Category Archives: Federal Budget

Stocks to Watch for Wednesday, March 25, 2009

Tuesday’s Market Recap:  Profit taking was the game of the day, especially at the open and at the last hour before closing!  This was quite expected after a big market rally on Monday.  Major indices briefly traded positive around mid-day after the testimony by Geithner and Bernanke to House finance committee over AIG issues.  Sellers came out in force toward sessions end pushing Dow down to 7660 or a loss of 116 points (1.5%).  All Dow components, except 3 ended in red.  S&P lost 16.9 points or 2.05% to close at 806, two consecutive days above 800 and also above 50 day MA.   Nasdaq fell 39.25 points or 2.5%, to 1516.

The dollar was mostly higher against other major currencies, while gold prices fell $28.8 or 3% to $923.30.

Oil gained 18 cents to settle at $53.98 a barrel on the New York Mercantile Exchange.

WSM hit its profit target this morning and closed for a nice 19.8% profit (please see my earlier post for details).  All three recommended picks for today, MELI, BAC, and HON, were bought and added to TaurusTrader swing portfolio.  None of the positions got stopped out.   At the end of the day, the portfolio had following open positions – WNR, TCK, AGU, AMR, MBT, FCN, MDR, HNT, RIO, MELI, HON, and BAC.

Among the day trade picks – FAS, BAC, WFC and MS gave great profitable setups.  As discussed in earlier posts, I follow 10-min chart for day trade setups.

Picks for Wednesday, March 25:   I expect the choppy trend to continue throughout the week.  Market movement has become increasingly news driven.  Unless some encouraging news comes out in the next few days, there is a possibility that all the gains made on Monday might disappear!  President Obama in his speech to the nation, in my opinion, spoke well and made a positive case in front of American public  for his policies and budget proposal.   

I made a case for a group of stocks in my blog on March 17.  These stocks are seeing some momentum building.  So, I thought the piece is worth repeating.  This is what I said on March 17 – “There are some positive signs that the economic activities around the word is showing signs of recovery.  I expect companies that make it happen in early stages are expected to benefit immediately, such as copper producers, dry bulk shippers, railway and trucking companies, etc.  Copper price is increasing which generally indicates increase in industrial and construction activities.  Shipping activities involving essential products across globe is picking up.  Further, I also think that Ag seed, chemical, and fertilizer companies will pick up momentum as planting season in North America is about to begin.  These companies will generate more than 60% of their revenues in the next couple of months selling seeds, pesticides, and fertilizers to farmers.  So, I’ll be keeping an eye on the following companies for the next few days” –

  • TCK  – Producer of copper and other metals (TCK is up by over 10% since March 17)
  • SBLK, DRYS – Dry bulk shippers.  SBLK reported good earnings after the markets closed on Monday. DRYS is again up over 10%.
  • ABFS, YRCW, CSX, GBX – Railway and trucking,
  •  AGU, SYT, MON, TITN, ADM – Ag seed, chemical,  fertilizer, and equipment companies
  • WNR, VLO – oil refiners

TaurusTrader swing portfolio is well diversified and currently has 12 open positions.  I do not want to add any more new position until I close some.

I’ll closely watch the following stocks for day trade opportunities: FAS, BAC, and MS.

If there are questions or comments, please do post.

Regards,

TaurusTrader

http://www.taurustrader.wordpress.com

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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

Good Riddance, February …. March on to March.

February was a disaster for markets to put it bluntly. Despite some resiliency at times, any hope for a rebound was dashed in the last week. It was the worst February since 1933. Major averages dropped through a series of long term lows. For the month, S&P lost 10.9% to close at 735.09, and Dow lost 11.7% to close at 7062.9. Dow has fallen steadily (- 38%) for 6 months in a row. However, Nasdaq is still holding the November 21,2008 low of 1295.5, and it closed at 1377.84. For the first two months of this year, Dow is down by 19.5%, S&P by 18.6%. Nasdaq is a little better, but still down by 12%.

It was a bad Friday, the last day of trading in February. Bad news came from all directions. Before the open, news came out that Uncle Sam would own 36% of City (C) effectively diluting current share holder value to just 26% of the company. Then came the worst GDP data (-6.2%) since 1982, indicating a deeper contraction in the economy than originally announced. And, on top later in the day, GE announced that it would slash dividend to 10 cents from 31 cents in order to preserve about 9 billion in capital and to maintain AAA credit rating. This action is the first for GE which had maintained or increased its dividend for 32 consecutive years. This spooked the market even further. 36 companies in S&P have cut their dividends in the past 6 months. Many more are likely to follow in the next few months as companies are trying whatever they can to preserve capital and survive this economic down turn.

Let the “March Madness” begin …. I believe that ‘volatility’ will be again the name of the game. There is still a lot of uncertainty about the direction of the market. Markets are in extremely oversold condition and want to bounce up with any whiff of good news. But, any good news is hard to come by. The political rhetoric in DC is not helping out a bit. It looks like ‘traders’ have revolted against the proposed policies of President Obama’s administration. Market is worried about the sweeping unprecedented changes proposed in health care, education and energy policies. Questions about the health of nation’s biggest financial institutions are still murky despite the government action with City (C) last week. Worries about toxic assets on their balance sheet still plague the markets. Many market pundits are predicting another leg down as a path of least resistance.

March will begin with a flood of economic data in the first week. Expect significant volatility and wide swings within a short period of time as the markets try to digest numbers. Some important economic data scheduled for release during the week are –

Source: http://bloomberg/markets/ecalendar/index.html

Monday – Personal income; ISM manufacturing index; Construction spending
Tuesday – Motor vehicle sales; pending home sales
Wednesday – ADP employment; ISM non-manufacturing; Beige book; crude inventory
Thursday – chain store sales; jobless claims; productivity and costs; factory orders;
Friday – Unemployment and non-farm pay roll; consumer credit.

Apart from these, also watch for Fed chief Ben Bernanke, who is scheduled to appear before senate budget committee on Tuesday morning.

On Earnings front, about 240 companies, including 8 members of S&P are scheduled to report.  

Source: http://www.zacks.com/commentary/10168/Earnings+Preview+for+Mar+2+-+6.

I would be keeping an eye on the following companies –

Monday – ABM, DISH, EGLE, SATS, MDR, POM, SWHC,
Tuesday – AZO, ARD, SSW,
Wednesday – BJ, COST, URS, MATK, MR, PETM, AUY
Thursday – CIEN, CNQ, COO, URBN, WNR, EBS, FTEK, IPI,
Friday – HRB

TaurusTrader portfolio recap – We were very conservative in our picks, as well as in our stops and profit targets. Despite the market downturn, our portfolio had a decent week. As I said before, who cares what the overall market does … we don’t. What we care is how our ‘picks’ do!! Please check my blog entry on February 24 – Is this the bottom … I don’t care, so shouldn’t you. We pick the ‘right’ stock to trade using our research and best judgement. So, because of this philosophy within a short period of time (1 to 4 days), we booked tidy profits with our ‘swing’ picks – C (av. 30%), SWHC (30.7%), MS (11.7%) and MELI (11.3%). We were stopped out of DRI (-8.1%)and ATHN (-6.2%).  We still hold UYG, CMG, PBR, and BMC, which are either up or down by 1 to 3% for the week. ADM and SVR failed to hit our target entry price, hence were not filled.

The day trade picks suggested throughout the week (BAC, UYG, WFC, MS, IPI, SYT, SU, HP, MON, HPQ) provided excellent intraday volatility to pocket any where from 2 to 13% within a day depending on ones entry and closing targets. However, two picks – WDC and AGU did not turn out well.

Picks for Monday, March 2: I’ll be on a ‘holding’ pattern. I’ll monitor my longs carefully, and follow with predetermined stops. On my day trade picks, I will be conservative and at the same time very nimble. In might even liquidate profitable positions even before they hit my profit target if the markets start to turn against me. I’ll protect my profit. If I liked a stock so much, there will be chances to reenter at a later time. If not, there are always other equities with a greater probability for a favorable outcome.

Following equities are on my watch list for Monday, March 2:

Drop ADM from ‘add’ list per my rule. It did not hit the “entry limit” of $28.50 within being on the list for 3 days.

ORBC – Buy above 2.07, stop 1.69, target 2.50 (very volatile, reports on 3/16/2009).
SWHC – will be releasing earnings on 3/2/2009. Would re-enter on a good earnings report.

Retail sector will be in focus next week. RTH had a good day on Friday. Same store data is due on 3/5/2009. I expect, some members of this group to gain some more momentum heading in to the data release. I’ll be watching ARO and BKE. These the two teen retailers have consistently reported good same store sale numbers in the past. I’ll also watch for movements in BIG and FDO, which are looking good technically.

As in last week, Ag and energy sector stocks will be the focus for day trade opportunities. The equities include – MON, AGU, SYT, MOS, IPI, SU, and HP. I would closely follow the crude price when I’m trading these stocks. They tend to move in tandem with crude, especially the ETF’s DIG or USO on intraday basis.

MELI hit our profit target of $16.80 on Friday. The stock is still riding on its earnings momentum. I may consider re-entering MELI above $17.15, to a profit target of 19.25.

As usual, if there are questions, please do post …. Let us help each other profit from good trading ideas!

Please watch out for volatility ….

Wish you a very pleasant and profitable day

Regards,

TaurusTrader
http://www.taurustrader.worlpress.com

Stocks to Focus for Friday, 02-27-2009

Thursday’s Recap – It was a tale of two halves.  Morning session was full of excitement, anticipation, and hope – hope for a reversal.   Markets ignored some very dismal economic numbers.  It was just ready to rally.  It even liked President Obama’s roll out of enormous budget, for about an hour or so.  I even sent out a blog about it in surprise (The President Speaks …. Markets didn’t Panic!!!).  It was all rosy ….

Then it was my fault …. I tuned in to CNBC.  Oh my!!.  There was panic and pandemonium in the studio.  The ‘know-it-all’ all powerful market experts of CNBC were ranting, raving,  arguing emotionally, and throwing sensational tag lines like ‘revolt of the rich’,  ‘class warfare’, ‘war against the wealthy’, etc etc etc.  They were picking apart the budget proposal.  It must have scared the heck out of every living being watching CNBC.   The markets started drifting between positive and negative territories, and firmly ending in solid red.   I may be off a little bit, but it sure looked like the talking heads of CNBC had more clout on the market than the President!!  Dow closed at 7182, shaved 88.8 points or 1.2% .  It was over a 200 point negative turn about for Dow.  Nasdaq was even worse, losing 34 points or -2.4% to close at 1391.5.  S&P was chopped by 12.1 points or -1.6%  to close at 752.83.  S&P is about 11 points shy of November 21, 2008 low of 741.02.  S&P came just within a point of breaking this low on Monday.  It is very critical that S&P hold this low tomorrow and close out horrendous February. 

I’m not completely happy with every thing in the budget either.  But, there are some items in there that can do this country good immediately as well as in the long run.  Some sectors benefit, while there is pain for certain sectors of the market because of dramatic shift in focus.  Health care, drug, and student lending stocks took a beating.  Some of these stocks are down 30 to 40% in the past couple of days (eg. HUM, UNH, SLM, STU). 

TaurusTrader portfolio had a mixed day.  We got stopped out of DRI (-8.1% loss).  Rest of the stocks either had a slight loss or a slight profit for the day.  We were not able to add ADM and SVR which again failed to hit ‘entry limit’.  Based on my criteria (a pick is dropped if it is not filled in 3 days), I’m dropping SVR from my ‘add’ list.   

Picks for Friday, February 27  – It is the last trading day in February, and markets are bracing for worst monthly close in several years.  Markets are running on ‘ raw emotions’, and I’m looking for some sanity to return.  We need some clarity from DC, not just media events by the President.   We still do not have a clear idea on what this administration intends to do to stabilize  troubled banking sector.  Tim Geithner’s ‘stress test’ for banks is ‘stressing’ investors out of patience.  The government’s involvement  is seeping in to trading, and that is not good.  Billions of market wealth is being lost.  I hope this administration is going to realize it soon, and back off from injecting too much politics in to market.

I do not have any picks for Friday.  However, as in the past couple of days,  I’ll keep an eye on the financials – BAC, MS and WFC, for quick day trade opportunity.  If the crude trades up by over a dollar, I may also be interested in looking at – MON, SYT, IPI, HP, and SU.   I do not want to risk holding any new stocks over the weekend though.

TaurusTrader portfolio currently holds – CMG, UYG, ATHN, BMC, PBR, and MELI. 

If there are comments or questions, please do post ….

Good luck trading.

TaurusTrader

https://taurustrader.wordpress.com