MON.. JUl. 21 THOUGHTS

There has been much talk – without going into expansive detail- that much of the recent rally has occurred due to a government-orchestrated short squeeze. To discuss that debate in this space would take many pages. So, let’s focus on one aspect of it for day trading purposes. The actions taken by the federal government in the last week have been largely unprecedented in modern financial history. Ostensibly, by the SEC simply enforcing laws in place, it has made shorting of stocks a bit more difficult. Notably, shares of BNPQF, BAC, BCS, C, CS, DSECY, DB, AZ, GS, RBS, HBC, JPM, LEH, MER, MFG, MS, UBS, FRE, AND FNM were identified in an SEC memo as the issues they will be paying particular attention to. Thus, borrowing shares of stock became a much more arduous process at almost every brokerage house last week and it will be even worse this week as the SEC dictum will be in place starting at 12:01AM this morning. Therefore, while many of us will be frustrated when we see messages like “short sale violation” when we try to short certain stocks (not limited to the aforementioned symbols), be aware that it is occurring everywhere and will likely intensify in coming weeks.

Overnight, markets in Hong Kong were sharply ahead (up 3% plus) while the gains tumbled over into Europe. Oil is back up as well amid the storm approaching the Texas-Mexico border and more Iran noise. The futures are up sharply in the early hours after Bank of America (BAC) posted relatively good earnings and Genentech (DNA) received a takeover bid for the rest of it shares. It’d seem like the markets are a bit overextended in here so the market play is the same as Friday’s: short selected weakness, but otherwise look for an overall A-B-A2 to the upside for the market should it not break in the first few minutes (which it likely will not).

BAC- great earnings. Using a benchmark for the first part of the day at least; not really trading it, but it is one of those stocks that is not shortable per the SEC.

FNM,FRE- up on the BAC numbers. If BAC strengthens, these could be secondary plays on the long side.

CVP, GENC- closed at or near highs. If they open down, they are buys. If they open higher, A-B-A2 would be nice to upside.

YHOO- Icahn only getting one seat on board thus it’d seem like a victory for Yang. If stock trades higher- particularly before 8AM ET, short thru unch.

STT- up sharply the last few days. Using as a proxy for BAC in case it is relatively weak and BAC sells off.

OSTK, VCLK- both closed on lows. If they open higher, likely shorts thru unch.

Earnings season in full force this week; there will be many after-hours plays in particular- earnings list below:

MON JUL 21 BEF

ALB .65/635M .68/649M 2.76/2.62B 3.22/2.84B

AME .57/627M .62/620M 2.47/2.51B 2.87/2.68B

BAC .55/18.42B .74/19.64B 2.34/75.94B 3.48/84.53B

CNB .01/233M .05/236M .28/945M .54/993M

HAS .22/675M .85/1.21B 2.17/3.89B 2.41/4.01B

MRK .83/6.05B .82/6.10B 3.31/24.28B 3.64/25.45B

RX .40/592M .45/598M 1.74/2.43B 1.96/2.61B

SGP .40/4.77B .30/4.42B 1.54/18.49B 1.73/19.32B

UB .92/681M 1.01/700M 3.69/2.75B 4.24/2.91B

WFT .45/2.21B .57/2.44B 2.18/9.58B 2.86/11.93B

MON JUL 21 AFT

AMX .86/8.03B .91/8.29B 3.49/32.48B 4.22/35.65B

AAPL 1.08/7.35B 1.24/8.29B 5.21/32.73B 6.38/40.21B

AMLN -.49/224M -.50/236M -1.99/908M -1.48/1.07B

BSX .11/2.01B .12/1.99B .55/8.08B .66/8.37B

CNI .86/2.05B .99/2.13B 3.39/8.23B 3.95/8.80B

EFX .60/508M .64/512M 2.54/2.04B 2.74/2.17B

EXP .29/198M .40/208M 1.20/722M 1.49/778M

HPC .43/601M .45/600M 1.63/2.34B 1.92/2.50B

LNCR .71/422M .66/422M 2.85/1.69B 2.33/1.75B

LOGI .19/511M .45/676M 1.68/2.72B 1.92/3.10B

LRY .79/192M .79/194M 3.16/772M 3.25/796M

MHK 1.28/1.84B 1.40/1.82B 5.00/7.10B 5.17/6.93B

OMCL .16/62M .16/63M .68/251M .87/293M

PKG .34/600M .36/607M 1.40/2.38B 1.77/2.46B

QLGC .29/161M .28/162M 1.14/656M 1.18/686M

RE 3.27/1.11B 2.70/1.11B 12.19/4.33B 12.16/4.37B

SNDK .14/911M .40/1.12B 1.39/4.28B 1.74/4.85B

STLD .93/2.35B .97/2.43B 3.46/9.12B 3.74/9.58B

TXN .46/3.39B .51/3.56B 1.96/13.76B 2.16/14.53B

WGOV .43/308M .44/325M 1.67/1.21B 1.93/1.34B

Good luck today.

www.protradingnetwork.com