Wed. SEP. 17- Look At All These Rumors

So, anyone out there heard of Timex Social Club? They were an old school rap group who wrote a song called “Rumors;” the song appeared in the Billboard Hot 100 in the summer of 1986 so it actually was popular for awhile! Well, in day trader parlance, ‘rumors’ have ruled trading the last few days. Late last week, for instance, many traders were trying to trade off of rumors that either LEH was going to fail or remain solvent, get funding or not get funding, and so forth. Even more exaggerated was the reaction of shares of Apple (AAPL) to a presentation by Steve Jobs amidst worries of his cancer history. Never mind the next generation of AAPL technology. Day traders acted off of whether Jobs was gaunt, what he said afterwards (that he’d lost weight), his denial over being sick, the company’s board’s denial to discuss health, and a myriad of other sub-issues. The stocks gyrated in percentage points rather than mere fractions. Yesterday, AIG swung wildly on ‘will they/won’t they’ rumors of financial aid. Nobody has a clear idea as to what is going on and what will happen so everybody is hunch over the edge of their buttons ready to act. This type of frenetic action will likely only become more exaggerated; if you are new to this game, stay away from rumor-centric arenas. And if you’ve been around awhile, it is still a very dangerous angle in which to play albeit a very profitable angle if you know how to interpret the news and corresponding stock reaction. But we well aware that this whipsawing of prices will continue for the foreseeable future and if something is going against you and accelerating, the best thing to do is to hit the exit button and live to fight another day.

Overnight, the Hang Seng fell another 3%, but the rest of the overseas markets were marginally higher. Today will be based on AIG's reation and fall-out...off-hand, it does not look good...while it'd seem like the worst has past, i.e. who could possibly be next?, the fallout from this crisis may well continue today as the victims of AIG and LEH declines come out of the woodwork.

Reiterating-If the whole story is not there -
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-
MS- great earnings; likely will keep uptrending if market holds all day

ADBE- good earnings

DRI- neutral earnings, but on “Mad Money” last night

SNDK- the board received a $26/share buyout bid…stock should go towards there, but if it acts weird in not rallying early, it may peel back off a bit.

WFC, USB, JPM, PNC, BAC- all strong yesterday; looking for continued strength today. If wrong and they open higher, short thru unch if they get there.

GIS- good earnings


Bad-

AIG- in all likelihood, the stock will be diluted today due to the bailout.

CEG- rumors that its operations would be ceased due to a lack of funding yesterday; stock plunged and then bounced…stock will move with the rumors again today

SYUT- has gotten drubbed the last two days due to its problems in China- some of its baby formula killed two children allegedly
FRZ- has been in trouble ever since announcing probe a few months ago. Decline may continue today; if no bounce on open and it opens a little higher, short through yesterday’s low of 4.26

PMII- horribly weak with terrible close near the low; likely short through yesterday’s 3.05 low

Good luck today.


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