.  The FED will be watching the numbers closely this week and traders will be doing the same, some will position themselves for that date and others will just sit on the sidelines.  In our case, even though we think the bias is up, we will be picky and look for a few set ups and pockets of strength.  Possibly position in on some dips on some favorites.  Seems a few downgrades are making the rounds and you start to wonder if the firms might want to get some cheaper (eg RIMM downgraded a 2nd time in as many days).  The pockets could and usually are a sector, but with the gains last week in our 3 most closely followed (Solars, China, Shippers)we are not expecting great follow through on them.  The pockets this week could also be the big financials like GS, MER which are acting like daytrading stocks in this environment and also the interest rate sensitive group.   It could also be oil stocks if the prospects for the winter are any indication by what some are seeing of a long cold winter.  This would also most likely help the Solars.  So be patient this week, as we say the indices don't go straight down, but they also don't go straight up.  If the market did continue to rally this week, we'd be very concerned of a sell off on the FOMC decision no matter what it would be.   A week of sideways action might just be the best medicine.

Just like the good old days, there is some M&A activity for a Monday morning instead of the usual sub prime headlines. Unfortunately, it might have little affect on the the mood of the market early this week, it is probably better to get your XMAS shopping out of the way this week and get ready for pre-xmas trading...we'll see.  What we don't want under our trees is more negative headlines from the subprime debacle to kick the legs out from the market after the recovery last week.  Be patient, be selective...a stock like MELI might be a ticket, it surpisingly didn't particiapte to some degree in the retail/online push from last week, but this weekend was a feature in IBD.

..or more like a month to forget!. Forgetting is good, but we all should take a lesson or three out of it and use them to become better traders/investors in the future. On this last day of trading in November, we have some bullish action to lead us into December.  Yesterday's action was quite surprising after two days of big gains on the indices.  Not only did we have back to back huge bull days, but yesterday the market showed great determination and grit in fighting off any profit taking finishing slightly in the green.  It is doubtful many expected so little volatility, mostly the Bears who already started yelling the day before that the 'fix' is in to have a rally into the end of the year. The action was very encouraging if not affirming the belief we can rally in December...well, that is if no huge headlines come from the financials.  Maybe the big boys pack have a secret handshake in play and will save any more bad news till early 2008.  Let's hope!.  The other day we had hints of another interest rate hike, now comes one from the man himself.... Lets go for Day 4!..lol

Bernanke hints of further rate cuts - AP

AP reports Fed Chairman Ben Bernanke on Thursday hinted that another interest rate cut may be needed to bolster the economy. The worsening credit crunch, a deepening housing slump and rising energy prices probably will create some "headwinds for the consumer in the months ahead," he said. Bernanke said he expects consumer spending will continue to grow and suggested the country can withstand the current problems without falling into a recession. But he indicated that consumers could turn more cautious as they try to cope with all the stresses. The odds have grown that the country could enter a recession. A sharp cutback in consumer spending could send the economy into a tailspin. Against this backdrop, Fed policymakers will need to be "exceptionally alert and flexible," Bernanke said. That comment probably will be viewed as a sign the Fed may lower interest rates when it meets on Dec. 11. The economic outlook has been "importantly affected over the past month by renewed turbulence in financial markets, which has partially reversed the improvement that occurred in September and October," Bernanke said. "These developments have resulted in a further tightening in financial conditions, which has the potential to impose additional restraint on activity in housing markets and in other credit-sensitive sectors," he said. In his remarks, Bernanke said rising gasoline and heating oil prices as well as higher food costs have the potential to raise inflation. He said that is something the Fed also is watching.

As far as individual stock plays, the list from yesterday's Journal should be quite sufficient into todays trading.  Nothing has really changed except some names had big days, most notably a few of the Solars here... and the idea of watching DJIM China names for a new opportunity might have paid off for a few of you already if you entered early yesterday as the EJ WX STV LFT... YGE EDU all had nice % gains on just okay volume. We don't see a reason, especially after yesterday action in these names that momentum money going into the solars and back into the shippers won't spread to this beaten up bunch.

We had a little hope yesterday!   We hoped that the market today would at least close flat and not to lose any ground on the day following a rally.    Boy did we close "flat"!   To summarize the action today, it was simply breathtaking.    There are basically two parts to today's theme.    The first part is of course the 'trading part' and as long as you had a little merchandise from the day before, or played just about anything intraday, you'd come out on top.   This is good because everybody is making money today, even probably the shorts!   Why?   We are assuming some shorts would be smart enough to cover today and booked some of their profit.   This is least important as it's really about the possibility to trade and make money into the New Year, not just today.    The second part is the psychological part!    Yes, the rally today does resemble the rally we had two Tuesdays ago but both rallies do seem a world apart.    Today's move is followed by a very strong move off yesterday and this is a very bullish sign.   This tells us that there can be momentum on the upside, and this market isn't just a one way ticket down.    Over 500 points were made in two days' worth of trading.    You can attribute some of those point gains to short covering but shorts cover for a reason don't they?     Now granted, we've come from a very oversold condition that is almost a month long, and today doesn't guarantee the end of this downturn.     However, odds have dramatically improved that we have just witnessed a bottom couple of days ago.     Basically, we need to fall more than 500 points just to reach the previous low and somehow we don't think there's that much more merchandise left for people to dump.     Even the financials, all of them, had a great day today.     Ok, we aren't going to get too cute with the financials and we still don't think they should be on our playlist, except GS here and there.   However, seeing the financials behave the way they did today does inject some much needed confidence back into ourselves which benefits our trading with other names.

Let's talk about some names....    First of all, the rally today is so broad based, we couldn't really find anything that's not working.    We'll just stick to some of the obvious and highly playable ones from our previous leaders. 

RIMM BIDU AAPL GOOG, out of these liquid ones, we actually liked the action from BIDU the best.   It does give you the best bang for the buck kind of deal.    Of course, today's isn't one of those average up days, so we'd cash out most of positions toward the end and only leave a small one in case we have another positive surprise.    The odds of this market having another great day like today is almost slim to none but we still have to respect what this market is capable of.

Solars,  SPWR/FSLR/STP, these three have become our favourites among the solar names because of their relative performance to the rest of the sector.    STP, a recent addition here and FSLR are near all time high and SPWR went up the most today.    We think given the current rosiness of this market, these names may get another leg up.     Remember, short term players will always look for plays that are fast and furious when the market is in a good mood.

Shippers, although this is the group that took the biggest damage last little while, they are being cheered for today.    We aren't looking for extended gains in names like DRYS EXM since they were beaten so badly and there's probably tons of resistance on their way up.   We'd simply be trading them in a day by day case.

ISRG, usually can pull off more than a few consecutive up days when it changes trends and VIP, a recent noted for a pre-earnings move with a NCH in sight, cashed in on one and will now feed or not feed off the report. These are of trading interest as well.  SIGM, put in an impressive Q and we will watch for a pullback here most likely.

Now, if we can only get the Asian DJIM plays joining, maybe we just will as a Chinese official said the country "will' proceed with a plan allowing individual purchases of the city's stocks.  Remember, this is a big part of the rally in the HANG this year and is also a big part of why the market corrected recently after an official said this was most likely being postponed. The HANG was up 4% overnight, large part to the activity in North America, but also to this 'will' proceed.  LFT, STV, EJ, WX, a few of the most widely played here...let's keep a close eye on them today for an opportunity.

Bottom line, the action may signify the end of the recent correction.    We aren't completely out of the woods yet but odds are pretty good that we won't go visit the recent lows in the 'short term'.     This does not mean that we have to go 100% back into this market right away.   Remember, we still need this market to find a strong footing and let it go back and forth and go sideways a bit before mounting an assault higher.   It does look like a Santa Claus rally may just be possible this year.   

While not all of the names on our watchlist participated in the rally today, it is something that's worth cheering for.    Of course, this is becoming a norm now that stocks don't just finish flat.   We either close up 200 + pt or down just as much.    One thing remained clear though, is that the financials had a very heavy weighting on the movement of the indices these days.    Today's news is that Citi is selling $7.5 billion dollar worth of co. to Abu Dhabi's state investment fund.   Although this news did not seem to spark Citi stock that  much, but it did have an effect on other financials, and as well as the overall market.    It seems whenever the financials find their footing, everything else will get a bid from the market participants.    This has been a concern for many of us because honestly, nobody knows when the financials are truly done going down.

For now and for today, we simply have to take this up day at its face value.    So we are up today and that's the end of the headline.   It doesn't mean anything about tomorrow or the state of our market.     Yes, we definitely sound like we are a beaten up bunch.    For what it's worth, we'd like to see a good follow through tomorrow.   A flat day would  also be a good thing in our book.     These days, an up day just doesn't count unless you are done booking all your intraday profit by 4 o'clock.     We are in a very oversold situation and the least this market can do is to go sideways with decreased volatility.    What we are looking for at the moment is to see if this market can absorb some bad news without people puking up anymore.    We know that there's going to be more bad news with regard to write downs etc., and  it's in this market's best interest to hold through at this level.    Funny thing is that we are merely a couple of big moves away from either getting out of this bottom or starting another leg down.    In either case, we as traders have to be clear headed and play only what this market tells us.

now some plays we are trading/looking at today...

RIMM/BIDU/AAPL, when market is up this much, it's almost a guarantee that these names are in play.    Even though these names have come quit a bit off their recent lows, they are still quite bit far from their recent highs.    Right now, we feel these names may need some help from the overall market.     Basically, if the market is showing strength, we'd feel no hesitation of jumping into any of these names.   Even when the market reverses, there's plenty of liquidity and time for us to get out.    These are good intraday trading stocks if that's the kind of things you are into.

GRMN, this one was punished a while ago because it's aggressively bidding for Tele Atlas.  It's no longer doing that now and holiday season is upon us.   According to many sources, portable GPS is one of the hottest items and these guys are simply the best in that area.   We are trading frequently on the long side with this name but will act according to the overall market condition.   

LFT, believe it or not, this is the Chinese play that had the "best" earnings reaction recently.   Now this isn't saying much because the entire China sector is pretty much being left for dead.   We just want to bring it to attention that we'd look to establish a position if things on the other side of the globe start to improve.

BIDZ, IBD play, IBD #2 debut, $22.50 high, lemon report, kaboom, ridiculous CC, possible fraudulent activity....   that's pretty much the order of business for this play the last 7 trading days or so.    Yup, we do live in a world that's full of twisted drama.   Fortunately today spells the end of BIDZ drama and there's no need to look at it anymore.

You need a good a pivot foot to drive to the basket and this market has its laces all loose and tangled and keeps falling on its face as it attempts to take a step forward.   Yesterday was a disappointment and it was set in motion by a few firms laughing off the holiday shopping.  Guess all their junior analysts walking through malls saw something different than the numbers put out that got some thinking positively.  The action just proves that if you are thinking of going in on a somewhat longer term trade, it is better to wait for a few first downs to see if the market can hold on to the ball if it starts to march up the field.   Yesterday, after the first 1st down on the Friday the market was sacked 15 yards back into the red zone.  This being the 12800 yard stick on the DJIA.   Well, just following this close while all the Bears began the Bear chant of recession, Bear cycle again, Citigroup announces an expensive capital raise of 7.5 gazillion dollars to Abu Dhabi Investment authority. This capital infusion and the CEO commitment to maintaining the dividend and not cut could restore some confidence in this issue and help other financials.  No promises.  We're not going anywhere unless the financials start to rebound.  'Maybe' this news gets us back over12800 to start.  It's not much in the big picture, but this market needs all the help it can get at this point.   As we said in chart section this weekend this area might be riskier than all the ones before that were broken.

We haven't mentioned a stock here on the Journal for about a week now.  It is best we don't give any ideas to those that are not more than intraday traders at this time.  Just too dangerous.  There are a few stocks that are providing some trading opportunities, but unless you can have eye(s) on the screens throughout the day, you might as well continue to get splinters on the bench.  Even...below is a case and point in one stock that was acting well against all the odds lately.

Just a trading note...a general rule for us is to rid of stocks getting a negative headline immediately.  Sometimes this is an offering or whatever and deal with it after.   But it is essential to get out the door early.   This brings us to BIDZ yesterday.  Most of us here know that rule applies to Stocklemon reports on a greater scale.   Usually they go after stocks we've traded generously to the upside and therefore these stocks have lots to give up fast and usually do after a report is published.   A members note on the forum yesterday, hopefully saved those playing BIDZ some 5 or more points.

How time has gone by so quickly these days!    We are near the end of November in one of the most turbulent year for as long as we can remember.    First of all, we'd like to hope everyone just had a really relaxing and joyful thanksgiving holiday.    For now, we need to rest as much as we can to prepare for the coming events.    This week is marked by a pretty strong finish from all  indices.    Unfortunately, to most of us, the week really finished on Wednesday, where a barrage of selling that took our indices below the August's lowest closing point.      So does this Friday's half day trading mean anything to us?    Yes and No!    It means something because we know now that there's at least bargain hunters out there willing to take their chance and put some capital into work.    It also doesn't mean much because if coming Monday this market resumes intense selling, the action on Friday would look rather like a joke.

The big question here is that if we are going to see more severe selling next week, when the majority of the market participants come back to their trading desk.    As oversold as the market is, it can still go lower before we see a meaningful bounce.     Yes, a meaningful bounce, and that is something we have not seen from this particular sell off.    On Friday we had some encouraging retail data(Black Friday) which gives us some assurance that at least the consumers are spending.    All we are hoping for is that the market participants would take it into their trading consideration and that would likely give a boost to retail sector(another battered one) and consumer electronics including gadget makers etc.   Hopefully, we just need to take some attention away from the current financial woe.    This may be a lot to ask for but we think the timing of the retail data coupled with the severe oversold condition, it's not unrealistic to see a bounce out of this.

Our game plan is simple...  if coming Monday this market continued where it left off on Wednesday, then we'd obviously sit patiently for something to develop.    If we get a good follow through from Friday, we'd likely be start looking at some plays including everybody else' favourite like RIMM AAPL, solars and anything that's relatively close to their year high.

Bottom line here is that this is a very tough market we are dealing with and we have to fully appreciate the magnitude of it.   Right now, it's not about making more money than others, but rather not to lose as much as others.    Whether a bounce comes in days or weeks, it will come and that's that.    If a bounce somehow turns into a rally and all the bad news get absorbed on the way, then we'd be fully committed capital wise.   Until that day comes, we'd be in a total survival mode now.    As long as we all understand what's going on, we have a pretty good feeling that we are all going to get through this.

Maybe sitting around a table with family and friends ...getting stuffed, laughing, watching the Pack' attack yesterday brings some sensibility that it's not the end of the world and that this market is not at the end of its rope.   Just like Brett Favre being written off, this market can rebound too and show some of the same grit and determination.  Right now, we are overdone for the short term and the shorts might be thinking of a snapback more than the longs.  You can see this in how fast a short covering comes and moves the market up.  We saw this on Tuesday.  The confidence is just not there with the longs in the past week, you know the amusement park game where you smash constantly the popping beaver...rabbit or whatever it is with a mallet as they keep popping out of holes.   Well, that's what the market feels like and plays like, except its Bulls ..and every time they get an uptick during the day and show their horns....they are hammered back down.    Soon the Bears arms will get tired and we'll get a reversal of sorts, nothing goes straight down, especially with earnings growth still around.   In the meantime, intraday traders should be selective and those with a longer hold period should just stay on the sideline until a march up the field takes place.   You don't want to start at your own 20 yard line, wait for a few first downs from the Bulls before coming back into the game.

Happy Holidays..

This market just doesn't want to go into easy mode these days.   Despite the fact we are in a holiday trading week, both the volume and volatility of this market are right up there among the higher days we've seen.     Of course, there's one and a half days left in the week and we have to literally laugh off any potential heavy action that's yet to come.    Today's action is definitely better than yesterday's and bulls held their ground from last week's low.    Although we are encouraged by market's late day action and particularly action from some of the high profile tech companies, unfortunately the action isn't spread evenly among all the names on our watchlist.

Shippers, this group just can't seem to get a bid whether market has a rebound or not.    We are definitely staying away from this group and unless something really dramatic happens with the sector, we aren't likely to play this group for a while.

Solars, since most if not all of the names in the group have released their earnings already, we don't think there's that much to look forward to in the short term.    It's troubling to see that none of the solar names wanted to participate in today's late day rally.   There were also numerous upgrades on various solar names last little while which didn't seem to help to lift the group at all.    However, if we get a meaningful rally from the crude oil, this sector will definitely get some action again.      Until then, we'd stay on the sideline for the most part unless a good intraday opportunity comes up.

China Plays, we have just one last reminder.   Just because some of the stories were so good a month ago doesn't mean people are still paying attention to them.    The group's currently in what we call a "diseased" mode and last thing we wanna be doing with them is to play a rebound.   Untill both the Heng, the Shang and major Chinese ADRs here all get some good action going, we'd stay away from the group completely.

 Right now, we are doing exactly what most others are doing and that is sitting on our hands for the most part.    The further away this market moves from last week's low, the more inclined we are to get back into this market.   For now, we are just playing some intraday points from the likes of RIMM AAPL GS etc.