MON. JUN. 2 THOUGHTS

Frequently, a pattern occurs which has been referred to in this space as an “A-B-A2” action. As this blog gains a bit of a following, this pattern- particularly in this market- should be explained further. Many times, a stock which has major news whether it be earnings, the resignation of an officer, or anything else, a stock will gap significantly higher or lower from the previous day’s close. For instance, Costco (COST) opened up about 60 cents from the close at 73.83 on the day it reported earnings (Thursday May 29). This open would be point A. The stock fell to a low of 73.28 shortly thereafter (point B). When the market began rallying that morning, the stock went back to 73.83 (second time at point A, i.e. A2). Within a couple of minutes, the stock rallied 80 cents. Many many times, this pattern works. The reasoning for this is as such- continuing to use COST as an example- the stock opened higher on respectable earnings, fell as some people got rid of their shares, but immediately turned on a decent up day for the market. When it got to its opening level, many people who were short got nervous and covered as they did not want to hold through the previous high of the day. Thus, the stock spiked back through its opening level. About an hour or so before the market opens, it certainly is not a precise science to figure out the exact numbers at which this type of action will occur; however, it does occur a lot. So, hereafter, make this A-B-A2 pattern your friend; it is one of the major tools used in effective day trading.

Overnight, the summer market doldrums continued throughout most of the rest of the world (seemingly even in parts of the world where it is not summer). The Asian markets were up, but European markets were broadly lower after some bad earnings news from a couple of European banks. Oil is down as well. The futures indicate a weak open state-side as well with a lot of news from the ASCO conference over the weekend, but the only number that will probably Dominant things today is this figure: "77 degrees in Manhattan for a high today."

CSIQ- announced a $500 million contract. Stock surged initially, but has peeled back. Off-hand, the stock wouldseem to be a buy, but it is definitely a short thru unch when/if.

DNA- decent ASCO data; mixed reviews. If other biotechs sell off, I'd be looking to short the thing not long after the open.

IMCL- terrible ASCO data. 40.60ish seems to be major support pre-open. If it gets through there, short the thing.

ACOR- good ASCO data. Looking for the thing to hold 26 bid...will use that as a benchmark number around the open. If it can hold, do the A-B-A2 thing, i.e. if it opens at 26, rallies to 26.30, short 26. Or conversely, if it opens 26, sells to 25.70, and goes back to 26, buy 26.

HRS- Company no longer for sale. Yet, the stock is off of its pre-opening levels. Use A-B-A2. if it opens 57.75, falls back to 57.50, buy 57.75...or something like that number-wise.

PARD-terrific ASCO data. Stock actually not up all that much...should really really rally...if it does not, short everything possible at unchanged.

SOL- share offering. Stock should open down; not looking for a trade here per se. But it is being mentioned because of an artcle in the "Financial Times" of London which indicated dampening demand for all things solar thus it will likely cause many solars to be down today. So, look for little nuances like STP showing relative strength so that'd probably be a buy thru unch.

Brokers- mixed...GS upgraded while LEH downgraded.

Earnings after- hours- LULU and SEED

Good luck today.