THURS. DEC. 4: A Real-Life China Syndrome?

So, when is 8% growth of a country’s economy a bad thing? It is the case in the present time with the place being the nation that aspires to be the world’s next superpower- China. The situation is apparently so dire that China’s top economic policy makers are holding a special meeting next week to plot how to secure growth of at least 8% in 2009. The global financial crisis is harming growth and inhibiting the creation of jobs. Annual GDP growth slowed from 10.1% in the 2nd quarter to 9% this past quarter and is forecast to be 7.3% next quarter year-on-year. The issue here is that an 8% growth rate is heralded as the minimum amount in which the Chinese economy needs to expand in order to absorb the millions of people seeking their piece of the Chinese dream in the job force. The problem if anybody remembers recent Chinese history or is paying attention to current trends in China is that there have already been growing protests by laid-off workers as well as strikes by taxi drivers which is a hint of portending social instability should the Chinese economy not be able to handle the influx of new workers. Thus, not only is bad socially for the nation, but it is bad economically as well. A more unstable China much less one which is not functioning at maximum economic force is a major negative to worldwide growth and the worldwide economy as well. Day traders must pay attention to this matter. Must. Must. Nobody is really talking about China as a major catalyst for what the market will do in the next year, but an argument can be made that the major sell-off in the States earlier in the week was precipitated by that negative report Monday morning. So, one more thing to add to the pile to keep your eyes attuned to because although China won’t affect things intra-day per se, it will be a force in the macro picture in shaping how the overall dynamic of the market acts for some time to come.

Markets in Asia were unchanged to down 1% while European bourses are up 1% to 2% across the board around 7AM ET. Bonds are up strongly and oil is down 1% yet futures are barely lower. All of the parameters surrounding everything indicate the markets here should be down a bit after the last two days of gains in particular, but the action is not being reflected. Thus, look for a little more strength early on, but if there is no initial rally, the averages will likely trend lower throughout 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- The following stocks have good news and/or a strong technical pattern

PSS- met earnings estimates

FCE/A- strength continued yesterday; looking for more today on an A-B-A2 if it opens down or unch

SLB- closed near a high after warning; would do A-B-A2 thru yesterday’s 48.67 high

WYNN- closed at a high after coverage initiated at a ‘Sell’ at Citicorp

SNPS –good earnings

STT- cutting 6% of workforce, but sees earnings for quarter in the high end of expected guidance

CBST- closed near a high

SNDK –up on takeover rumors; likely a A-B-A2 to downside today with Toshiba denying rumors

BBND- continued short covering rise

VNO, SPG- among the strong REIT’s yesterday

AGN, CELG- on “Mad Money” last night


Bad-The following stocks have bad news and/or a weak technical pattern

ARO- warned on next quarter

JAS- warned on fiscal year 2009

JEF- warned on next quarter

ADBE- warned on next two quarters

HE- share offering completed yesterday at 23 which is where stock closed; looking to short below 23 if it gets there

MRK- warned badly on its 2009 outlook

MOV- warned horribly on its 2009 outlook



Earnings:

THURS DEC 4 BEFORE

JTX MOV SAFM

SFD TOL UTIW

WSM

THURS DEC 4 AFTER

CMTL GES NX

WIND

Please download the following attachements:

Eriklist.zip

EARNINGSBEFORE.doc

Good Luck Today!

Erik Kolodny

ProTrading Network's NYC Holiday Event

Guys and Girls,

As the holidays approach, we would like to get everyone together. It seems fitting to pick a centrally located venue. NYC is the place. I happen to be partial to Scalinatella, at 61st and 3rd. It is one of my favorite restaurants with amazing menu and environment. I sent Bruce there in November and he loved it.

Next is to pick a date. Any date two weeks out would be good, preferably a Friday? Please let us know if there is a day that doesn't work for anyone. We would like to have as many of us there as possible. Please email me directly with any concerns or suggestions, Support@ProTradingNetwork.com.

Thank you,

ProTrading Network's DOW list

Attached is the list of the DOW stocks for upload to the Sterling Trader Pro.

Enjoy,



Click link for DJI list

DOW%20list.stk

WED. DEC. 3- Where's The Manic Craziness?

On Monday, the S&P 500 fell almost 9%. The Dow and NASDAQ followed suit. Yet, there was no hysteria. No headlines on the nightly news. No CNBC specials. No stories about people jumping off of buildings. As recently as three months ago, a 9% market decline would have been treated as the story of the year in finance. But now? Ho-hum. Even weirder was the main reason given for the decline. Namely, the cadre of economists whom comprise the National Bureau of Economic Research – an organization which classifies business cycles- decided in their infinite wisdom that the U.S. economy has been in recession since December 2007. Really? We didn’t know that already? That’s what caused the Dow to fall 700 points? No. There were two reasons. First was a decline in the rate of Chinese growth according to a Chinese economic report- something which seems innocuous, but is not as it is the world’s fastest growing economy of the major world powers. Equally important was that we were coming off of the best week for the markets in 75 years. So, much ‘profit-taking’ was attributed. The take-away is this: an amazing statistic- the rate of intra-day volatility on the 50 day moving average for the S&P 500 is the highest in history: 3.8%. This means that the average daily range for the S&P 500 for the last 50 trading days has approached 4% per day! There is nothing to signal that the wild intra-day volatility will dwindle dramatically anytime soon. So, to clarify from Monday’s post, December is a bit more illiquid and calm, but it does not mean- as shown by yesterday’s wild gyrations that the volatility is going to decrease by a wide margin. Thus, combined with the increasing dearth of players as the month progresses, it will make day trading that much more delicate as the volatility continues without a lot of liquidity.

Overnight, stocks in Asia were up about 1%-2%, but stocks fell in Europe after Research In Motion (RIMM) warned at 10:30PM last night. Like nobody would see it at 10:30PM. Thus, futures are well lower here. Look for that 1% or so down open with more choppy illiquid trading to follow. The market will likely follow RIMM all day albeit not in the same manner in which GE was followed yesterday. There will likely be a weak rally at some point, but look for a narrower intra-day range with the market staying on the downside much of if not the entire 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- The following stocks have good news and/or a strong technical pattern

MRVL- beat earnings estimates

MOS- after warning, closed near a high

IBM/AAPL – closed near highs

SLW- mentioned positively on “Fast Money” last night

SNDA_ closed near a high after posting great earnings Monday night

ETP- mentioned positively on “Mad Money”

MIR- closed near a high

PFG- up strongly and closed near a high

RAS- exploded on the last tick; will likely trade lower today, however

FCE/A- had short covering burst yesterday; if it opens unch or down, likely a buy thru 7 when/if it gets there

CEG- received rival takeover bid which could value company up to $52/share. Stock should be bought when/if it ticks above 26.50 and probably A-B-A2 all day

Bad-The following stocks have bad news and/or a weak technical pattern

OVTI- warned horribly for next quarter

RIMM- finished lower on a strong up day for the NASDAQ; likely to be weak anew today after warning badly, but from 6:30AM-7:15Am, stock gradually uptrended so don’t be stunned if this news is in the stock and it gets positive

GM, F, DAI- all asking for aid from government to fund operations for the duration of 2008

CLWRD- closed near a low post spin-off

BBBY- warned on its outlook

SWIR- closed near a low

FCX- warned and eliminated dividend

HE- issued shares at 23 in a share offering…should not trade below 23 thus if it opens above there, it is a short the first tick below 23







Earnings:


WED DEC 3 BEFORE

DLM

WED DEC 3 AFTER

ARO CPRT JAS

PSS SNPS

Good luck today.

TUES. DEC. 2 - Basic Economics

On October 24, U.S. crude oil settled down $3.69 at $64.15, the lowest close for oil in 17 months at that time. The news? OPEC pledged to cut oil production by 1.5 million barrels per day. Over the weekend, OPEC met again, but this time it could not even agree on a number in which they should try to cut again. And what happened? Oil closed down $5.18 to $49.25, the lowest close for oil in almost three years. Now, let’s not focus on the fact that OPEC has historically not held to its pledge whenever they cut production. It is in the interest of the cartel as a whole to cut, but it is in the interest of individual member to pump as much as they can. Basically, if everyone else cuts production, but I keep pumping, I’ll do relatively OK ergo the cuts don’t work. This time, however, there is one more wrinkle major wrinkle is in the mix. See, part of that whole concept in which economics work is that in addition to the supply part of the equation, there must be demand. If the average person cannot afford a BMW thus relatively low demand, why cut the supply of BMW's to make them even less affordable in a bad market? It is the same thing here. The usage of oil is falling rapidly as factories begin to idle and the pace of activity stagnates greatly in the BRIC nations of Brazil, Russia, India, and China in particular. Thus, barring gigantic cuts (which the OPEC nations must stick to), there is no artificial quick fix to the oil market much less any market when demand is not present. Because, let’s not fool ourselves, this is clearly a demand problem as the appetite for consumption worldwide continues to decrease. For day traders, the direct correlation between equities and oil prices as established in the late summer is likely to continue for some time to come. Prices for everything but bonds and the dollar relative to the Euro currencies are marching in unison and manipulations such as what OPEC is trying to do will not stop the natural order.

Overnight, stocks in Tokyo were crushed in falling about 7.5%. However, the rest of the Asian indeces were not down nearly as much and sentiment shifted in Europe with the bourses there up a little. Oil hit a fresh 3 ½ year low overnight, but bounced back. With things more stable, look for a stronger open this morning. After that, it will continue to be thin and illiquid, but a better tone. There will likely be a big sell-off at some point followed by a choppy rally back.

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- The following stocks have good news and/or a strong technical pattern

SNDA- beat its earnings handily

SGLP- kept Friday’s huge strength; likely a buy thru 3 when/if it gets there

RMBS- short covering continues; likely a buy thru 11.75 when/if it gets there

MRX- settled litigation with IDXX

DOW- reduced terms in its chemical venture with Kuwait, but deal still going through

Bad-The following stocks have bad news and/or a weak technical pattern

CSE- closed weak on a sell imbalance

FSP- got ravaged late in day on sell imbalance; love it as a buy thru unch if it opens down as it broke from 11 to 8.75 in the last hour yesterday

UDRL- closed on its low

CHK- closed on its low, continuing Friday’s deep declines on the share issuance news

HIG- closed on its low

EXM- closed on its low

MTL- closed on its low

DRYS- closed on its low

CLF- closed on its low

MS- closed on its low; watching this one and GS today

SPG, VNO, EQR- among the REIT’s which got demolished late yesterday

JEC- huge short covering spike ended with a thud in closing on its low

XOM, CVX, RIG, BHI, HES- among the big oils to close on their lows

LM- shored up money market funds; not necessarily good because it restricts their capital a bit

TSRA- ruling by panel that its patents are valid on its technology, but have not been infringed upon by its competition

MOS- warned

MVCO- drilled on funding concerns

FNFG, PBCT, BRKL, HCBK- among the mid-tier banks that were thrashed; many at new trend lows

XNPT- failed phase II trial

SHLD- missed earnings by a lot, but announced buyback of stock


Earnings:

TUES DEC 2 BEFORE

BECN BZH SHLD

SPLS

TUES DEC 2 AFTER

MRVL OVTI SIGM

SOLF



Good luck today.

MON. DEC. 1- Ray Stevens And "The Streak"

The Chicago Bulls in the Jordan years and, say, the 1998 New York Yankees are very used to winning streaks. The popular 1970's performer even sang a song about "Streaking," albeit a different kind of streak! However, until the last five business days, the Dow Jones Industrial Average much less the S&P 500 had not had a five-day winning streak in 16 months-an absolutely amazing feat. The significance of this is of course almost meaningless except for two things. First, it shows just how incredibly persistent the selling pressure has been. But the major tenet to take from this factoid is that either the market is changing from a bearish to a bullish pocket and/or this is a major short covering squeeze as last week was the Dow’s best week in 75 years percentage-wise. Either way, as we enter what is traditionally the most illiquid month of the year in what has been the worst year for the markets in a couple of generations, it is important to note for us day traders that the environment is changing. The VIX has fallen so the volatility won’t be as drastic in all likelihood, but that just makes things more dangerous. All of us are gonna want things to happen and there will be times when they just aren’t there. So, this is not the usual cautious column…it is an extra-cautious warning. The markets are wild and will remain so, but intra-day, things as evidenced clearly Tuesday and Wednesday of last week in particular had direction, but it was attained only after a lot of shaking. Keep your eyes peeled to all of the macro indicators like bonds, oil, et al, but be aware- there are pockets like last week when none of it matters.

Markets overnight were heavily lower throughout the world. Asian indeces were down 1%-2% while losses intensified in Europe to 2%-3%. Oil is down significantly and the 10 year bond continues its ascent. Look for some major profit taking this morning after the hefty gains from last week. After that, stocks will likely try to stage a small rally, but overall it should be a stagnant choppy day on relatively low volume amid a dearth of news off of the weaker opening.

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- The following stocks have good news and/or a strong technical pattern

CVG- closed very strong; looking for A-B-A2 thru Fri.’s 6.40 high

SGLP- likely will reverse; however, if it opens lower, looking to buy thru unch at 2.65

TRW- looking for potential A-B-A2 thru 3.78

JEC- continued short covering panic; looking for reversal else A-B-A2 thru 44.90

LNC- closed near high; could be more short covering above 13.75

OCNF- closed strong; looking at A-B-A2 thru 3.50



Bad-The following stocks have bad news and/or a weak technical pattern

SPG, NLY- closed on their lows due to imbalances; if they open higher and get down to unch, short thru unch

RUBO- the stock of this restaurant chain plunged to a new move low on Friday; look to short thru Friday’s low around 2.15ish

Earnings:

MON DEC 1 BEFORE

(none)

MON DEC 1 AFTER

SNDA


Good luck today.

FRI. NOV. 28 - Half- Day After Thanksgiving

On this Kid’s Day at the NYSE in which everyone is encouraged to bring their kids to work, let’s reflect not on what we’re thankful for, but rather why the market is open today. The market is typically open for half days on the day before Independence Day, the day after Thanksgiving, and Christmas Eve. There have been selected days in which the market has been closed full-days as well. Namely, the market closed for several months during World War I, a stretch of days on and off between 1928 and 1930 in which member firms were allowed to catch up on work from the heavy volume of that time, and on days in which there have been funerals of presidents. Most recently, the market was closed for four days during the horrible 2nd week of September in 2001 following the terrorist attacks on American soil. Although there is nothing in the official stock exchange guidelines, there is indeed an unwritten rule that the markets not be closed for more than three days in a row so as not to allow for an order build-up and/or exacerbate a move should there may be a major news event. Since we have to be here, it is important to note that many days after Thanksgiving have been major trading days for the markets. One of the more recent interesting post-Thanksgiving sessions occurred in November 2000 after the election results were announced on Thanksgiving night. Days after Thanksgiving are typically ripe with illiquidity, but also bring in many amateurs playing stock market thus exaggerating moves that much more. So, although it seems quiet out there, be aware that in this unusual year, this could be an unusual day with sharp movement all the way up until the 1PM ET close.

Markets in Asia and Europe rallied net-net the last couple of days, however Europe turned aggressively lower this morning. Combined with worries over terror and the massive recent run-up, the markets are due for some profit taking this morning. Look for a down open, an attempt for a rally, and then choppy action for the duration of the shortened trading day.

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- The following stocks have good news and/or a strong technical pattern

GFG- very strong; could be A-B-A2 thru 2.90

AGM- strong; looking for A-B-A2 thru 5ish

ATPG- closed near a high; looking for more momentum

RMBS- momentum continued; looking for more of same

IOC- strong close; looking for A-B-A2 thru 12.50

JRCC- momentum continues; looking for buy thru 11.90 on an A-B-A2

BAC, MER- BAC got formal approval to close their takeover of MER and aims to finish deal by end of year 2008

GHM- closed on its high; looking for more momentum

EOG, SWN- among the very strong energy stocks on Wednesday

JEC- gigantic up move in last few days; short squeeze likely continues otherwise A-B-A2 to downside

LUK- violently higher on Wednesday; looking for continued momentum today, particularly thru 19.50 if it opens below there

MIC- way up on Wednesday; looking for A-B-A2 thru 5



Bad-The following stocks have bad news and/or a weak technical pattern

PCK- may discontinue dividend as announced Wed. morning; looking for A-B-A2 thru 6

FRO- missed earnings horribly

CHK- needs to issue shares to raise capital; file offering late Wednesday afternoon…never a good sign to file an offering on the eve of a major holiday


Earnings:

FRI NOV 28 BEFORE

FRO


Good luck today.