Sunday, August 28, 2011

More green ahead, or hot air?

Last week the bots tried to push the market down, but buyers won the match, pushing the ES up a good 50+ handles on no real positive news. This is starting to become a new thing “buy on no news” still don’t understand why because nothing has changed. Not been on twitter as much as I would like last week (maybe that’s a good thing) been busy trying to socialize with the new teammates. As far as trading goes, went for a long shot on $DRYS limit @ 2.55 on Friday, got to 2.56 then straight up to 2.8 after the Bernanke rally on Friday. Have to say, was definitely not expecting a turn around like that, I know most were expecting a selloff, but we have been ramping all week so why stop there?

Above is a chart of DryShips ($DRYS) line @ 2.55 seemed to hold and bounced off for the last two weeks.

This week I will be focused on earnings. Up for reports are: $PVH and $CPB

Phillips Van Heusen $PVH is in the clothing retail business and the parent company of Tommy Hilfiger, Calvin Klein, Bass, IZOD, Nautica and many other well-known mid to upper class names. Looking at their income statement, Revenues y-o-y have more than doubled with increasing sales, though net income is down from 161M to 53M. Expenses, especially selling, have more than doubled from 2010 (2.21B v. 938M), along with a large increase in interest expense. I’m giving them a neutral hold, and would not be buying the stock before earnings release Tuesday. Retail is very sticky to trade right now, especially with the increased volatility we have seen.

Above is a chart of $PVH; there have been a lot of violent swings, from $70 to $50 then back to $60 all in a months time. Trade what you see.

Campbell Soup Company $CPB not only makes soups but is also the parent owner of Pepperidge Farm (Goldfish Crackers). One can pretty much say that is a home run with the Goldfish Crackers in the Tomato soup, right? I like this company a lot and it has been beaten up pretty bad. It holds pretty steady and pays a nice fat yield 3.75% while you wait. Recession-proof as well; a very defensive name; people are going to want something relatively cheap to eat, why not some Chicken Noodle? Looking at their net income, it has been on the decline since October’s report last year, about 40% of last October’s net was reported in May. They are keeping costs down and have been cutting quite a bit, but cannot get the revenue boost. Quarterly revenue from Jan to May is 2.1B v. 1.8B. The revenue number doesn’t really bother me, I’m sure they will beat last quarter easily, stock price is cheap @ $30 the machines have been behind the 10% unnecessary selloff this month. Forward P/E of 12 also signaled as cheap. I have it as a buy; will probably be trading it this week, time allotted.

Above chart of $CPB notice huge dropoff this month on absolutely no news whatsoever of the company, just your HFT at work, (hint hint buying opp.)

That’s all for this week guys, stay safe and make some $ this week. For more on trading ideas get at me via twitter: @peter_eller10

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