Tag Archives: Retail stocks

Stock Market Watch for Wednesday April 08, 2009

Tuesday’s Market Recap:  Stocks fell for second day in a row.  Traders, bracing for a grim earning season, took some profit off the table from the mammoth rally in stocks for 4 consecutive weeks.  There were no major events that could have pushed the markets up.  The trading volume was very light, just as on Monday.

The Dow lost 186 points or 2.3% to 7790, and the S&P 500 was down 20 points or 2.4%, at 816. The Nasdaqshed 45 points or 2.8%, to 1562.  The losses were broad based.  Only 2 Dow members ended positive for the day, and about 90% of S&P components ended the day in red.  Commodities trading was mixed.  Crude closed at $49.28 per barrel, down 3.5%. In contrast, Gold rose $10.10 or 1.2% higher to close at $883.30 per ounce.

TaurusTrader portfolio had a mixed day. Position in WFC was stopped out for 8.4% loss. If you remember, TaurusTrader still has a small position inWFC, which was bought @ $13.75, a couple of days earlier. At the end of the day, the portfolio had 12 positions – WNR, AGU, AMR, FCN, HON, HSP, WDC, TNA, EXP, FMX, CMED, andOMTR. And, small positions in WFC and MS. BCE andRRC are still on the focus list, but have not hit the ‘buy limit’.

Market Watch for Wednesday, April 08:  The Dow component Alcoa (AA) unveiled its latest quarterly result, thus kicking off the new earning season.  AA reported a loss of 59 cents a share, about 3 cents worse than the estimate, but the revenue came in slightly ahead of consensus.  AA Shares were slightly lower (about 1.5%) in after hour trading. 

On the retail front, the home goods store, BBBY also reported after the markets closed today and topped the estimates.  Consequently, BBBY shares were trading up over 12% in the after hour trading.

However, the ag fertilizer giant MOS provided a dismal report.  The net income of MOS fell 88%  due to rising materials costs and falling sales volumes.  The company also warned potash sales would continue to be weak in the fourth quarter.  MOS shares fell about 6%  late trading. 

There was a lot of optimism around MOS.  If you had recently watched Fast Money on CNBC, you know what I mean!  However, if you were a regular reader of this blog, you probably were not surprised by the poor quarter by MOS.  In my blog on April 1, while talking about DE, I said ” ….. In fact,  …… there was a newly released negative USDA report that could potentially impact fertilizer and ag equipment stocks. US farmers will be planting more soybean acres, a crop that requires less fertilizer and equipment utilization compared to corn …….”.  So, you were warned ahead of time! 

Ag and fertilizer stocks will be affected tomorrow in sympathy with MOS.  I’ll watch our AGU position carefully, even though AGU is not similar to MOS in its business dealings.  AGU makes bulk of its revenue in selling and distributing seeds, ag chemicals, and nitrogen fertilizer.  And, it reported a stellar quarter a few days ago.

So, it should be a interesting day of trading on Wednesday.  The earning reports discussed above may have some impact on overall market at the open, but probably a minimal impact toward the close.  Again, for the quarter in general, the  expectations are very low, and nobody expects the first quarter earnings to be good. Companies were conservative and lowered their expectations substantially. Very few have warned recently. This could mean that there may be relatively few negative surprises.

Potential market moving events on Wednesday are – 1) Federal Reserve will release its March meeting minutes, which should provide more details on the state of the economy. Also, 2) SEC is expected to discuss proposals related to the re-institution of the uptick rule for shorting stocks.

TaurusTrader swing portfolio is long in 12 positions and is well diversified.  I do not want to add any new position at this time of market uncertainty.  However, I will watch my positions closely with tight stops.

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

Happy trading …

Best regards,

TaurusTrader

http://www.taurustrader.wordpress.com

Focus List for Thursday, 03-05-2009

Wednesday’s recap:  At last a positive close … a welcome reprieve from onslaught of negative closings continuously for five sessions.   All three major indices made significant gains.  Dow gained 150 points or 2.23% to close at 6876.  Nasdaq ended the session at 1354, gaining 2.5% or 32.7 points.  S&P closed at 712.9 gaining 2.38% or 16.54 points.

Economic indicators released today did not surprise the markets as they all came in within market expectations.  The ISM Services Index for February was 41.6 vs 41% consensus.  According to the Fed’s Beige Book, the Fed does not expect a significant economic recovery until late 2009 or early 2010, again within the realm of market expectation.  The ADP Employment Report indicated that  697,000 jobs were lost in February. The consensus estimate called for 630,000 job losses.   The ADP does not have a good track record for accuracy, but generally tends to agree with the actual trend.  Unemployment data from labor department is slated to be released on Friday.

The biggest buzz however came from China which announced that it might spend another $550  billion plus in addition to the massive spending plan it already announced last year end.  Stocks in metals, mining, and energy took off with the news.  There were some good earning reports, especially from BJ, JOYG, and BIG.  At one point, Dow was up close to 250 points.  Financials struggled because of credit rating worries  with GE, WFC, and even JPM.  However, toward the end of the day financials pared some losses after the news that the congress would hold a hearing on mark to market accounting rules on March 12.  This is a very welcome news for banks as it might help them write down toxic assets from their books.  If this should happen …  Man, hold on to your seats …. some bank stocks might shoot up 40 to 50% or even more in a day!

Most of the stocks on our watch list had a great day.  All agriculture stocks -MON, SYN, AGU were up by 5 to 6%.  IPI was up by over 5%, but ended the day in a negative territory.  IPI will be releasing earnings tomorrow.

Among the retail stocks that I highlighted – BJ (7.2%) and BIG (17.8%) were up big upon good earnings report.  So did the home builder TOL.

BMC (-1.2%) and PALM (-4%) were losers.  MS gained over 8%.

Picks for Thursday, March 5:  We will have chain store sales, jobless claims, productivity and costs, and  factory orders data for release tomorrow.  I will be closely watching the retail sales numbers as I mentioned in earlier posts.  Some, especially discount and teen retailers, are expected to post better numbers.  Again, I will follow ARO and BKE.  Would be interesting to see what WMT does!

Following are my specific picks for tomorrow.  Unless, there’s a compelling reason, I’ll liquidate all trades before day’s end whether trades hit profit target or not. It is too risky to carry the trade on to Friday through unemployment data release, which may swing the market violently either way! I have two Chinese stocks, one mining, one investment bank, and one technology stock on my target for tomorrow’s trading.

1.  JOYG – Enter above $18.00, target – $19.50, stop $16.99.   (Reported good earnings Wednesday morning, plus riding high on Chines stimulus news).  You may also buy March 15 calls for about 0.50 cents premium above cost. 

2. WDC – Enter above $15.30, target $17.10, stop $14.48

3. MR – Buy above $20.50, Target $24.50, stop $19.45 (Earning’s play.  Reported great numbers and guided higher after the market close on Wednesday).

4.  SOHU – Enter above $46.17, target $50.50, stop $42.55 (very volatile)

5. MS – Buy above $19.70, Target $21.50, stop $18.25

ADBE pre-announced and narrowed the EPS range.  It was gaining in the after market hours and will be interesting to watch tomorrow.  If interested, it would be worth watching ag sector stocks also which are picking up momentum – AGU, MON, and SYT.  IPI will be releasing earnings tomorrow, and can see wide swings!

Have a great trading day ….. and good luck.

TaurusTrader

http://www.taurustrader.wordpress.com

Focus List for Wednesday, 03-04-2009

Tuesday’s recap:  One more negative day for the markets, five in a row.  There were dismal existing home sales and a disastrous auto sales data.   Ben Bernanke, Tim Geithner, and even Barack Obama could not inspire the markets to close in positive territory.  Dow, however, swung in a wide 150 point range between positive and negative territories.  By the end of the day, Dow closed at 6726 shedding 37 points or 0.6%, a level not seen since April 21, 1997.  Similarly, the all important S&P could not hold the 700 level and lost 4.5 points or 0.6% to close at 696.3, a close seen way back on October 28, 1996.  Nasdaq fared a little better, closing almost flat at 1321 (-1.8 points), and still holding the November 21, 2008 low.  

PALM and THRX were our picks for today.  THRX briefly hit out entry target soon after the market open, but the volume was so low that my orders were not filled.  It never came close to trigger again rest of the day.  On the other hand, PALM triggered the entry price of 7.70.  It rose to as high as 8.00 before pulling back.  Monday’s pick, ORDC was not filled.  PBR was stopped out for a loss of  about 7.5%.  PBR is a good stock, I’ll probably re-enter the trade soon. 

We will probably be stopped out of PALM at the market open tomorrow.  PALM, surprisingly preannounced some bad news after the market close today.  The stock had dropped over 10% in after market trading.  It’s all in the game.  We need to be prepared.  Market Gods giveth some …. and taketh some away unexpectedly.

I had 3 profitable day trades with MS and WFC (please see my earlier blog entry today).  These trades netted 1.35 points in little over an hour.

Picks for Wednesday, March 3:  Last remaining 3 days in the week are extremely important, which are are loaded with release of sensitive economic data, most importantly, the employment figures.   We will get a glimpse of what  to expect wih the release of ADP report prior to market open  tomorrow.  Consensus is that Friday’s unemployment data would indicate a loss of 630K jobs.  The market may have already baked in this number, but substantial loss above 630K would be a real trouble.  If the S&P doesn’t stabilize around at least 700 (740 to 760 is preferred), it will have a difficult time ahead technically.  The next close support is around 600. 

I’ll be watching for sales and earnings report from wholesale club giants BJ and COST, and also from the home builder TOL  for trading opportunities in retail and ‘home building sectors’.  Many of the retailers will be providing same store sales figures on Thursday.  As in past couple of days, I’ll have the teen retailers ARO, and BKE on my watch list along with deep discount retailers, BIG and FDO. 

Keep an eye on Ag and fertilizer stocks.  I believe that ag sector stocks will pickup momentum very soon.  North American planting season will begin shortly. Most of these companies make more than 60% their annual sales in the next few months selling seed, pesticide, fertilizer, etc  to farmers.   They have been unfairly punished the past few days on the news that Obama administration would be target farm subsidies for cuts.   

My favorite ag stocks are – MON, IPI, AGU, and SYT.  AGU took a big hit after announcing $3.4 billion hostile bid for CF.  I believe it is over done, and AGU is due for a ‘big bounce’.  There’s also some rumor in the market place that SYT may be looking to acquire the ‘ag division’ of struggling DOW.  So, be ready to pull the trigger on any positive momentum.   IPI is also a good candidate to day trade, and my observation is that it usually moves in tandem with Crude.

I do not have any specific picks for Wednesday.  But, I’ll be ready to pull the trigger at any time with stocks mentioned above.  There is still tremendous volatility associated with financial sector stocks that could be exploited for quick day trade opportunities.  The stocks that I follow are MS, WFC, and BAC.

Good luck trading.  If there are questions or comments, please do post.

Regards,

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