Week of Oct 29th Shopping List

You have to have a list, otherwise you end up buying under-researched junk! (I may buy one or two items from this list early Monday( like PG), and wait for pull backs (like for YHOO and DSX I certainly wait), These are not suggestions to others, I am just documenting what I am considering and what I have looked at this week-end.

UPDATE 10-30-07: SCHN, PG and X are off the list,
BOUGHT: YHOO Dec 35 Calls at $0.93, ACI Nov 40 Calls at 1.95 and DSX Nov 45 Calls at 2.45, MOS Nov 70 at 3.20

Is YHOO turning around?

was up more than 7.3% on Friday Oct 26th, with 2X normal volume. The stock is acting a lot better after their earning announcement, and they are in the same space as Google and Bidu (The Advert. sector). This group is also seeing positive money flow after being out of favor for long. The speculation was high on Friday as well the Jan 40Calls was traded over 170,000 contracts and it shows lots of optimism that YHOO could be following the foot-steps of you know who in the same sector, they close at 33.63 (a new 52 weeks high), As people of this blog would know by now, I pay extra extra attention to 52-weeks hi list (and 52-weeks low for short candidates), So I think the break over 32 was significant, and must be paid attention to.

Update on some recent trades

GME: Sold (Closed position) Nov 60 Calls at 1.90 (about 35% in one day), Closing this position is not because of I lost hope in GME in one day. I just needed to register a win.
After taking losses on NVDA Long and KMX Short positions. Although KMX maybe still a valid short. I also did a Day trade on MTG (did not post that trade) Bought Nov 17.5 PUTS at 1.50 sold the next day for 2.20 (of course after I sold it went up to 2.80). I also bought PMI Nov 17.5 PUTS on 10-26-07 at 1.35, PMI went up more than 3 dollars today some optimism after CFC earning announcement (CFC claimed that they see a turn around), Well after all these loses, I am not going to trust their judgment and still think, we will have more bad news. So I use the rallies as selling opportunities. I bough PMI puts toward the close of the market so I did not pay much for the puts , but I should have waited at least a day or two and let the short rally go on, so I could buy more puts at a cheaper price.!

Another Dry Bulk Shipper (DSX)

Could this one be the next DRYS? Diana Shipping Inc (DSX), another Dry bulk shipper with high growth and trading at discount to its next year earning. The Water transportation is still strong and Dry bulk shippers are the sector leaders. Cramer mentioned this stock and was very bullish on the sector and its growth potential. Those who have read my postings, may recall my trades when DRYS was at 70 and 80 dollars range after that I could not find any good entry point (no meaningful pullbacks) and DRYS is in 123 range now. I was hopping the " Cranmer effect" ware off soon and I get a comfortable entry point, but couldn't find one yet. Last Monday the group and DSX took a breather and I hope they do that also this Monday as well. I really hope to see this stock below $40 before buying call options. Maybe Dec 45 Calls (its about $3.00 now).

Used Pullback to bye GameStop (GME)

I was doing my search off of 52 weeks low and high last night and came across several stock off of their 52 weeks high (ready to move even higher), I am also sharing some of my homework with you, this is a 32% growth stock trading at discount comparing to its next year earning (Got the data from Yahoo finance), so I used yesterday's pull-back and 30Daya MA support as an entry position into this stock. Bought Nov 60 calls @$1.40 (Gamestop Corp. GME). Stock is around $56 and went up $1.2 after Jim Cramer mentioned it on CNBC . This could also have a short term effect to help the stock to break the $60 resistance level.

Looking into Shorting these, I tell you why

I may add more text on this subject but for now just wanted to look at these charts and point out the unusual option activities on these stocks. I certainly do not have the right tools to search and spot stocks with heavy volumes and unusual option trades. I have accidentally encountered the following two situations and wanted to share with you. My interpretation of the high volume option trades is, someone is putting a large bet and maybe knowing or hoping there is more down-side in the stock. In general I think this market correction is short term and bull market will very well resume after this correction. So for longer term I am looking for good stocks from my shopping list and if their individual stories are not changed, I will by them soon. But one thing I can not take a pass on is , stock which gapped-down with heavy volume, and warned investors in their conference calls (this mostly applies to SLB).
SLB Dropped more than $12.30 on Friday (11%) and KMX down 4% on Friday market close.

Schlumberger : SLB Nov 100 Put traded at $4.65 (Up 287%) On Friday Vol.: 6482 Carmax: KMX Nov 20 Put traded at 0.75 (Up 57%) On Friday Vol.: 5286

I am looking into buying puts on SLB and buy puts on KMX (If it can not hold the $20 support)

Put NVDA on your radar screen

Strong chip demand/growth confirmed by Semiconductor giant (Intel) yesterday, Nvidia Corp (NVDA) gapped-up and breaking the trading range with heavy volume, make me think that this stock is ready to move higher. I wait till Monday or Tuesday of next week to buy. I think we may get a pullback after option expiration on Friday, many tech. stocks had a great run, waiting for them to catch their breath, and buy them then.

UPDATE: Semi's do not look good now, Exited this position with 40% loss. Some analyst has a SELL rating on the stock and as a short term momentum play, I had to take a loss and move on.

The week ahead, earning reports etc.

Big names like Coca-Cola (KO) UTX , Caterpillar (CAT) reporting this week and I will be buying some Nov. options in anticipation of great earnings and their exposure to foreign markets, their earned income from rest of the world should translate into big surprises in US dollars. Also noted that Pharmaceuticals were rising for the past two weeks, and performing very well. Looking into BIIB, DNA, GILD, GENZ and particularly Alexion Pharmaceuticals (ALXN) after initiated with Buy ratings in Oct. and price target as high as $85. As John Murphy noted in his article to his subscribers; "AMEX Biotechnology Index (BTK) trading over its spring high. Its relative strength ratio has been rising since late August." The article also points out, GILEAD BREAKS OUT - BIOGEN TESTS MAJOR TREND LINE, GENZYME HITS NEW 52-WEEK HIGH.

My favorite tech. stocks did not pull back (enough) so I will be watching them, but can not get in before seeing some correction in Oct. , in Nov and Dec. I will be trading them on their way up.

As for trading GLID and ALXN (I will be waiting for some pull-back, as both stocks hitting new 52 weeks high for the past 4 trading sessions. For KO, UTX, CAT probably execute them in the same time frame early on Monday.

Buy them when they Pull-back, ok we're getting it

After a huge rally in the market we saw a reversal (at least for a day), maybe it continues for a few days and with Oct. option expiring next Friday, there will be a volatile week ahead of us, remember we are just seeing the other side of the momentum plays (the down-hill) so What are some good names to buy. I would look into the top performer in the NASDAQ and Some names in Financial sector to Buy (Investment bankers not money centers like Citi):
I would be buying:
[RIMM ~96] [ AMZN ~82] [ AAPL ~145] [ GOOG ~590 ] [ BCSI ~39 ] [ GS ~205]
[MA ~150] ("You gotta charge it", No matter where you shop, either at store or on the internet, MasterCrad seems to profit either way) I am biased toward more drop before getting encourage to buy. In the OIL sector I really like XTO its at $65 now, if it gets to 60-62 range, I will be a buyer.

On the SHORT side either shorting the markets (Buying Ultra Short Dow 30 DOG or Nasdaq Ultra Short QQQ QID)
Or pick a momentum stock like BIDU , buy puts and sell the puts on Monday for a quick cash. I also look into the stocks with disappoint earnings or negative outlook, they will be punished more heavily in the volatile market. Two specific names:
ATI ( 106.65 went down 10.3% after the market close) and FAST (44.75 down 5.04 with 4 times average volume).

Second Wave is coming

I have been waiting for some sort of correction or pull-back in over-all market for the past 3 weeks or so, meanwhile tier 1 leaders rallied and now rest of the market will follow. S&P500 shows strong and clear sign of the longer term rally on its way and as a sign of a typical strong and sustainable rally, the leaders lead and the rest will follow. As an example look at technology stocks, APPL, GOOG, RIMM, AMZN and GRMN are way up .. and now AKAM and BRCM (2nd tier techie's) are following. My take is that, those how loaded up tier 1 are now looking for opportunities in lagger stocks and look for any positive sign (and at least in the absence of the negative outlook) to buy stocks in leading sectors. Even in sectors which were hurt by housing market crises and finance, and retailers are coming back. One stock I would like to single out here , thats CAT, with good exposure to foreign market (and week dollar) their earning should be good and their AG. business side should do very well too, but they were pulled down by th erest of the housing and construction stocks. On tier one technology stocks or those in the top 5 percentile of the market the pull-backs are terribly short and hard to catch up. 3 weeks ago I wrote about DRYS looking good at $80 and should be bought on a pull-back. Well pull-back never happened, it gained 10 weeks every week and even this morning went up close to 6 points (its about 106 now), I personally did not have the courage to buy DRYS now .. But certainly looking in stocks which went up and now are moving side ways or slightly down. Remember my argument is the market trend is positive and the lagers or those stock which are catching their breath, will go up soon. I will through some charts but you can look up the details in many financial sites like Yahoo finance yourself.
In Oil sector: XTO, APA and VLO, On the comparison chart you can see VLO is trying to catch up while XTO and APA are leaders which are moving sideways and are well positioned to resume their rally.
Technology: AKAM and BRCM are showing eagerness to move higher, I like to mention 4% jump in the stock of Sun micro (JAVA) its about $6.05, a friend of mine mentioned that to me about a 5 weeks ago (when it was below 5) and I told him I hardly trade stocks under $20, since I am looking at option-able stocks which are 20 or higher. The rally in tech stocks is certainly not over, leaders still lead, and many stocks like the ones I mentioned that are breaking away from their trading range.
Retailers: Sears Holding SHLD and Best Buy BBY.
On the short side I should be able to find more candidates (I wish I had a position in NTRI , I did not catch any of its $16 drop, its too late to short now, this stock should be doing well in the Q1 of 2008 (after holiday season) anyway, back to the current short candidates, I am looking into buying puts (side note for those who thought buying puts on NTRI mean, buy the stock: buying puts is the equivalent of selling short and capping the risk) in NIHD ( Nii Holdings Inc) its $69.59 (down 4%0 today, it went down significantly in the past 4 trading days (from 83 to 69 with heavy volume). 1.55 Million share sold by insiders in the past 6months, while the stock was moving up and hit the 52 weeks high at $90. The sector (Communication equipment) is not in a bad shape at all, usually I want the sector show signs of money moving out, but its not. --Happy Trading

ps: Read a nice posting on http://tomorrowsnewspaper.blogspot.com/2007/10/can-synaptics-hold-ground-here_06.html
on SYNA, stock went up more than $2 today and I have a small position (Call-side) , I think this stock is also fit the definition and should be bough (gradually, hoping a small pull-back)

LONG Candidates:



SHORT Candidates:

My APA Trade Confirmations

On August 23rd I posted a note on APA and on 24th I bought PUTS, I closed that position 4 days later with a 44.8% gain. After that turned bullish on Oil (bought calls on GRP, MDR, XOM and puts on BP), Couple of gentlemen in Google!Finance discussion group questioned my claim to actually made money on APA puts after my posting on August 24th, here are the confirmations for those trades.