Stocks to Focus for Tuesday, 03-03-2009

Monday’s recap:  First day of trading in March began on a wrong foot.  Major averages ended in deep red for four straight days.  Navigating this market is like  ‘chinese water torture’.  You know you are going to survive, but never know when the suffering ends …. you wait, wait, and wait in agony! 

Monday’s losses were very steep and wide spread.   All 30 Dow stocks declined, over 98% of S&P components ended in red, so did all 10 groups of S&P .  There were no places to run, and hardly any place to hide.   Dow shed about 300 points (4.2%) to close at  6763, and Nasdaq lost a hefty 55 points (4%) to close at  1323.  S&P took a haircut by 35 points (4.7 %) and closed at 700.89, a level not seen since October, 1998.  Crude lost 11.6% to end at 40.15 dragging the energy sector down by 6.4%.  Financials (6.8%), materials (6.9%), and industrials (6.4%) also saw deep losses.  Even gold, considered a safe bet,  fell 0.3% finishing at $940 an ounce. 

The largest corporate loss in US history in a quarter of over $60 billion by AIG spooked the market and intensified the fear about the health of financials, again.   Basically, AIG lost over half a million dollars a minute during the 4th quarter.  Unbelievable!!! Uncle Sam decided to inject another $30 billion in to AIG hoping to stem the bleeding.  There was also bad news from across the pond with another banking giant HSBC reporting lower profits, and announcing drastic measures to bolster its books.  These followed the news late last week of Uncle Sam’s decision to own 36% of Citigroup and drastically diluting the City common shares.  Bad news after bad news is hitting  nation’s biggest  financial institutions real hard.

Monday’s economic data failed to inspire investor sentiment.  January personal income and spending were better than expected. The February ISM Manufacturing Index was also a couple of points better than expected and came in at 35.8, up slightly from 35.6 in January. Even though the  reading remained below 50, there’s a slight indication that the rate of contraction has slowed. 

Regarding TaurusTrader portfolio, we got stopped out of UYG (-12%), and CMG (-6.5%).  As of Monday, the portfolio holds PBR and BMC.  We came close to adding ORBC, but were not able to add any new stocks today. 

Stocks to focus for Tuesday, March 3:  The market is broiled with extreme pessimism.  Even, Warren Buffet expressed pessimism for markets through 2009 in the newsletter sent to his share holders.  Traders will be watching the all important S&P at 700.  If S&P breaches this all important round number, there’s no support in sight till the next round number at 600.  Traders will also be watching the release of January pending home sales data tomorrow morning. Fed Chairman Bernanke will testify on the U.S. economy and budget before the Senate Budget Committee tomorrow.  Also, the Treasury Secretary Geithner is coming out of hiding to testify before the House Ways and Means Committee on the federal budget.  I hope that these two will provide some “ray of hope” for the markets to latch on.  I’ll be keeping my fingers crossed! 

I’ll be watching to add the following equities to TaurusTrader portfolio:

1.  PALM – enter above $7.70, stop at 7.00, target $9.25

2.  THRX – enter above 14.48, stop at $13.60, target $16.65

Bear market rally is possible at any time with a whiff of any good news.  During and after testimonies by Ben Bernanke and Tim Geithner, the financials may take wide swings and provide some opportunity for profitable day trading.  I would prefer WFC, BAC, and MS.

I’ll also focus on some retail stocks – ARO, BKE, FDO, and BIG, heading in to same store data to be released later this week.

Please do post if you have comments or questions ….

Have a great day!

TaurusTrader

http://www.taurustrader.wordpress.com

STOCKS TO FOCUS – Wednesday 02-25-2009

Tuesday’s recap -What one single person can do to the market confidence?  Quite a bit indeed.  It was Helicopter Ben’s 4-hour long testimony on monitory policies to senate finance committee that brought some excitement and positive sentiment back in to the market, at least for a day!  Gosh … it was sorely needed.  I believe this excitement should continue for few more days.  President Obama’s address to joint congressional members should also help calm the jittery market as more details on economic stimulus and banking sector stability plans start emerging.  I listened to the President’s speech.  I liked the rare upbeat tone of our president. 

Almost all sectors ended the day in positive territory, with the exception of Gold and Gold stocks.  Dow picked up almost every point it lost on Monday to close at 7350.94 (+3.32%).  Nasdaq went up by 3.9%  to close at 1441.83, and S&P jumped 4.1% to 773.14.  Even though the overall trend is still bearish, it was definitely a good day for bulls.

Our picks had a nice day too.  We achieved our targets with 2 picks – C and SWHC.  I sold 50% of C at 2.53, my first target for a 24.6% profit in less than 3 trading days.   SWHC was even better.  I closed SWHC at $3.75 for a 30.7% profit within 24 hours.  Our day trade picks UYG and MS had a phenominal day with over 10% gains.  Other picks – DRI, CMG, ATHN, BMC, gained a little or stayed flat.  SVR did not hit the ‘buy limit’, hence was not bought.

At the end of Tuesday, I have the following  positions still open that I discussed in the blog - C (50%), DRI, CMG, ATHN, BMC, UYG, and MS. 

Picks for Wednesday - I expect the positive momentum to continue with the financials.  I’ll ride my financial picks – C, UYG, and MS with tight stops.  Will also consider WFC and BAC for day trading, with a profit target of 5 to 10%.   Technology sector started to pick up some momentum toward the end of the day on Tuesday.  I’ll be watching some technology stocks like HPQ and WDC, and also our Tuesday’s pick  BMC. 

As I said earlier, there were some positive ‘stimulus’ for the markets in President Obam’s speech.  Infrastructure, cutting edge technology, financials, and education, especially those that provide educational loans - are the beneficiaries of Obama’s plan.  I do not like infrastructure plays at this point.  I already have some financial and technology stocks in my portfolio.  I would like to focus on ‘educational loan’ companies like STU and SLM and see how they react tomorrow.

Following are my picks for Wednesday, February 25, 2009

1.  PBR – Buy above 27.05,   Stop at 25.00,  Target 30.50 ( you could also write March 30 calls, and collect some premium)

2.  MELI – Buy above 14.90,  Stop at 14.50, Target 16.80 (Earnings play and a possible day trade candidate)

3.  ADM – Buy above 28.50, Stop at 26.50, Target 34.00 (somewhat volatile)

4.  SVR – Buy above 15.80, Stop at 14.25, and Target 19.00 (Pick from Tuesday, 02/24/09)

Stocks on the radar – MON AGU IPI SLM STU HPQ WDC.  I’ll let you know as soon as I spot any trading opportunity with these stocks.

Have a great Wednesday …. and happy trading.

TaurusTrader

STOCKS TO FOCUS – Tuesday 02-24-2009

Monday’s recap - It was another brutal day for the market with Dow losing 3.4% closing at 7114.78 (-250.89), Nasdaq lost 3.71% ending the day at 1387.72 (-53.51), and S&P was chopped by 3.47% closing at 743.33 (-26.72).  The bank nationalization fear which haunted the market all of last week appeared to have ebbed, and therefore, the financials performed somewhat better than the overall market.  However, there was bloodshed in most other sectors, notably agriculture, mining, energy, and materials. 

It was a mixed day for our picks.  The day started off promising, and all our picks had a good momentum early in the day.  However, as the day progressed, a couple of picks stated sagging a bit.  MS, DRI and CMG ended the day better than the overall market with less than 3%  decline.  UYG surprisingly lost about 7%.  C and SWHC ended in solid green with a gain of over 10%.  C at one time came very close to our first target ($2.53), and was up over 25% or as high as  $2.48.

Picks for Tuesday - I expect the financials to pick up a little more steam tomorrow.  JPM came out after market close on Monday and announced a 87% cut in the dividend to preserve capital, and also expressed a desire to payoff the TARP money as soon as possible.  It looks like the market liked this announcement.  JPM was advancing in after market hours as I write this post. 

I will be watching all my picks from yesterday – C, MS, UYG, SWHC, DRI, and CMG, and follow them with tight stops.

For Tuesday, my picks are -

1.  ATHN – buy above 34.32, Target at 38.00, and Stop at 32.20

2. BMC – buy above 29.46, Target at 32.00, and Stop at 27.49

3. SVR – buy above 15.80, Target at 19.00, and Stop at 14.25

My day trade picks again are the financials – C, WFC and MS.

If there are questions, please do post ….

Have a good trading …

TaurusTrader