Stocks to Watch for Wednesday, March 11, 2009

Tuesday’s Recap:  What a reversal of fortune!!  If we can string up a few more days like this …. I sure can dream of retiring!  It was a “hard to lose” day.  Pick any stock, it probably closed up.  If any one did not have a winner today, they need to check their stock picking skills … I’m serious!!

The markets were due for a bounce after such a prolonged over sold condition.  The time was ripe for some good news that the bulls could pounce upon!  It came from the City CEO Vikram Pandit before the markets opened.  He gave some rosy picture for City.  Who cares for the details!!  It was good enough for the banking stocks to rally!  Then came more news.  Congressman Barney Frank announced that SEC may consider bringing back the up-tick rule as early as next month.  Also, in the background, many traders were weighing on congressional committee meeting later this week to support temporarily relaxing the mark to market accounting rule for banks.  Race for short covering started in earnest providing more fuel to the rally as the day progressed.  This is the kind of day the TaurusTrader has been patiently waiting and ready for (please read my earlier blog, Week Ahead, March 9-13, 2009).

All three major indices saw substantial gains.  Dow ended up by 379 points (5.8%) to close at 6929, and Nasdaq fared even better picking up 90 points (7.1%) to close at 1358.3.  S&P rose by 43 points or 6.4% and closed at 719.6.  It was probably more than a short covering or dead cat bounce rally.  There was some indication of conviction buying.  The volume on NYSE was over 2 billion, which was higher than recent average volume.  Gains were wide spread across sectors.  Over 97% of S&P members advanced, and all 30 Dow components ended in green.  So, there could be more leg to this rally!

TaurusTrader had a great day with both swing and day trade picks.  WFC and JOYG hit their profit targets within 24 hours for 29.2 and 8.3% profit, respectively.  Four stocks triggered their ‘buy limit’, hence were added to the portfolio today.  They were - CPRT (added at $27.60), WDC ($15.30),  SOHU ($46.17), and MS ($19.70).  MR was dropped after being on the ’buy’ list for 3 days without hitting the entry price.    Current swing portfolio holds 5 stocks,  BMC, CPRT, WDC, SOHU, and MS, along with two options, WDCDV (WDC April 12.50 call) and BIGCC (BIG April 15 call).

Our day trade picks for Tuesday also had a phenomenal day.  The financial picks – BAC (up 37.6%), WFC (up 23%), and UYG (up 28.5%), and Ag sector picks, MON (up 6.5%), AGU (up 8%) and IPI (up 9.6%) provided ample day trade opportunities. 

Picks for Wednesday, March 11, 2009:  I would keep a close eye on banking stocks, specifically – BAC, WFC, and MS.  They were already gaining from where they left off at close, in the after market hours.  Wednesday may see some more substantial gains for these stocks.  Energy, shipping, technology, mining, and ag sector stocks are also of interest.  I would focus on HP, DSX, MELI, IPI, AGU, and JOYG for any day trading opportunities.

Also, I would like to add the following stocks to TaurusTrader swing portfolio:

1.  DRYS – Buy above $4.65, Target $6.50, Stop $3.95

2. MBT – Buy above $28.35, Target $33.10, Stop $24.30

Good luck trading ….

TaurusTrader

http://www.taurustrader.wordpress.com

Watch List for Friday, March 6, 2009

Thursday’s Recap:  So much for that one-day rally on Wednesday …. Things got back on to the downside in a hurry today, recording 5 down days out of past 6 trading sessions.   Historic record for lows kept falling  with both Dow and S&P.  Nasdaq barely closed above November 21, 2008 low.

Bad news were abundant – survival of GM in question, continued worries with GE capital, City trading like a penny stock, banking sector woes getting worse and now spreading to somewhat healthier banks, poor jobs data, deteriorating housing value and mortgage crisis, confusion abound from law makers, Obama administration still mum on banking solution, disappointing news from China on additional stimulus, market wizards on CNBC huffin’ & puffin’,  etc etc etc.  Hardly anything positive.  Result – another day of bloodshed on the street and end to yesterday’s sucker rally. 

Even though the decline was wide spread across sectors, the financial stocks were mercilessly clobbered.  JPM and WFC recorded multi-year lows and City now trades like a penny stock.  The disappointing news from China on additional stimulus did not go well for Basic materials, transportation, energy, and shipping stocks.  They lost way more than what they gained on Wednesday on the heel of positive rumor. 

Dow closed at 6594 (-4.1% or -281.4 points), S&P at 682.5 (-4.3% or -30.3 points), and Nasdaq at 1299.6 (-4.0% 0r 54.1 points).

None of our picks for Thursday (JOYG, MS, MR, SOHU and WDC) triggered.  But, some stocks on watch list had a decent day.  BKE, WMT, and ADBE had nice gains.  We were stopped on PALM (-7.7%).

Picks for Friday, March 6, 2009:  I do not have any stock picks for Friday.  It is too risky to go long before the release of unemployment numbers.  Market is extremely jittery and full of negative sentiments.  DEFENSE is the name of the game.  I still believe that the selling is overdone.  There are a bunch of ‘good’ stocks that got punished unfairly along side some deservedly bad ones.  Sanity will prevail and these stocks will get positive attention eventually.  I’ve PATIENCE, I’ll wait.  I have some defensive plays in the mean time that might pay off while we wait …. I’m going to suggest some ‘option’ plays that would allow us to risk a lower capital.

1.  Buy BIGCC April 15 Call on BIG for $3.00 or less.  Unwind the position if BIG drops below 14.90 by April 3.  Thrifty discount retailer BIG reported great earnings yesterday.  The stock responded well to the report, and it closed at $17.04 today.  The option premium is relatively cheap.  And, there is a good potential for upside move.  My target is 70% before April 3. 

2.  Buy WDCDV April 12.50 call on WDC for $3.oo or less. Unwind the position on April 3 or earlier if WDC drops below $12.50 or you have 100% profit.  The option premium is relatively cheap. WDC closed at $14.50

You may want to look at NLY.  The stochastics on this stock is very oversold.  There is some level of support around $12.00.  NLY closed at $12.50 today.  It was in the positive territory for most of the day before losing steam just before the close.  NLY yields a hefty 15% annually or around $0.50 a share per quarter.  Best strategy is to buy the stock, and write “out of the money” covered call option - collect the premium, and collect that hefty dividend, while you wait for the stock to appreciate. 

Good luck and have a great weekend ….

TaurusTrader

http://www.taurustrader.wordpress.com

MS hit the target of $22.50

MS has hit our target of $22.50 for a profit of $2.35 or 11.7%.  If you remember I mentioned this trade on Monday (Stocks to focus – Monday 02-23-2009 blog). 

MS is one of my favorite stocks to day trade ….. It is also a good candidate to write covered calls …. it is just a great ‘stock’ for me.  It is one of those stocks that keeps on giving profits over and over in multiple ways.

Happy trading ….