Stock to Watch for Tuesday, March 10, 2009

Monday’s Recap:Markets ended lower again, ninth time in 10 days, not withstanding news of multi-billion dollar mega merger in pharma. World Bank painted a very gloomy picture for world economy, and indicated that the world economy would shrink for the first time in 2009 since World War I. It also predicted that the global industrial production would fall by 15% over 2008 levels. Mr. Warren Buffet, the Oracle of Omaha, also painted a negative picture by saying that the economy “has fallen off a cliff”. In the end, it was too much negativity for the markets to shake off. By day’s end, Dow was down by 1.21% or 90 points and closed at 6547. S&P lost 6.85 or 1% to close at 676.53. Nasdaq ended the day at 1268.6 after losing 1.95% or 25.2 points.

There is M&A excitement in Pharma sector. MRK just inked a $41.1 billion merger deal with SGP. This follows two other mega deals between PFE and WYE, and Roche and DNA. Of course, this has sparked rumors about other potential M&As in this sector. This might potentially impact stock price of companies involved in the rumor mill. JNJ, BMY, SNY, LLY, AMGN, and NVS are some names that might buy others or be bought!

Energy and banking sectors gained, while basic materials and technology were losers. Big names like IBM, AAPL, MSFT, GOOG and HPQ ended in red and were a drag on major indices.

Today’s TaurusTrader pick WFC had a great day gaining over 15%. Similarly, from the watch list, BAC also had a phenomenal day (up over 17%). Thursday’s pick, JOYG was triggered and bought today at $18.00 a share. By the end of the day, we were long on WFC, JOYG, and BMC. We also have call options on WDC and BIG.

Picks for Tuesday, March 10: Banking stocks will be interesting to watch. We may see further uptrend through March 12, the date when Congress holds hearing on mark to market accounting practice. The outcome of the hearing will have a tremendous impact on financial stocks. BAC, UYG, and WFC will be on my watch.

Day trade watch list include Ag stocks – MON, AGU and IPI. 

Other than these, I do not have any specific recommendations for tomorrow at this time. But, if I spot any thing, I sure will post immediately.

Good luck trading.

TaurusTrader

http://www.taurustrader.wordpress.com

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