WED. NOV. 19- Delving Into The Headlines

One of the major characteristics of a good trade at Protrading Network is to make sense of the news. Yeah, we know. Just like the rest of Wall Street. The difference is that we have our own unique take on the news. There are two main steps which sound self-evident, but they are not. The first is to learn of the news, but rather than rely on a headline, our most successful traders tend to really study a story. A “Washington Post” headline on November 10 blared “China Unveils $586 Billion Stimulus Plan.” The sub-headline was “Amid Unrest, Package Would Address Social, Political, and Economic Concerns.” It is a plan that many economists compared to the New Deal, according to the article. However, the Chinese central government clarified upon questioning that they’d provide less than 1/3 of that amount with the rest of the money to come from localities. The main course of action would be an increase in exports to boost growth. Furthermore, the government made no indication it’d set aside money for an international bailout fund. Now, one would not really know or understand any of this until doing a mere 3-5 minutes extra homework. Which leads to step II. The market opened up sharply that morning yet sold off rapidly…and few people understood. But those that did their homework knew that the Chinese plan was not what everyone thought it was. So, several traders had a terrific morning as others sat around wondering why the market was breaking. In this time of turmoil, one absolutely not only must keep up with what is going on in the world, but one must understand in detail what is going on in the world.

Overnight, stocks throughout the world failed to move up after Wall Street’s rally yesterday with most indeces down just under 1% in Asia and 2% in Europe. It is a worrisome set-up state-side today, simply put. Futures are down albeit not huge. But the bond market is very strong, oil is down again, and the financials are indicated lower across the board. Yesterday’s rally was weak; there were more than twice as many stocks down as up on the NYSE. So, all the signs point to what could be a pretty bad day. The corollary here is extraneous news flow plus if the expected selling doesn’t come in by mid-day, things could turn up very quickly because, again, it is a pretty dangerous set-up this morning.

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-

LDK- outstanding earnings- beat and raised guidance

BJ- great numbers; they also beat and raised guidance

PVH- good earnings, but did warn

RIMM- put on Conviction Buy list at Goldman; if market weakens, RIMM likely a short thru unch as it has had a nice run-up this week

WYE- very strong; if it opens down, looking to buy thru 35.50 high of yesterday else A-B-A2 to downside

Bad-

APP- closed near a low; look to short thru yesterday’s 2.60 low

FWLT- closed near a low in failing to rally yesterday afternoon; likely a short thru 18.10

ANR- down heavily on the failed merger; look to short thru 19.20 when/if

DRYS- very weak; looking to short thru 7.80 low if market particularly weak
LFG- it appears merger with FNF in danger of failure; looking to short thru yesterday’s low around 3.70

AAWW- one of last major airlines out there; stock fell on downgrade and liquidity concerns yesterday…looking to short thru yesterday’s 10.40 low

M- wretchedly weak…and just in time for T-giving…if it opens higher, would love to short thru 6

DFS- credit crunch affecting Discover…looking to short thru yesterday’s 7.90 low

BBY- debt ratings cut to near junk by S&P

Earnings:

WED NOV 19 BEFORE

BJ LDK ROST

TWB


WED NOV 19 AFTER

APWR CYBX DBRN

GYMB INTU MENT

MW PETM SMTC

TSL WGOV






Good luck today.