Day Trading Thoughts For Tues. Mar. 17

Discussion in 'Trading' started by erikrkolodny, Mar 17, 2009.

  1. erikrkolodny

    erikrkolodny ET Sponsor

    This past Monday (March 9), something occurred which had not been present in a very long time- a bit of Monday merger mania. The terms of the Dow Chemical/ Rohm & Haas (DOW/ROH) deal were finalized at the original deal price after a long saga. Roche ended up raising its price for Genentech (DNA). And to top it off, one of the largest pharmaceutical deals in history- an acquisition of Schering Plough (SGP) by Merck (MRK) was launched on Monday morning. One key sign of a major market bottom is a major pick-up in merger activity. The reason for this is actually quite simple when one thinks about it even momentarily. Psychology- fear and greed. If company A with the intent of being an acquirer thinks company B is cheap at 15 yet company B falls to 8, the second that there is an uptick to say 9 or 9.50, company A will be scared of watching company B rally thus they seize on their opportunity and bid, say 13 for the company (and still get it cheaper than the 15 that it thought was a good price in the first place)! Now, this is a different environment than any in history; thus it is worth noting that the markets actually finished down on Monday although obviously the rally commenced thereafter. The DNA and ROH sagas had been lingering for months and the MRK/SGP deal was more so a survival of the fittest in an effort to fight the wave of generic drugmaker competition due to new government policy. But, it is worth noting that these deals did in fact occur- with premiums to boot on all three acquisition targets. Thus, any slight (sustained) rise in the market will likely unleash another wave of mergers. For the day trading world, whereas rumors for quite some time have been ‘which financial is in trouble’ or ‘which company will go bankrupt,’ it is entirely plausible that in the days to come that we will be hearing all sorts of takeover rumors on almost any company out there.

    Markets in Asia were very strong overnight with prices up 2% to 3% across the board. However, the pace of the rally was much more muted in Europe with prices not straying too far from the unchanged line to the upside. Bonds, oil, and currencies are all quiet. Futures are showing some mild strength in recouping a fraction of the losses in yesterday’s reversal. Look for a fairly quiet session amid semi-holiday trading conditions with nearly non-existent opportunities during the height of the Manhattan St. Patrick’s Day parade. Otherwise, equities are not likely to stray exceptionally far from unchanged either way today albeit with an upside bias, again, pending the performances of the financials.



    Reiterating-
    Please understand that if the ideas do not get to the hoped for set-ups cited below, more often than not, one should not blindly trade the symbol next to said idea.
    If the whole story is not there -
    If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf something is bad, assume either a buy thru unchanged or an A-B-A2 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified-


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

    FRPT- decent quarterly earnings

    SFI- announced buyback of up to $50 million of stock along with a new $1 billion credit facility

    SO- on “Mad Money” last night

    CTBK- closed at the high of the day

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

    SINA- beat earnings estimates for quarter, but warned of slowing revenues for next quarter; watch other Chinese techs like NTES, SOHU, and BIDU

    AA- slashed its dividend and planning on doing a 150 million share offering

    ENER- atrocious earnings warning

    PAA- doing a share offering

    MS, GS- brokers help lead financial sector lower yesterday- despite being featured in “Barron’s”

    AFL, MET, ALL- among the insurers closing on or near their lows of the day

    COF, JPM, WFC, PNC, USB, STI, STT- among the major financials/banks closing at/near their lows of the day

    BKR- closed near a new trend low

    DDUP- broke to a new trend low

    IBOC- major reversal today; worrisome as it was weaker than most of the smaller banks

    BXP, SPG, AIV- among the REIT’s which closed near their lows; the REIT’s were the weakest sector of the market yesterday

    CRD/B- closed at a new trend low

    WYNN- announced a share offering

    PCAR- warned of quarterly loss

    FDS- beat on quarterly earnings, but warned on upcoming quarterly revenues


    Earnings:

    TUES MAR 17 BEFORE

    CSIQ EGY FDS

    TUES MAR 17 AFTER

    ADBE AIR GES

    Good luck today.

    Erik R. Kolodny
     
  2. Fantastic summary and very informative. Keep it up. Look forward to seeing it on a daily basis.