News You Can Use

Discussion in 'Trading' started by Brandonf, Jul 8, 2002.

  1. Brandonf

    Brandonf ET Sponsor

    The news often provides a catalys for large moves in individual stocks and in the market as a whole. Most people, however, manage to lose big when they trade the news by buying good news and selling bad news blindly. This does not always work because the news does not mean anything in and of itself, it simply brings peoples attention to a stock, sector, index - and from there pre existing trading plans and emotion take over. Often times you will see a downgrade in a stock with a decent technical bottoming pattern (for example) and the upside will be very good.

    As an example, here is the News You Can Use Letter from 7/3/2002.

    Just for fun lets do a pop quiz to start things: When was the last time the Nasdaq had a month that ended in the green? Novermber of 2001! There has not been one this year at all! Dispite this, most investors are still more afraid of missing the much hyped bottom than of going broke. Speaking of the bottom feeders, however, you do need to be on alert for upside. We are very oversold and at multiyear support.

    Concord Communications (CCRD): The stock lowered its guidance for the third quarter last night. It has rallied to a higher high and was attempting to make a higher low on the daily chart at support. Look for buying opportunities.

    ***Xilinx Incorpoarated (XLNX): The stock was downgraded by Merril to NT Neutral from NT Buy (anyone know what the "NT" means?). The stock is at strong weekly support and could form a double bottom here. Look to buy on strength.

    MicroMuse (MUSE): The company expects Q3 revenues to come in at $35 million as opposed to previously expected $38.3 million. There is a possible double bottom on the weekly chart. Look for buying opportunitis on strength.

    Bob Evans Farms, Inc (BOBE): The company reaffired guidance last night. The stock is fairly extended, look to short weakness.

    Brinker International (EAT): Upgraded to strong buy at Lehman Brothers this morning. Look to short on weakness.

    ***MBNA Corp (KRB): The stock was upgraded to hold at CIBC. The daily and weekly charts are very weak suggesting shorts. Look for shorting opportunities on weakness.


    Each mornning before the open I will post a list of several stocks that have a news catalyst that could move them, and technicals which might support a move against the "logical" direction given the news.

  2. Bono



    Very good post I should say. I like it when people use their brains to filter available news and combine technicals with fundamentals in search for better trading decisions. I guess I'll be the first addict of your new thread :)

    NT = Near Term I suppose ?

    Also, in your post did you mean to say in brief something close to "buy the rumor, sell the news" ?
  3. Brandonf

    Brandonf ET Sponsor

    Level3 Communications (LVLT): Warren Buffet has invested a whole $100million (out of about a $50billion net worth) in the Omaha based telecomm. The stock is at a nice area of support, so I would be more likely watch for upside than downside in it. Watch how it holds its gap.

  4. Brandonf

    Brandonf ET Sponsor

    Cobalt Microelectronics (CCMP): Barrons was talking trash about them this weekend. Said short sellers have a case that its high margins in the slury business are in trouble because some day someone will compete with them. The stock is at a very strong area of support. Look to buy strength.

    Manpower, Inc (MAN): Upgraded by Merril to buy from market perform. The company is in a downtrend (though it is at weekly support). Fridays strong rally occured on practically no volume at all (even for a holiday that kind of move should have attracted more volume) causing me to be suspicious of the upside. Look for Oops type shorts on MAN, or short any weakness if it does not gap up.

    Stillwell Financial (SV): Merril comes out with caustious comments about many of the names in the financial sector including SV. The stock is at a nice double bottom area on the weekly chart. Look to buy on strength.

    Abgenix, Inc (ABGX): Morgan Stanely has started coverage with an underwieght rating. Though there is no "real" technical setup per say the stock is extremely stretched to the downside, and such stocks tend to snap back provided a catalyst. Look for buying opportunites.

  5. Brandonf

    Brandonf ET Sponsor

    ***Overture Services, Inc (OVER):*** Goldman has raised earnings esitmates on the stock. It is forming something of a daily and weekly bear flag. Additionally it was one of the only names in tech that did not participate in Friday's rally, suggesting a good degree of relative strength.

  6. Bono


    That could very possibly be an Island Reversal on XLNX.
  7. Brandonf

    Brandonf ET Sponsor

    I will just throw this one in here while I'm giving setups. The play of the week is a Swing/Position Trade that I send out every Sunday to the world.

    Huntington Bancshares (HBAN) is in a nice weekly uptrend. Over the last several weeks it has pulled back to an area of price support, this often leads to buying opportunities. Over the course of the last several days the stock has traded in a mostly sideways manner, this resting period will often occur before breakout moves. Look for buying opportunities in HBAN.
  8. Brandonf

    Brandonf ET Sponsor

    Mentor Graphics (MENT): The company has lowered Q2 Guidance, saying that they expect a loss of $0.40 per share. The stock has a nearly perfect double bottom forming up on the weekly chart. Look to buy on strength.l

    That'll be it for now. I will post more tonight. Good luck today. Expect the general action to be back and forth.

  9. Magna

    Magna Administrator

    Don't follow your commentary above. How does not participating in the rally indicate good relative strength? I'll assume you meant the opposite.
  10. Brandonf

    Brandonf ET Sponsor

    I guess thats an example of me using a term in a non std. way, coz I have all kinds of questions about it :). I should have called it relative weakness....but what I mean is that the downtrend is showing that its relatively strong.

    #10     Jul 8, 2002