Tag Archives: Mark to Market Accounting

Week Ahead for Stocks – April 6 to 10, 2009

It’s been great 4 weeks for the stock markets which saw 4 straight weekly gains. For Dow, this 4-week gain is the largest percentage gain since 1933.  The gains were widespread.  Nine out of 10 sectors in S&P gained, and the lone exception was health care which lost about 2%.   Nasdaq is now over 2% positive for the year.  There were some good news amidst several negative economic data that market ignored in anticipation that the bottoming process of economic downturn is imminent.  There are still concerns abound, especially with the housing, commercial real estate, unemployment, and of course the banks and their balance sheet.   Any bad news can pull the indices back down to earth easily.

Official earning season kicks off on Tuesday with Alcoa stepping in to earnings confession.  Earnings estimate for major companies have dropped significantly.  More than 70% of S&P companies are expected to post a decline in earnings compared to the past year.  So, the earnings season is a major concern for markets.

Around 30 companies are expected to report earnings this week.  I’ll be watching the following releases closely –

  • Monday:  APOG, BLUD
  • Tuesday: AA, BBBY, MOS, RT
  • Wednesday: STZ, FDO, GBX, SGR, WDFC, SMSC
  • Thursday:  CBK, MTRX
  • Friday: Market is closed for Good Friday.

For details on earnings calendar, please visit:  http://www.zacks.com/commentary/10514/Earnings+Preview+for+Apr+6+-+10

Economic Calendar: Following economic news might have impact on the markets –

For details, please refer to:   http://online.barrons.com/public/page/barrons_econoday.html

  • Monday: Fed Gov. Kevin Warsh speaks on Financial Markets.
  • Tuesday: Red book, Consumer credit data.
  • Wednesday: MBA purchase applications, Whole sale trade, EIA petroleum reserve data, FOMC minutes.
  • Thursday: Chain store sales, International trade data, Initial weekly jobless claims, Import-export prices, EIA nat gas report. Larry Summers speaks at 12 pm.  Money supply.
  • Friday: Treasury surplus.  Markets closed for Good Friday.

Picks for Monday, April 6: Markets have gone up too fast too soon.  No major data releases are scheduled, hence markets will have a calm day to digest past moves.  Weekend news events may influence a positive market open.  Ben Bernanke indicated that the credit markets may be thawing …. this is a good sign.  Also, the European banking giant, HSBC raised $17 billion in a largest ever rights offer in UK, which was well received.

As I complete this post, Asian markets are doing OK, and pretty much ignored North Korea’s Rocket launch and the following world condemnation.

I will keep the following stocks on my radar through out the week for possible inclusion in swing portfolio or for day trading opportunities:

KMB, COP, SGP, WAB, OMC, TTC, UL, HLF, TIE, WLL, MET, SII, HAIN, PTEN, AA, SD, HXL, OIS, EXM, ADM, PBR, SLAB, DRYS, MOS, MELI, FAS, BAC, MTH, IYT, ARO, FOSL, DZZ, and DIG.

If the stocks continue with their momentum to upside, I expect to see considerable downside potential for Gold (GLD, DGP) and Gold mining stocks (XME, GOLD, AUY).  So, watch carefully if you have any gold or gold mining stocks.

I’ll be looking to add the following to TaurusTrader swing portfolio on Monday:

  1. CMED – Buy above 16.48, stop $14.20, target $18.60 (very volatile)
  2. RRC – Buy above $46.04, stop $43.20, target $50.50
  3. OMTR – Buy above $15.01, stop $13.90, target $17.10 (very volatile)

Per my previous post, I’ll not be day trading.  hence, will not provide any day trade picks for Monday.

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

Have a great week and happy trading.

TaurusTrader

http://www.taurustrader.wordpress.com

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Stocks to Watch for Friday April 3, 2009

Thursday’s market recap: Another great day!  Even though it could not hold on to it  at close,  Dow breached 8000 mark for the first time since Febrauary 9.  Nasdaq is now positive for the year!  S&P somehow managed to hold above the critical 833 support level.

The Dow gained 216 or 2.8%, to close at 7978.  It had earlier gained as much as 314 points.  The S&P index gained 23 points or 2.9%, to end the day at 834. The Nasdaq rose 51 points or 3.3%  to close at 1603.

Crude rose $4.25 to settle at $52.64 a barrel, while gold fell $18.80 to $908.90 an ounce.

Traders were in buying mood.   Markets opened up nicely in the morning despite some negative data on jobless claims.  There were again small doses of good data that helped.  Banking sector had a some relief with FASB’s decision to relax mark to market rule on toxic assets.  Markets also liked the news coming out of G-20 meeting in London of heads of states.  G-20 leaders decided to fund IMF over $1 trillion to help troubled nations around the world, and also agreed to formulate stricter global regulation of financial institutions.  ECB lowered interest rate by 0.25%, to bring the rate down to 1.25%.  Factory orders posted a larger increase in February.  This news came on the heels of yesterday’s better than expected data on pending home sales, manufacturing activity and auto sales.

TaurusTrader’s swing portfolio had a nice day.  All 4 of yesterday’s picks – EXP, WDC, HSP, and TNA, were bought, and had decent  gains.

Focus list for Friday, April 3: There are signs to support that this rally may have more ‘juice’ left in the tank to run.  As I said in my earlier posts, small doses of good news have started coming in indicating that this recession has started to recede.  Benefits from innovative plans, at least some, put forth by the new administration appear to slowly seeping in to the economy.   CNBC’s Bob Pisani observed that mutual funds are getting back to the market to scoop up stocks.   Commodity prices are going up.  Copper just made a new 5-month high.  Copper is a good indicator of economic growth.  Similarly the transportation index, which went on a tear today!   I also expect that the Banking stocks to continue their momentum following the boost they got from Thursday’s favorable mark to market ruling by FASB.  RIMM reported exceptional quarter after Thursday’s close, and was up over 20% in aftermarket hours.  Folks, these are some good signs ….

However, we can’t let our guard down.   The optimism could be easily crushed if tomorrow’s jobs report surprise us with lousier than lousy expected data.  Economists predict  a loss of 654 K jobs in March, and unemployment rate  to rise to 8.5%,  from 8.1%  in February.

TaurusTrader swing portfolio picks for tomorrow, Friday April 3 are:

  1. FMX – Buy above $27.08, stop at $24.90, target $30.60
  2. BCE – Buy above $21.77, stop at $19.90, target $24.50
  3. WFC – Buy above $16.26, stop at $14.90, target $19.00

There are no day trade picks for Friday.

Please follow all trades with protective stops. The markets  may be kind to you,  but  it can turn against you any time unexpectedly!

Good luck trading.

TaurusTrader

http://www.taurustrader.wordpress.com

Market Watch for Thursday – April 2, 2009.

Wednesday’s recap: What a way to begin the new quarter … down by triple digits at open and up by over 150 points by close!! Some sense of optimism is slowly building about the economic recovery. Today’s dismal opening was attributed to a couple of factors. News from Asia were not good. China’s manufacturing index came in lower than expected, and Japan’s business sentiment among big manufacturing firms came in at a record low. Further, prior to markets opened, the ADP report indicated a dismal private sector employment condition, a drop by 742,000 in March. This figure was higher than anticipated. So, the markets opened in deep red.

As the day progressed, small doses of good news trickled in, and the markets responded. The next economic reports came in showed a rebound in pending home sales and improving manufacturing activity. Despite massive public protests, there’s some good news out of G-20 meeting. British Prime Minister Gordon Brown said that the G20 was close to agreeing on global reforms for the financial system. This was not expected.

The Dow rose 153 points or 2%, to 7762. The S&P 500 index gained 13.2 points or 1.7% to close at 811 and the Nasdaq picked up 23 points or 1.5 percent, to close at 1552. Crude oil fell $1.27 to settle at $48.39 a barrel. Gold prices rose by $2.70 to $927.70 an ounce. The dollar was mixed – slightly weaker against the yen, but was stronger against the euro and pound.

Chemicals, gold miners, banking, and technology stocks had a stellar day. TaurusTrader had an OK day. No big gain or losses. No position was stopped out. However, it was a decent day for day trading. Had a nice success with TNA and FAS among the picks.

I also initiated small positions in MS ($22.30) and WFC ($13.75) at the open today ahead of FASB’s decision on mark to market scheduled for tomorrow. I wrote about it in my yesterday’s blog.

Stock Picks for Thursday, April 2: There are good news coming in small doses. The worst is not over, yet. The pain is still there, but there is some optimism building that the pain from recession is beginning to recede. If FASB modifies the mark to market rule tomorrow in favor of banks, it should bode well not only for the banking sector, but also to the whole market in general. The markets may have already baked in for a slight disappointment in Friday’s jobless data. Unless it comes out real bad and out of whack, the markets should do fine. But, any improvement in employment numbers, however unlikely, should help vault markets higher …. Omen!!

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

  1. EXP – Buy above $25.50, stop at $22.75, target $28.50 (volatility is high)
  2. WDC – Buy above $20.01, stop at $17.98, target $23.00
  3. HSP – Buy above $31.41, stop at $28.60, target $35.50
  4. TNA – Buy above 18.60, stop at $15.75, target 21.50 (very volatile and risky)

Chemical sector is showing some momentum.  If you have additional capital to commit, I would suggest looking at DD and DOW.  Both these picks also have strong ag portfolio that compliment  their chemical business.

I’ll not day trade tomorrow as I’ll be away on my other business interest that I detailed in my earlier post on Wednesday.  However, if interested, the financials may again provide some opportunities for profitable trades.  My favorite ones are – WFC, FAS, and MS.

MON is scheduled to report earnings prior to open on Thursday.  Expect high volatility in ag and fertilizer stocks in sympathy.

If there are questions or comments, please do post.

Best regards, and happy trading ….

TaurusTrader

http://www.taurustrader.wordpress.com

Week Ahead for Stocks, March 30 – April 3, 2009

Weekly Recap (March 16 – 20, 2009): Stocks made some historic progress …. gained for three weeks in a row, the largest move since 1938.  It was a huge 3-week rally.  However, markets stuttered a little bit on Friday heading into the weekend mostly from profit taking.

On Friday, the Dow fell by 148 points or 1.9% to end at 7776.  The S&P 500 fell 16 points or 2% to end at 815, while the Nasdaq lost 41 points or 2.6% to end at 1,545.

Index

Started Week

Ended Week

Change

% Change

YTD %

DJIA

7278.38

7776.18

497.80

6.8

-11.4

Nasdaq

1457.27

1545.20

87.93

6.0

-2.0

S&P 500

768.54

815.94

47.40

6.2

-9.7

For the week, the Dow rallied 6.8%, the S&P 500 gained 6.2% and the Nasdaq rose 6%.  For the month so far, the Dow is up 10.1%, the S&P is up 11% and the Nasdaq added 12.2%.  The S&P 500 is now up 22.4% from its March 6 low of 666.8 points.

The bulk of the gains however were made on Monday with the major indices gaining over around 6% on the news of Treasury Dept releasing details on its plan to remove troubled assets from the balance sheets of banks.The gains continued, albeit modestly through rest of the week, building on some better than expected data from the housing sector, February durable goods, and final 4th quarter GDP.

Believe it or nor, the treasury auctions usually a non-market event, turned out to be a major market mover this week due to some saber rattling by China by its negative comments on US debt.

Tim Geithner and Ben Bernanke appeared before Congress during the week.  Geithner also appeared on Sunday morning media circuit touting administration’s ideas and plans to jump start the economy.  Geithner is looking more and more confident, and markets are slowly warming up to the new Treasury secretary.

In the end, all ten sectors posted solid gains for the week.  Financials advanced 12.2% , industrials gained 10.5% and consumer discretionary advanced 8.8%.

TaurusTrader had a phenomenal week.  Seven positions in the swing portfolio achieved profit targets, ranging from 8.6 to 47.4%.  The positions that hit profit target, hence closed were – TCK, MELI, BMC, RY, CPRT, BX, and WSM.  Also, the April 12.50 call option in WDC (WDCDV) was also closed netting 100% profit. Please refer to my earlier posts for details.  None were stopped out.  TaurusTrader also had several successful day trade opportunities for 2 to 5% profit per trade in several recommended equities – FAS, MS, WFC, TNA, and BAC.

At the end of the week, TaurusTrader was long in – WNR, AGU, AMR, MBT, FCN, MDR, HNT, RIO, HON and BAC.

Week Ahead, March 30 – April 03, 2009: Markers are in oversold condition. Some pull back is possible, especially at the opening on Monday.  Like in previous weeks, markets will mostly be driven by news coming out of DC on auto industry bailout and banking regulations.   The G-20 meeting of finance ministers on April 2 is another media event that could have some impact on currencies.  We may need to keep an eye on how the bond and treasury auctions go. There will  be a hearing on mark to market accounting which could impact the markets.  Fed Chair, Ben Bernanke and Vice Chair Don Kohn are scheduled to speak on Friday in separate events.  On the earnings front, 52 companies are scheduled to report this week – the last week before the “official” start of 1st quarter earnings.  Some important reports that I would be watching are:

  • Monday:  CALM, LAYN, SNP, CHT
  • Tuesday: APOL, BGP, GIGM, LEN, SAH
  • Wednesday: WOR
  • Thursday: AYI, MDRX, LNN, MU, MON, RIMM
  • Friday:  AZZ

For details on earnings calendar, please visit: http://www.zacks.com/commentary/10445/Earnings+Preview+for+Mar+30+-+Apr+3

Economic Calendar: Following economic news might have impact on the markets –

For details, please refer to:   http://online.barrons.com/public/page/barrons_econoday.html

  • Monday: None
  • Tuesday: 1) 9:00 am, Mar. Consumer confidence (27.0 up from 25.0);  2)  9:00 am, Jan. S&P/Case-Shiller home price index, (unchanged -18.5%);   3) 9:45 am,  Mar. Chicago PMI (34.7, up from 34.2);
  • Wednesday: 1) 8:15 am, ADP employment change; 2) 10:00 am, Feb. Construction Spending (-1.6% up from -3.3%);  3) 10:00 am, Mar. ISM index (36.5 up from 35.8)   4) 10:00 a.m. Feb.  pending Home sales (-2.0% vs -7.7%);   5) 10:30 am, US Energy Dept Oil Inventories For Mar 27;  6) 2:00 pm. Mar. Auto sales.
  • Thursday: 1) 8:30 a.m. Initial Jobless Claims For Mar 28 Week;  2) 10:00 am, Feb. factory Orders (-0.3% vs -1.9%;
  • Friday: 1) 8:30 am, Mar. Av. work week (33.3 unch.); 2) 8:30 am. Mar. Hourly earning (0.2% unch.);  3) 8:30 am, Non-farm payroll (650 K); 4) 8:30 am, Mar. Unemployment rate (8.5% vs 8.1%); and 4) 10:00 am, Mar. ISM services index (42 vs 41.6).

Picks for Monday, March 30: The big question on every ones mind on Monday would be “whether the rally of the past 3-weeks is real, can I jump in or wait on the side lines”.  No major economic data or earnings releases are slated for Monday.  So, it would be somewhat challenging to predict how the markets would react.  I thought  Geithner did OK with his media appearances over the weekend.  But, it may not be enough to move the markets.  I’m going to wait it out.  I’ll not have any picks for Monday for our swing portfolio.  I’ll watch my positions with tight stops.

I will keep the following stocks on my radar through out the week for possible inclusion in swing portfolio or for day trading opportunities:

ORLY, NFLX, DRYS, DSX, IPI, MOS, MON, RIMM, AXP, BWLD, AMZN, WDC, MELI, FAS, WFC, BAC, MTH, IYT, COV, HUM, DE, ARO, FOSL, and GME.  Also, Gold (GLD, DZZ or DGP) and Gold mining stocks (XME, GOLD, AUY).  I expect some accelerated “directional” movement to occur with Gold and Gold related stocks in the next few days.

As in past few weeks, I expect considerable volatility associated with financial stocks.  So, I’ll be looking at the following for day trade opportunities:  FAS, WFC, BAC, and MS.

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

Have a great week and happy trading.

TaurusTrader

http://www.taurustrader.wordpress.com

Stocks to Watch for Thursday, March 12, 2009

Wednesday’s Recap:  A gain is a gain however small it is.  In a rather choppy trading, major indices eked out small gains to close in positive territory two days in a row in over a month!   Dow closed up 4 points, S&P gained 1.7 points, and Nasdaq fared slightly better gaining 13.4 points.  Dow failed to clear 7000, ending at 6930, S&P closed at 721.4, and Nasdaq stood at 1371.6 by the end of the day.  The financial and technology sectors held up OK, while the energy sector gave up as crude dropped 7.4%.

TaurusTrader again had a great day!  MS gapped up at open, way surpassing our target exit price.  I closed MS position immediately after open at $22.68 for a profit of 20.1% in less than 24 hours.  BIG received an upgrade this morning, and our April 15 call (BIGCC) hit our target of $5.10, for a net gain of 70%  in 4 trading sessions.  I suggested buying BIGCC on Friday the 6th, for less than $3.00. 

Our picks for today, DRYS and MBT did not hit the entry limit, hence were not bought.

As of the end of March 11,  TaurusTrader swing portfolio had following positions:

1.  CPRT – filled on March 10 @ $27.60, closed today at $28.19 for an unrealized gain of  2.1%.  Target $30.30

2.  WDCDV (WDC April 12.50 call) – filled on March 6 @ <3.00, today’s close $4.30, gain 43%.  Target $6.00

3.  WDC – filled on March 10 @ $15.30, closed today at $16.57.  Unrealized gain 8.4%.  Target $17.10

4.  SOHU – filled on March 10 @ $46.17, closed today at $49.06.  Unrealized gain 6.3%.  Target $50.50

5.  BMC – filled on February 24 @ 29.46, closed today at $28.53.  Unrealized gain -3.2%.  Target 32.00

In the past few days, we closed out MS (twice), C, SWHC, JOYG, BIGCC, WFC, and MELI for some hefty gains.  At the same time we also took some losses from UYG, PALM, PBR and ATHR after being stopped out (Please refer to my earlier blog posts).

Focus list for Thursday, March 12:  Next couple of days will be pivotal that might determine the direction of the markets for the short run.  Number of market influencing events will be taking place – 1) Traders will be watching the congressional debate tomorrow on mark to market accounting practice, 2) Treasury secretary Tim Geithnerwill be testifying before senate budget committee tomorrow, 3) advance retail sales for February are due tomorrow, along with January business inventories, and weekly jobless claims data, and 4) G-20 meeting on financial crisis and to devise coordinated efforts to mitigate the crisis.

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

1.  FCN – buy above $47.80, Target $52.00, Stop $45.15

2. MDR – buy above $13.40, Target $16.00, Stop $11.50

3.  BX – Buy above 6.31, Target $7.50, Stop $5.40

Energy stocks might see some volatility heading in to OPEC meeting over the weekend.  Technology stocks are expected to gain more on advances already made.  Banking stocks might fluctuate widely during and after the mark to market congressional hearing.  Ag and fertilizer stocks are on tear, and I expect it to continue.  So, I’ll be concentrating on following stocks for quick day trade and swing trade opportunities:

HP, HPQ, MELI, WFC, JPM, UYG, MON, AGU, and IPI.

If there are questions or comments, please do post …

Happy trading ….

TaurusTrader

http://www.taurustrader.wordpress,com

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

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