FRI. AUG. 22 THOUGHTS

A few weeks back, there was a piece written in this space about the ‘tone’ of the market. Yesterday was a day to revisit that theme. With oil having its biggest one day gain in several weeks and a searing focus by market participants on Fannie Mae (FNM) and Freddie Mac (FRE), one would have expected the market to be significantly lower on the day. Instead, after an initial sell-off, the market began coming back with the major averages closing mixed. It is not for anyone in this space to prognosticate longer-term moves as that is not the focus of the trading done here, but it is worth noting for one reason for day trading purposes: do not get caught up with what should be, go with what is. And yes, that aforementioned sentence is written correctly. Even if you are on ‘death watch’ for Fannie and Freddie, it does not mean they cannot rally here and there. Even if you think oil prices have topped, it does not mean that oil cannot rally here and there. So, again, particularly as we enter the last week in August, please be weary of this and be extra careful trading due to a relative dearth of news these next few days.

On a personal note, we all want to wish our summer intern, Robert Erdogan, the absolute best. He has been a phenomenal help this summer and we will all miss him. Good luck during your senior year!

Overnight, markets in Asia were down slightly, but Europe was higher. The markets state-side are strong amidst rumors of a LEH buyout which is leading to some short covering in the financials. This strength will likely hold today in quiet trading as people jet out early ahead of the weekend.


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-

LEH- rumors of buyout by Korean Bank. Best trade is early before the rest of the world see the news; other than that, be careful.

FNM/FRE- both bouncing a little; short thru unch if they cannot hold.

ALO- being bought out for 33 a share in cash. As this is being typed, the stock is just above 33…if bids hold, it is the trade of the day particularly pre-open. The stock should be trading just below 33; clearly, somebody thinks there is something more to come for the company.

CSUN- good earnings

GPS- good earnings

BCSI- good earnings

FL- good earnings

STP- has been strong on earnings…could be A-B-A2 to upside if tone good yet if oil sells off, it is likely a short thru unch.

Bad-

DRYS- bad earnings; watch DSX, GNK, EXM as sympathy plays

VRGY- bad earnings

LVS- downgraded and down

ZUMZ- bad earnings

FRI AUG 22 BEF

ANN .45/624M .67/609M 1.84/2.45B 2.10/2.54B
CSUN .03/95M .06/109M .16/410M .60/594M

Good luck today.

www.protradingnetwork.com

THURS. AUG. 21 THOUGHTS

Yesterday afternoon, one of the traders was looking to buy Suntech Power (STP) around 42.50 on a new high, up 5 ½ on the day. Upon calling out the idea, he was told by one of the newer traders that the stock was already up 5 ½. That brings up a concept foreign to many day traders- just because the stock was up 5 ½ did not mean that it could not be up over 6 (which it eventually did). Another person wanted to buy FRE/FNM at some point mid-morning simply because they were beaten down so much (before they both fell a lot more). As day traders, we must study history and learn from it, but not become so enthralled with the net change of a stock that it impedes us from making an objective prognostication. What matters for us to earn a living is the future-not the past. Thus, do not be afraid of buying STP up 5 ½ or shorting FNM down 1 simply because the changes seem preposterous. Situations are what they are- it is our job to do determine what happens next based on the information at hand rather than in many times taking the wrong side simply because of existing breadth of the delta.

Overnight, stocks throughout Asia were down across the board with Hong Kong down over 2%. European stocks followed suit with prices down about 0.5% to 1% throughout the continent. Commodities are up with the dollar down. Futures state-side are indicated lower. Look for a troubling start, but watch FNM, LEH, and FRE for direction today.


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-

BYI- good earnings

NOVN- positive drug news

ENER- extremely strong yesterday

MEE, ACI, BTU- coals strong yesterday and strong again this morning amidst an oil bounce

CSIQ, STP, SOLF- all strong yesterday on STP’s earnings

FED- very strong yesterday on short covering

PLCE- good earnings


Bad-

FNM, FRE, LEH- if market accelerates to downside, these three will lead it. People are scared. Likely, however, is that the bets and easiest trades will be made in these things before 8:30AM so please please be careful thereafter.

CRM- bad earnings

SNPS- bad earnings

JDSU- bad earnings

SMTC- bad earnings

FRO- bad earnings

GME- bad earnings

THURS AUG 21 BEF

ARO .30/374M .60/472M 2.16/1.82B 2.41/2.05B

BKE .60/166M .84/188M 3.11/746M 3.47/822M

BKS .09/1.24B -.13/1.19B 1.74/5.46B 1.86/5.57B

CYBX .02/33M .03/34M .22/137M .45/155M

DKS .36/1.10B .09/936M 1.26/4.28B 1.49/4.87B

FRO 2.33/402M 2.12/305M 9.05/1.64B 5.62/1.24B

GME .28/1.66B .36/1.79B 2.39/8.62B 2.97/9.61B

HNZ .66/2.45B .77/2.74B 2.90/10.84B 3.19/11.50B

HRL .40/1.61B .67/1.74B 2.26/6.57B 2.50/6.89B

PDCO .39/755M .46/801M 1.94/3.23B 2.19/3.49B

PLCE -.44/341M .79/465M 1.87/1.68B 2.43/1.80B

SFL .83/123M .82/122M 3.43/539M 3.10/521M

TECD .46/6.11B .72/6.50B 2.57/25.81B 3.14/27.31B

TTC .97/473M .17/338M 3.21/1.86B 3.65/1.88B

THURS AUG 21 AFT

BCSI .16/103M .20/119M 1.02/482M 1.66/581M

DRYS 4.57/275M 4.63/308M 18.55/1.06B 14.22/1.08B

FL .02/1.27B .26/1.33B .72/5.37B .86/5.43B

FMD -.39/? .03/156M -2.39/? .05/288M

GPS .29/3.52B .33/3.74B 1.33/15.18B 1.45/15.40B

HIBB .15/124M .26/141M 1.02/566M 1.18/623M

INTU -.08/470M -.11/484M 1.60/3.06B 1.86/3.34B

PSUN .06/311M .23/335M .55/1.30B .72/1.32B

VRGY .28/176M .31/179M 1.34/717M 1.80/799M
ZUMZ .07/93M .29/118M .90/438M 1.07/515M

Good luck today.

http://www.protradingnetwork.com/

WED. AUG. 20 THOUGHTS

11.2 million. That is a pretty big number. It could be the population of a major city. It could be the amount of fans who attend professional sporting events in the New York City area annually. But, no. What we are talking about here is the inflation rate of Zimbabwe. That is correct. The annualized inflation rate in Zimbabwe is 11.2 million percent as disclosed by the country’s Central Statistics Office. Thus, if you lived in Zimbabwe and your net worth a year ago today was $11.2 million, your entire wealth was effectively wiped away. This type of inflation is ostensibly unprecedented in modern times. Inflation is also a problem in many non third world countries as well. The Producer Price Index registered one of its highest readings yesterday; ostensibly, inflation is 9.7% at the producer level in the United States. This is an alarmingly high number. Interestingly, the Consumer Price Index showed a 6.5% rate of inflation at the consumer level not long ago. What this means is that producers are not passing down all their costs to consumers- or at least they have not done so thus far. It also portends that earnings growth for American corporations may well fall short of expectations over the next earnings season. This is something to watch for over the next few weeks as select companies begin to warn because it will create select opportunities for day traders.

Overnight, markets throughout the world were higher. Strength in techs should be prevalent on the heels of the HPQ numbers. It will be tech vs financials today.

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-

STP- good earnings

USEG- announced major licensing deal

HPQ- great earnings

PAY- pre-announced phenomenally good earnings

MENT- good earnings

BJ- good earnings, but guidance a little iffy; if it opens higher, short thru unch even if it is pre-open

OTEX- good earnings

Bad-

LEH, JPM – among others, downgraded by JP Morgan

Airlines- down with oil bouncing

ADI- bad earnings

NVTL- atrocious earnings

JKHY- bad earnings

ARAY- bad earnings

EJ- bad earnings

WED AUG 20 BEF

BJ .57/2.64B .38/2.37B 2.14/10.01B 2.35/10.73B

EJ .14/41M .21/59M .80/208M 1.09/276M

EV .47/285M .48/290M 1.85/1.14B 2.17/1.26B

LDG .76/1.35B .62/1.32B 3.06/5.53B 3.44/5.82B

MENT -.12/175M .20/216M 1.01/899M 1.26/953M

ROST .54/1.61B .43/1.59B 2.35/6.57B 2.62/7.06B

STP .31/439M .41/543M 1.58/2.06B 2.57/3.07B


WED AUG 20 AFT

BYI .53/244M .47/228M 1.83/898M 2.32/1.01B

CRM .08/261M .09/273M .35/1.07B .67/1.41B

GYMB .24/204M 1.04/280M 3.19/1.04B 3.54/1.15B

JDSU .10/396M .13/400M .54/1.54B .75/1.70B

LTD .20/2.30B .04/1.99B 1.48/9.70B 1.71/10.18B

PVH .65/581M 1.21/751M 3.36/2.59B 3.81/2.76B

SMTC .23/78M .26/81M .97/317M 1.13/348M

SNPS .39/340M .40/354M 1.63/1.33B 1.90/1.47B



Good luck today.

www.protradingnetwork.com

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.

www.protradingnetwork.com

MON. AUG. 18 THOUGHTS

A common mistake that even the best traders out there make is overtrading. When the market is volatile, the average day trader is overly cautious due to the excessive movement and does not trust his own instincts in succumbing to fear. When the market is generally calm as it was on Friday, many traders jump up their size on their trades in an effort to earn a day’s pay. As we are entering the last two weeks of August- traditionally one of the slowest spates of trading during the year- be overly weary in what you are doing. Oftentimes during this calendar period, stocks move in a tight range so don’t simply put on 10 times what you’d normally would. What usually happens is that the stock does not move, you get frustrated, take a small loss, and then rinse and repeat. Many of us fell into this trap on Friday and it is being pointed out so that we can all be self-conscious of this type of self-destructive activity through Labor Day.

Overnight, markets in Hong Kong and China continued to decline although the European bourses are higher. The strength in Europe has led to some gains for futures in the early going as well. Look for a very quiet day today with pockets of activity in the financial sector in particular, but not a session for grand opportunities.

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-

ELN- rumored to selling off division; should be good in immediate-term as it raises cash. Stock should stay plus, but if it goes thru unch particularly after run-up of last week, short thru unch- it is likely the trade of day if set-up works

APP- closed strong on Friday on good earnings

DYAX –positive drug news

SDTH- good earnings

FMCN- great earnings; will likely be buy after being beaten down, particularly if it opens at 28 or less

OMRI- positive upgrade

LOW- bad earnings, but strong this morning; yearly outlook looks OK

JCP – strong Friday on earnings; 40 resistance level could prove to be buying point

Bad-

RZ- closed weak on Friday

MENT- crushed Friday after their takeover deal called off

IPHS- down sharply Friday and closed near its low

PWRD- bad earnings

PRGO- weak earnings

RIMM- PacCrest issued weak report


Earnings:

MON AUG 18 BEF

LOW .56/14.11B .33/11.69B 1.50/48.28B 1.60/50.89B

PRGO .41/476M .45/474M 1.60/1.80B 1.95/2.02B

PWRD .40/48M .43/53M 1.69/202M 2.27/278M

TSL .80/192M 1.01/226M 3.26/793M 4.35/1.24B

ZNH ?/? ?/? -.06/9.01B -.06/10.52B

MON AUG 18 AFT

NONE

Good luck today.

www.protradingnetwork.com