TUES. AUG. 19 THOUGHTS

There are countless nuances which the typical day trader should pay attention to. What makes it trickier is that some work so infrequently that they are worth keeping one eye on, but it is best to typically ignore them for fear of information overload. One of these indicators is “Barron’s.” For those that are not aware, “Barron’s” is the leading weekly financial newspaper in the United States. With the advent of the Internet and other financial media, the impact of the newspaper has diminished greatly as it was once the preeminent piece of weekend financial journalism at a time when alternatives did not exist. Thus, it is something every day trader should glance through on Monday morning (at least bits and pieces from the headlines) just in case something comes to fruition. Well, this past weekend, the featured story in “Barron’s” was on Freddie Mac (FRE) and Fannie Mae (FNM). The implication was that U.S. government officials may have no choice but to ostensibly nationalize both of these major housing financial entities. In the early going, both stocks dwindled down but held losses before totally giving way in the afternoon. The story may not prove to be true whatsoever, but the fact of the matter is that enough eyeballs viewed it to make the story relevant. This led to declines in other financial stocks which led to a decline in the market. Amazing, isn’t it? This is the first time in recent memory this has happened, but it just goes to show that news-based catalysts are everywhere and can impact markets in a way that many day traders don’t realize. Yet, these catalysts for the self-aware and prepared trader can provide a very nice day’s pay if one realizes exactly what is going on in a given situation.

Overnight, markets throughout Asia were hit very hard- down 2% or so across the board. The trend spread to Europe where the bourses are down 1% to 1 ½%. Commodities are also lower with oil and metals down…at least bonds are up! PPI and Housing starts both came in worse than expected as well. All of this sets up for a negative start to the day; the best trading advice to follow is to look for strange nuances as discussed in the aforementioned parable. If financials as a group are down and you notice something strong, buy it as a for instance.

Reiterating-New code for the next few days if the whole story is not there due to an expansive number of ideas-
If something is good, assume either a short thru unchanged or an A-B-A2 based on direction of the market unless specifiedIf something is bad, assume either a buy thru unchanged or an A-B-A2 based on direction of the market unless specified

Good-

SOL –good earnings; look to short thru unch if it is higher at any point today- particularly pre-open

WCG- announced settlement; pressures off the stock

XFML- strong earnings

HD- beat earnings marginally

MDT- beat earnings marginally

MYGN- good earnings and looking for strategic alternatives

TGT- beat earnings nicely, but barely beat revenues. If market weak pre-open in particular, it is trade of day thru unch if trading higher after number comes out

Bad-

LEH- down on rumors of capital writedowns

SKS- bad earnings

AIG- drifting down on rumors of capital writedowns

LVS- very weak yesterday; if it opens anywhere near unch, it is a short

TUES AUG 19 BEF

HD .61/20.55B .43/17.98B 1.71/72.35B 1.81/72.77B

MDT .69/3.67B .71/3.72B 2.98/15.31B 3.37/16.53B

MYGN -.18/67M .60/97M -.57/234M 1.25/318M

SKS -.19/686M .16/813M .31/3.37B .45/3.54B

SOL .32/141M .34/159M 1.29/612M 2.02/897M

TGT .76/15.46B .56/15.69B 3.43/67.11B 3.86/71.98B

TUES AUG 19 AFT

ADI .39/669M .46/680M 1.89/2.55B 1.75/2.59B

ARAY .04/56M .04/57M .12/216M .26/247M

HPQ .83/27.41B 1.00/30.25B 3.57/114.43B 3.98/121.51B

JKHY .32/196M .29/194M 1.20/752M 1.37/838M

NVTL .11/88M .15/97M .61/384M .76/437M

OTEX .58/191M .49/177M 1.98/716M 2.29/767M


Good luck today.

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