WED. NOV. 5 - Post-Election Redux

Election Season 2008 is finally almost over. As of this writing, there are four seats left up for grabs in the Senate and six races in the house. The Senate is now controlled by the Democrats 56-44 pending the results of those four races with the Democrats in control by a 79 vote majority in the House pending the results of the six remaining races. Thus, as of this writing, things played out almost exactly as most polls and pundits indicated they would. So, should the results be greeted with the same euphoria as on Election Day yesterday? Nope. In the longer-run, all politics aside, nobody can argue that the rise of power like this for the Democrats is good for the investor class. Capital gains taxes will likely rise, marginal tax rates at the top will rise, and any economic stimulus package will blow a further hole in the deficit…even as we realize that markets historically have performed better when a Democrat has been president than under Republican leadership. Of course, the best periods tend to occur when a Democrat President is in power with a Republican Congress versus Democrats in all branches, but we digress. In the immediate-term, it is likely a case of ‘buy the rumor, sell the news.’ The markets have had a tremendous run over the last few days. Everybody seemed to be waiting on everyone else to sell yesterday; when that did not happen, the markets rallied. But, there is no immediate-term trigger thus day traders wake up in an even more dangerous environment than normal today. A subtrend within a trend. The bull run albeit on low volume has been for real these last few days; people could buy dips at any time. So, harking back to yesterday’s piece, have a set strategy for what should be today based on the results with intense homework to postulate your opinions to formulate proper trades all the while realizing that if things are not going as expected, the countertrend moves can be quite powerful as well so money can be made no matter what happens. For instance, if you expect solar stocks to rise today yet they open down, rally to unch, and sell back off, a very nice negative A-B-A2 can be in play. So, again, do your homework and be ready for anything.

Overnight, markets in Asia rallied but European markets are down across the board. State-side, the U.S. market should open down. One of three scenarios will likely play out today. There could be some ‘buying the dip’ off of the initial decline which would spark short covering in many sectors in which the political landscape is now more favorable. Or there will be an A-B-A2 giveback today. Most likely will be the ‘in-between’ choice with the markets opening down, trying to rally, failing yet a dearth of selling pressure fails to push down prices so we stagnate in choppy ground in negative territory much of the session.


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-

STP, SOLF, FSLR, SPWRA, ESLR, LDK, TAN- among other solars that net-net should benefit from an Obama administration. Have had huge run-ups recently, if they open higher looking to short any of them, particularly before 8AM ET.

SCR- closed at a high

KGC, AEM- among the many gold stocks that have had a huge run in the last week; looking for profit-taking, but will follow gold

ENOC- closed at a high; if it opens down or near unch, looking to buy thru 9

GPCB- closed at a high; want follow-through and would buy at 2.75 or higher if it opens down or flat else A-B-A2

TTEC- looking to buy thru 10.30 after closing near its high

SPLS, CAT- mentioned on “Mad Money”

CLWR, S- merger approved

AKAM, BRCM, VRSN- telecom stocks which may benefit from Obama administration; should be relatively strong today

WTW- good earnings

AMMD- decent earnings

AGU- great earnings

RL - good earnings

Bad-

LVS, MGM, WYNN- casino stocks notably weak last couple of days; looking for more weakness

AHII- closed near a low after posting terrible earnings; looking for a short at or below 2.60 if it opens flat or higher

XOM- among other big oils; due to decline after nice rally

PXD – poor earnings

XTEX- broke down a bit more; looking to short 9.60 or below if it opens higher

BDX- bad earnings

MBI, ABK- atrocious earnings

DVN, RIG- bad earnings



Earnings:

WED NOV 5 BEF

ABK AGU BBG

BCE BDX CMS

CNP COCO CSE

CTSH DLR DUK

DVN FCN FWLT

GGP HLS HSIC

HSP IACI KIM

KWK MBI MHS

MMC MT PCS

PQ PWR RIG

RL RRD TAP

TWC TWX UPL

WW XNPT



WED NOV 5 AFT

ACLI AINV ATVI

AVB BEE BEXP

CCI CECO CRL

CSCO CUZ DOX

ECLP ENS FIC

GDP GXP HTX

LEAP LFG MDR

MNT NFP NFS

NWS OKE PNM

PVA SHO SUN

THQI TX VMC

WG XCO XTO





Good luck today.