Day Trading Thoughts For Wed. Mar. 4

Discussion in 'Trading' started by erikrkolodny, Mar 4, 2009.

  1. erikrkolodny

    erikrkolodny ET Sponsor

    Let’s take a second out away from the banking crisis and political dominos falling to discuss something near and dear to all of us- why if oil prices continue to decline (or at last not rally sharply) are gas prices notching higher? For instance, two weeks ago today, crude oil had its lowest close of the year yet the national average for a gallon of gas was priced at its highest level all year. Here is the answer: gas prices are indeed tie to oil prices, but it is a matter of which type of oil. The benchmark for the price of crude oil is the West Texas Intermediate oil which is drilled in- guess where- west Texas. However, West Texas oil is currently selling for less than inferior crude grades from other locales throughout the globe. The economic downturn state-side as left U.S. storage facilities full as demand has collapsed. However, overseas crude is what usually goes into most of the gasoline produced in the U.S. Foreign oil is selling many times these days for $10 more per barrel. Brent North Sea crude- the type of oil which fills many East Coast refineries winding up in gas pumps throughout the U.S. costs substantially more than West Texas crude. Building pipelines to pump in oil from Texas would cost billions of dollars- resources are already stretched and historically, West Texas oil sells for more than Brent so it makes little economic sense to do build the infrastructure. So, besides the fact that now we all have an explanation for the divergence in oil and gas prices (I didn’t know either), it also further shows why there is a diminishing correlation between the movement of oil and equities. Generally, oil and stocks have moved together in recent weeks, but not always and the fact of the mater is that right now, it just isn’t important. With everything going on, it is worth keeping an eye to oil a couple times a day, but the impact of oil prices is not impacting equities much these days and is not likely to do so anytime soon as the market focuses on bigger issues right now.

    Initially, stocks were trading lower in Asia, but the Chinese government noted they will announced a new stimulus plan tomorrow which sparked a 6% gain for the Chinese benchmark index; this turned Asian bourses around with most closing just under 1% higher. The strength spread to Europe with the bourses posting strong gains of about 2% to 3% across the board. Futures domestically were weak last night, but are now higher across the board. With a positive backdrop and volume relatively paltry yesterday (a 15% decline in QQQQ volume compared to Monday’s snow day), we’re set up for a bounce. The initial impulse will be to sell into strength, but look for a mid-morning turnaround particularly if the volume is low on the selling and a decent snapback today.

    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

    FDO, BIG- on “Mad Money” last night; BIG also posted great earnings this morning

    BJ- solid earnings

    JOYG- great earnings and raised guidance

    ABM- closed near a high on good earnings news

    RMBS- a judge upheld the Hymix ruling

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

    MGM- issued a statement warning of default by the end of 2009; LVS should move in sympathy

    PALM- warned on earnings

    URS- poor earnings

    ACAS- sold off dramatically yesterday on deletion from S&P 500; could get bounceback today

    OI- closed on a low

    NCZ- postponing their dividends

    HIG- got a 2nd downgrade in a month on its debt rating from S&P

    SIVB, EWBC- among the smaller banks closing on their lows yesterday

    GIFI- closed near its low

    POM- stock continues its plunge; closed near its low

    PCR- closed near its low

    CEG- closed near its low

    CYN- closed near its low

    DISH- closed near its low

    IPCR- closed near its low

    GOOG- warned economy could hurt its outlook

    PTV- closed near its low

    AET, AFL, PRU, MET, ALL- among the big insurers closing near their lows

    TEG- once again after posting horrible earnings last week, closed near a low

    COST- missed estimates for the quarter

    URS- guided slightly lower for the year earnings-wise










    Good luck today.

    Erik R. Kolodny
  2. keep an eye on JOYG. its trading at 18.40 at the moment and i believe it hits 19..then look for 20(a round number) followed buy the 50 dmd which is 21. 21 should prove to be a magnet..keep in mind that both JOYG and BUCY have a habit of gapping up and then could be much different for a few reasons; totally oversold as well as the overall market,earnings and guidence were actually strong. not something a short wants to hear. BUCY should get some movement but i hate the chart.
  3. i meant to say 21 is the 50 day moving average.pardon my grammar.