Stocks to Watch for Friday, March 27, 2009

Thursday’s Recap:  Another great day at the market!  All three major indices finished solidly positive.  Dow ended the day up 175 points to its highest level in six weeks.  Dow has gained nearly 21% since close to hitting a 12-year low on March 9.  Nasdaq has now erased all losses for 2009 and is now back in black.  AMAZING!  Dow, however is still down 9.7% for the year.

Mainly 3 factors contributed to today’s rally. 1) Better than expected earnings and future guidance by retail giant BBY, food processor CAG, and soft drink company DPS – relaying the fact that the consumer spending is still intact, 2) Contrary to yesterday’s disappointing auction, today’s auctioning on long term debt was received with enthusiasm, lifting the fear  about the government’s ability to fund its economic stimulus and financial bailout programs, and 3) shorts got squeezed and forced to cover some of their positions.  Stocks have been aggressively shorted during the market decline  and the short interest had risen 11% by mid March.  Enormous amount of sideline money is slowly venturing to get back in to the buying mode.

Economic data (GDP and unemployment) were not great, but the numbers came within forecast.  Hence, did not have major impact on markets. Tim Geithner appeared very confident and handled questions with ease in his testimony to the house finance committee.  Markets and for that matter the congress, are becoming comfortable with our new treasury secretary.

When the closing bell rang, the Dow had gained 175 or 2.3% for the day and it closed at 7925, its highest close since February 12.   The S&P500 index rose 19 points or 2.3%, to 833, and the Nasdaq rose 58 points or 3.8%, to 1587.  Gold prices also rose modestly.  Oil reached a new high for the year, settling up $1.58 at $54.34 a barrel.

Today’s gains were widespread as all 10 major sectors in the S&P 500 closed the session higher. Contrary to recent form, the gains came without leadership from the financial sector.   The dollar is stabilizing and it rose marginally against other major currencies.  This brings to the comments I made last Thursday, when dollar took a dive after fed announced a trillion dollar infusion to bolster economy.  Here is what I said: 

Is Dollar Worry Over Blown? -  ……. In my opinion, the dollar related reaction to fed decision is a little over done.  US economy is still the strongest economy in the world despite all our problems.  Dollar is still the dominant currency.  People who are squabbling over greenback, should just look back a little.  Just 6 months ago, EUR/USD pair was trading at over 1.60.  Now, when it jumped from 1.30 to 1.35 or so, all hell breaks loose!  ………………………  So, relax folks.  A slight decline in dollar is not the end of the world as the dooms day pundits like Larry Kudlow and his friends on CNBC rant about.  The dollar is already stabilizing against the Euro and Yen as I write this blog around mid night.

That was last Thursday …. Friends, how true that statement turned out to be.  … PATIENCE …. Patience is what we need to navigate this market.  Do your home work and do not be swayed by hype!!

TaurusTrader swing portfolio had a superb day.  MELI was closed out for 13.5% profit in two days.  All positions, except BAC advanced.  TCK. MBT and WNR are very close to hitting their profit target. 

It was not a bad day for day trading.   There were opportunities to trade for 3 to 5% profit with  TNA.  Rest of the picks did not pan out well.  As discussed before, I use 10-min chart to determine entry and exit points.

Picks for Friday, March 27:  President Obama and Treasury Secretary Geithner will be meeting with banking industry CEOs to discuss on banking crisis, bailout money, toxic assets, and regulations, etc.  Any post meeting snippets from participants may have some impact on financial sector stocks.  Friday’s economic data releases include, Personal Income ( Expected: -0.2%), Personal Spending (Expected: +0.3%), and U Mich Sentiment Index (Expected: 57). 

Even though I’m very tempted, I do not want to add any new position to swing portfolio.  The current portfolio of 11 stocks is well diversified, and a few positions are very close to hitting profit target.  So, I’ll wait till next Monday or Tuesday to add new positions.

For day trading, I’ll focus on financial, technology, energy, ag and commodity sectors for trading opportunities.  Some of the specific stocks that I would be following are – FAS, TNA, DUG, MOS, and JOYG.

If there are questions or comments, please do post. 

If you are interested in receiving my posts directly via email, please email me at –  TAURUSTRADER@SBCGLOBAL.NET  or click on the ‘comments’ below to request.  I can do the rest!!

Happy trading ….

TaurusTrader

http://www.taurustrader.wordpress.com

Stocks to Focus for Friday, March 20, 2009

Thursday’s Recap:  Rally faltered a little bit.  Markets declined for only the 2nd time in 8 days.  Financials lost steam and took the major averages down.  It is probably a good thing.  Banking sector had gone up too far, too fast.   XLF has been up over 60% in less than 2 weeks.  Some cool off was overdue.  XLF ended the day losing about 8%. 

Dow shed almost all the gains it made yesterday by losing 86 points or 1.2%, and closed at 7401.  Nasdaq lost 0.52% or 7.74 points to close at 1483.5, while the S&P 500 declined by 1.3% or 10.3 points to 784.

So, technically speaking…. looks like 50 day MA is the Achilles heel for major averages to overcome.

All three indices are at technically interesting juncture. Dow is 220 points away from its 50 day MA, which it has not crossed since January 7. Dow came very close to taking out 50 DMA on February 9, but it was flatly rejected. S&P has breached 50 day MA for two consecutive days now, but could not close above it.  S&P also has not closed above 50 DMA since January 6th.   Current 50 DMA for S&P stands at 794,  just 10 points away from today’s close.

Nasdaq has however, closed above 50 day MA for 2 consecutive days now.  But,  is barely above (by 22 points) the 50 DMA (1461).   It would be interesting to see whether Nasdaq would be able to hold above its 50 day MA in the next couple of days.

Is Dollar Worry Over Blown? - There were renewed worries about the greenback following yesterday’s fed decision to spend another trillion dollars to bolster economy.  Dollar declined against major currencies for 2 session in a row since then.  Dollar lost 4% against Euro in less than 24 hours.  That’s a big move.  This led to a bounce in commodities and commodity related stocks in today’s trading.  The CRB Commodity Index rose more than 5% (largest single-session advance by percent this year). Crude oil gained 6.5% to close at $51.25 per barrel.  Gold advanced by 7.8% to close at $958.50 per ounce.  Energy stocks (+1.4%) and materials stocks (+1.4%) also rose. 

In my opinion, the dollar related reaction to fed decision is a little over done.  US economy is still the strongest economy in the world despite all our problems.  Dollar is still the dominant currency.  People who are squabbling over greenback, should just look back a little.  Just 6 months ago, EUR/USD pair was trading at over 1.60.  Now, when it jumped from 1.30 to 1.35 or so, all hell breaks loose!  Very strong dollar in the past few months had hurt US companies doing business abroad.  An example is ORCL, which reported a great quarter yesterday.  ORCL beat the street estimate by 2 cents.  Still, ORCL numbers would have been 5 cents better if it were not for a stronger dollar.  So, relax folks.  A slight decline in dollar is not the end of the world as the dooms day pundits like Larry Kudlow and his friends on CNBC rant about.  The dollar is already stabilizing against the Euro and Yen as I write this blog around mid night.

TaurusTrader swing portfolio had a decent day.  AGU and TCK were bought and added to the portfolio.  None were stopped out.  Today’s gainers include – AGU, TCK, BX, MDR, CPRT, +WDCDV, BX, BMC, and WMS.  Stocks – MBT, WNR, and RY shot up at the open, but lost steam later in the day ending in red, along with AMR and FCN.  CPRT, RY and MBT came within just a few cents of hitting the target before retracing!!!

It was just one of those very rare days that I could not find a decent trading setup to day trade!  It is better NOT to trade when there are no trades to be made with confidence!!

Picks for Friday, March 20:  It is a tripple witching day for options.  Expect a very choppy session and the stocks to trade in a wide range.  I do not want risk picking any stock to go long at this kind of market condition.  However, I do want to ‘day trade’ precisely at this kind of market condition, and exploit the market volatility . 

I’ll focus on financial, energy, ag and commodity sectors for trading opportunities.  Some of the specific stocks that would be following are – FAS, WFC, MS, TNA, DIG, DUG, IPI,  AGU, and JOYG.

If there are questions or comments, please do post. 

If you are interested in receiving my posts directly via email, please email me at –  TAURUSTRADER@SBCGLOBAL.NET  or click on the ‘comments’ below to request.  I can do the rest!!

Happy trading ….

TaurusTrader

http://www.taurustrader.wordpress.com

JOYG hits target (8.3%) … WDC and BIG calls up nicely.

Heck of a start to the markets this morning …. Dow is up a whopping 250 points as I write this blog, and Nasdaq up by 60 points.

JOYG has hit our target of $19.50 for a nice 8.3% profit within 24 hours.  TaurusTrader picks are having a nice day so far with nice gains in WDC and BIG call options.

As I mentioned earlier, WFC also has hit our target for a nice 29.2% profit within 24 hours.

Ag stocks on our watch list, MON, AGU and IPI are also up nicely by 4-6%.

Good luck,

TaurusTrader

WFC target hit for 29.2% profit …

WFC has hit our target of $11.30 at the market open today.  Our entry price was $8.75 which triggered yesterday.  It is a nice 29.2% profit in less than 24 hours. 

JOYG was also up nicely – up by over 6% and is alomost close to hitting our target ($19.50).

All banking stocks are up nicely this morning upon City CEO Vikram Pandit’s positive comments.  I expect some nice day trading opportunities in this sector.  Per my earlier blog entry, I’ll be in and out of BAC, WFC, and UYG as when the opportunity arise.  I use 10-minute chart for day trading decisions.

Good luck …

TaurusTrader