MON. NOV. 10- Preperation Is Key

One of the more interesting features of an interesting market in an interesting time is that so many traders tend to pick random times to take random positions in random stocks. The best time of the day for trading tends to be in the pre-hours and in the first 1-2 hours post-open. As stressed so frequently throughout this blog, the well-prepared trader can make most of his/her money during this time. This is because it is rather fascinating to attempt to make sense of complete chaos- yet it can be done very profitably. On Friday morning, Fidelity Financial (FNF) announced it was going to merge with LandAmerica Financial (LFG) for .993 shares of FNF for each LFG share. As LFG closed at 4.75 where FNF was 8.35 at the close on Thursday, this was quite the deal for LFG shareholders. By 7:55AM ET on Friday, FNF was actually trading higher on the morning in a range of about 8.65 to 8.85. LFG was trading about 8.10 – not quite the 8.50ish it should be trading at, but one must leave leeway for time value of the stock (i.e. time is money and a dollar is today is worth more than a dollar a year from now). At 8AM, with the stock trading at 8 on ARCA, LFG suddenly traded around 7.30 on NSDQ yet FNF had not budged. This was just one seller who came in unprepared and dumped about 8,000 shares of the stock. Anybody who bought that stock at that level – a full 70 cents below where it traded one minute prior yet its acquirer was trading even higher- was in line for a nice pay day as that trader could immediately sell the stock at 8 or even better by holding for just a few minutes. But none of this was possible without a little homework. One did not need to know every intricacy of the deal; however, by simply knowing there was a deal and terms of said merger, one could trade accordingly. Day trading is harder, but it is literally impossible if one is not truly aware of the goings-on in not only the markets, but the stocks they trade. Thus, we at Protrading Network preach much less beg all day traders to do basic homework- know what the foreign markets did overnight, know the major stories of the day, and know the stories behind the stocks they plan to day trade - particularly in this environment. There has arguably never been a time since the advent of day trading in which the gulf of the performance between day traders who do some homework versus those who do not has been wider.

Overnight, markets rose sharply worldwide following plans for a huge capital infusion by the Chinese government and the American taxpayer doling out more money to AIG. Futures are sharply higher state-side. Look for a strong open followed by a lot of choppiness. Volumes will likely not be exceedingly high today so pick spots to short in weakness, but if the market can digest its early gains after a little profit-taking post the nice rise on Friday, we’ll probably chop around all day in upside ground.

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 (preferably to the downside in a downside market and the upside in an upside market) based on direction of the market unless specified


Good-

CYCL- being bought out for AT&T for 8.50 cash

HUN- trying to renegotiate merger terms according to “The New York Times”

FDRY- accepted a higher 16.50 bid by BRCD

VZ/HLF- on “Mad Money” Friday night

HES- oddly closed strong on Friday in a decent oil sector, but it was among the strongest

WFC- gapped higher on the close on an imbalance; looking to buy thru 29.50 if it gets there

ENER- decent earnings; may get rise on oil surge…but it was also downgraded this morning

PWRD- good earnings

CHDX- good earnings

NRG- rejected buyout bid by EXC

AIG- government loan expanded in size

Bad-

MBI- debt rating cut to junk at Moody’s. MBI insists it doesn’t matter, but if the stock trades down sharply should there a whiff of anyone not be willing to use MBI as a reinsurer, this stock will crater

MIC- closed near a low; looking to short thru 7 on an A-B-A2 in particular should it get there

TC- closed weak on horrible earnings; looking for follow-through yet if selling ebbs early, could be an A-B-A2 short covering upside bounce

ACAS- bad earnings

ALD- bad earnings

ECL- biggest shareholder selling 72.7 million shares of ECL




Earnings:

MON NOV 10 BEF

ACAS AHR ALD

CLWR DISH ENER

NU SRE SUG

TSN



MON NOV 10 AFT

AGM AIG ASCA

CCJ FMCN HPT

HR HRC KFN

LGF MR MRX

PBR REG ROK

SBUX TKTM TMA





Good luck today.