Day Trading Thoughts For Wed. Jan. 14

Discussion in 'Trading' started by erikrkolodny, Jan 14, 2009.

  1. erikrkolodny

    erikrkolodny ET Sponsor

    When we were kids, if we got a good report card, we could not wait to show our grades to our parents. When I got the report card that cemented my valedictorian of my middle school status in 8th grade, I could not wait to gleefully show it to my Mom and Dad…much less rub it in the face of my siblings! I did very well in high school as well, but could not figure out CADD (computer aided design and drawing). No matter what I did, I couldn’t get it. It was by far the worst grade I ever got in high school and I created every excuse in the book not to have to show that report card to my parents. After all, buy high school, I had some sort of life and did not want it disrupted because of the poor showing in CADD. I stayed late at school, went to a friend’s place for dinner, studied with another friend, but eventually, I made my way back home where I had to show the report card to my parents. Well, the same type of concept occurs in the stock market. One would not think that it does, but it does. See, perception is everything and perception becomes the reality- whether the reality comes to be is another story. The case I am discussing here is that of J.P. Morgan (JPM). Shares of JPM have been bludgeoned this year, down from about 32 to yesterday’s close of just below 25. After the close yesterday, JPM announced it was pushing up its earnings date from next Tuesday to tomorrow (Thursday)- five days earlier. Particularly with the stock down so much, the question became why would they push up earnings? Theoretically, the thinking goes that nobody rushes to share bad news so the news must be good…in practice, it is actually true an amazing amount of the time for what it is worth. But the mere whiff of the pushing up of the date helped spark the biggest percentage gain in JPM shares in weeks yesterday, i.e. they are willing to get their ‘report card’ out sooner than later. Whether the thinking comes to fruition is another story, but keep in mind that this type of action does occur and keep your eyes out for it as we begin to head towards earnings season in earnest next week.

    Markets in Asia were up slightly overnight, but the shift changed abruptly in Europe as banking shares weighed on the bourses pushing most European indeces down 1% to 2%. Yesterday, there was a seemingly inexplicable resilience to the markets which is why I called for a relatively stable day. However, there is a relatively inexplicable weakness to the futures this morning; commodities are higher, no major bombshells came out overnight, et al. Yet, the markets are down. Thus, look for the downside bias to maintain itself all day; if there is no attempt at any sort of rally by late morning, this afternoon could have a little more aggressive selling than normal albeit on continued average to below average volume.


    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 specified

    If 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-

    Not a huge list today as the main indeces closed in the middle of their range yesterday and there is still a relative dearth of newsflow.

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

    JPM- closed near a high yesterday; may well get more momentum…looking to buy thru 26.59 Tues high

    AER- closed near high; looking for A-B-A2 thru Tues 5.71 high

    IOC- closed near high; looking for buy thru Tues 20.65 high

    MR- rally extended yesterday in closing near high after good earnings on Monday; looking for potential A-B-A2 thru Tues 21.79 high

    COP, CAT, NYX, HD, RIMM- featured on “Mad Money” last night

    MNKD- announced successful completion of an FDA trial of its device

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

    MS/C- officially announced agreement in which C and MS will do a joint venture involving C’s Smith Barney division. Look for a potential case of selling on the news.

    LLTC- beat on earnings, but warned on next quarter

    BG- warned, but interesting numbers…sees $7.70/share versus $10.22 in FY ’08 and $6.90 to $7.60 in FY ’09 versus $8.03/share. These are well below analyst numbers, but still significantly profitable numbers thus looking for A-B-A2 to upside in case traders think warning is built in otherwise assuming A-B-A2

    STSA- lowered guidance






    Good luck today.

    Erik R. Kolodny
  2. i will be looking at NUVA today(long) to the 37.40 area.
  3. Have few more in my watchlist: UA, SI,DB, HBC.
  4. Asia higher but Europe and the US lower as sagging bank stocks are dragging indices down this morning. It's all stocks so far as treasuries, fx and commodity trade are all narrowly mixed. Crude is a little higher which helped boost Asia stock prices last night. Most of the region's markets managed to finish higher...Nikkei, Topix and Hang Seng all +.25 -.50%...Kospi +1.4%, CSI300 +4%...ASX200 +.90%. The Taiex was an outlier, finishing down 25% DB announced a $6bln Q4 loss, HSBC is reported to need $30bln to shore up it's capital base and the entire banking sector is back on its heels again, pulling down the broader market in Europe. At present, DAX is -155...Eurostoxx - 70, FTSE -14, all trading session lows post retail sales which came out as expected...bad.
    SPH is now on life support, having fully round tripped the entire rally from 850 last week of '08. The relentless grind downward in anticipation of ever poorer headlines (which keep on coming...Nortel announced it's filing for bankruptcy), earnings and prospects has paid the shorts for a week now, and if the market closes cleanly sub 850, a move back under 800 comes into play. There is near term support at 847 and 842 that might spur short covering rallies, but those rallies should be sold. The market needs to get back above (and close) 885 to be good again. for today, buying 842 with a stop under 832...selling 866 with a buy stop at 877.50.
    Up: 861, 867.25, 874, 877, 883, 886
    Dn: 847, 842, 836, 827.50, 823

    1:00 pm - Minneapolis Federal
    Reserve Bank President Gary Stern to
    speak about U.S. macroeconomic
    policy, in Cedar Rapids, Iowa.
    Audience Q&A expected.