FRI. JUL. 11 THOUGHTS

In the midst of a slow earnings spate such as this, it is important to take a little time out to prepare for the very busy earnings season ahead. One of the features of our trading at Protrading Network is that we do many news-centric trades thus the inundation of earnings news during the height of earnings season is typically a highlight of the quarter. Typically, most companies base their earnings on the end of each quarter (i.e. Mar. 31, Jun. 30, Sep. 30, and Dec. 31). However, it takes the major accounting firms 2-5 weeks to properly tally the results of the major corporations found throughout the United States. Thus, the 15th of the first month of each quarter through the 15th of the 2nd month of each quarter is typically an extremely busy time for day traders who do news-centric trading. Specifically for Richard Rizzos, the blog will look a bit different during that time as many of the plays will be based off of earnings flow and occur anywhere from 7AM-11AM ET. Some days will include a commentary; other days will just have a trading lesson featured due to a dearth of time. Same quality…different theme. The watch list can also change wildly between 7AM and 11AM as stocks consistently move up and down the list based on how they perform in terms of volatility. What we try to do during that time (as we do every day) is to rank the stocks from most likely to trade to least likely to trade as there will be literally hundreds of stocks on the list on some days. But, keep in mind in this calm before the storm that the blog will be choppier with the list subject to change at a moment’s notice; the list sent out each morning will be a snapshot at the time the e-mail is sent, but be aware that you cannot just rely on the top 10 or 15 because every stock on that list will be important.

Overnight, markets throughout the world opened higher, but came in hard after reports came out that some senior Bush government officials were considering a plan which would bail out Fannie and Freddie (FNM/FRE) at taxpayer expenses which would effectively wipe out the stock market value of both companies. This will likely prove to be disasterous for those stocks today and the market will follow. As of this writing (6:30AM as I draft this), futures are not down all that much. That will change dramatically in all likelihood.

FRE,FNM- TOP DAY TRADE OF THE YEAR SO FAR. CANNOT BE CLEARER. TOP DAY TRADE OF THE YEA. SPECIFCIALLY- as of this writing, these stocks are almost flat. Cannot believe it. Really can’t. The second the system opens (6:45/6:50AM), will short these things (FRE anywhere above 7.80 and FNM anywhere above 12.50) given any confirmation. Look to hold FRE through 7 minimum and FNM to 10 ½. And those are probably high targets. After this initial crack, it will get a lot harder so if you are not at your desk by 7AM ET, be careful trading these the rest of the day. Action will be to short side largely, but anything today is possible.

COL- beat earnings; if stock opens down on weak market and market strengthens, buy thru unch.

GE- met for quarter. Warned next quarter. Says will beat for year. Looking to buy it thru unch if it opens down.

MGM, LVS- WYNN posted great earnings. Both are up, but well off of highs last night. Looking either to short LVS/MGM thru unch, but better yet if market strengthens, looking to buy MGM shortly after open if it is around 23.50 and the market is bouncing.

FAF, LFG- closed near lows yesterday. If by some chance they open higher, will short thru unch. If not, looking for A-B-A2 to short side.

LEH- if it ticks below yesterday’s low (15.63), no matter what time of day, iti s a short 15.60.

CHK, HSP- on Cramer. Looking to short CHK thru unch if it gets there.

Brokers- will likely track LEH.

Will be a lot of seat-by-your-pants trades today. Without making a specific recommendation to buy or sell a stock, GET IN ON SHORTING FNM AND FRE 7AM ET. And good luck today.