Day Trading Thoughts For Mon. Dec. 15

Discussion in 'Trading' started by erikrkolodny, Dec 15, 2008.

  1. erikrkolodny

    erikrkolodny ET Sponsor

    A rather interesting thing that is gaining traction since the presidential election is the exodus of companies from such places as Bermuda to Switzerland. The main issue is one of tax fright. The trend started with insurance companies such as Flagstone Reinsurance to bigger entities such as ACE Limited (ACE). Companies do not like to identify tax as a reason for selecting their headquarters in any given place, but Switzerland is attracting a great deal of interest from Bermuda-based companies as it has a solid tax treaty with the United States. There is no such treaty between Bermuda and the United States; there is much uncertainty about the tax advantages of being a Bermuda-based company amidst the exit of President Bush. In any case, the trend continues to intensify with companies such as Transocean (RIG) having announced their proposal to move a few weeks ago with Foster Wheeler (FWLT), Tyco International (TYC) and Weatherford (WFT) among the companies announcing their move on Wednesday of last week. This dense topic does affect day traders greatly. Among the requirements that the S&P 500 has to be a member of its index is that a company must be headquartered in the United States or a U.S. colony. Thus, whenever a company emigrates to a place like Switzerland, by the by-laws of the S&P 500, it is supposed to come out of that index. This can have enormous ramifications for those stocks; indeed in a November 22 note, a Credit Suisse analyst estimates that there would be going on 47.5 million shares of RIG to sell if the S&P announced that RIG would come out of the S&P 500- which sure enough, it did on Thursday afternoon. In another case portending things to come, TYC traded down almost 10% by the end of the day on Thursday. Furthermore, when and if the stocks go out of the S&P 500, there will be another burst of selling. Thus, whenever you see a seemingly innocuous headline indicating a move out of the U.S for the next few weeks, realize that there will likely be an ensuing sell-off and thus becomes a new type of trading play.

    Stocks in Tokyo staged a strong rebound overnight after overshooting to the downside on Friday. But, movements were much more muted throughout the rest of the world. State-side, the Friday performance no matter how one looks at it was impressive. The Madoff news and the GM story (even with rumors of an imminent government bailout) failed to knock down stock prices in what was a rather benign upside day. With the Fed due out tomorrow and no major news due out today, look for a relatively quiet December Monday session. The upside bias will likely continue, but again, it stands to not be quite as volatile as we are used to it being.

    Good- The following stocks have good news and/or a strong technical pattern

    PLD- closed at a high; look to buy on an A-B-A2 in particular thru 8

    SPG, EQR, VNO- among the strong REIT’s which closed near their highs; looking to buy thru Friday’s highs on continued momentum if they open below those numbers (EQR 31.75, SPG 52.04, VNO 58.40)

    FNF- closed strong on Friday; looking for momentum buy thru 14

    UDR- very strong Friday; looking at buy thru 15 on momentum

    DRE- very strong smaller REIT; looking to buy thru Friday’s 9.25 high

    EXEL- up on positive drug news on Friday; looking to buy thru Friday’s high of 5

    HSNI- strong Friday; looking to buy thru Friday’s 2.56 high

    SWKS, CIENB, TLAB- all on “Mad Money’ on Friday night

    HON- reaffirmed guidance for 4th quarter 2008 and all of 2009

    Bad-The following stocks have bad news and/or a weak technical pattern

    WAT- rebounded after atrocious Friday earnings; look to buy on an A-B-A2 thru 37.40

    PKI- very weak after downgrade; looking to short thru Friday’s 13.10 low

    OCNF- announced that they are suspending dividend immediately to preserve capital

    MON- bizarrely weak on Friday; if it opens higher, looking for short thru unch and Friday’s low around 69.60 else A-B-A2 to upside

    AAPL- downgraded by Goldman Sachs






    Good luck today.

    Erik R. Kolodny
  2. Journal Forum or Blog Forum. :cool:
  3. Here in "Trading" is appropriate. It is not an end of the day recap / journal.

    This contribution is quality, daily. I had an epiphany since following his work and methodology.
  4. buy buy buy market set 2 surge

  5. I will buy any stocks making new highs after the DOW breaks 8600 on the upside.

    Erik's daytrading methodology is an advocate of buying the highs and shorting the lows. I am doing nothing while we are within a range.

    Erik, if you have your list, maybe you should upload it for those who use Sterling Trader Pro.