Will unemployment week stall our recovery?

Another week for the books indeed. Last week we saw a big up move Thursday on more kick the can news for Greece. Take this as bullish for now, bearish later, eventually we will come to that day where we can no longer be doing this anymore, enjoy it while it lasts. We saw the ES jump from 1,220 to 1,290 in 2 days, stops looked to be in place around 1,290 as there was a small amount of selling pressure towards the last 15 min Thursday. We are positioned to go either way this week, so a couple levels to watch:

Downside: Support and 200 DMA are both around 1,266, 1,256 is UNCH for 2011

Upside: Resistance: 1,294 (Got here Thursday then pulled back off the highs) then 1,306

I see us possibly creep higher to 1,300, then pull back a bit, have a selloff possible below out 1st support on the jobs report Friday.

Last week I highlighted Manitowoc, Bunge and Dominion, appeared to be right on all 3 of those.

We saw a big push to the upside in $MTW on a stellar report

Big move above the $10 level in $MTW definitely bullish signals

Also saw Bunge with an ok report and a nice move up above $60, still in my opinion very cheap on valuation.

Above $BG

Downward move after earnings from Dominion Resources after the report

Trading range appears to be compressing, still long imo

Earnings this week I will be focused on my own holdings since they will all be reporting; Frontier Communications, Invesco Mortgage Capital, and Eastman Kodak. Frontier $FTR has recently broken down once it crossed $7.00 which was huge support. I have been holding onto this name for 2+ years now and the return has been basically flat when the large dividend is included. After the report comes out this Thursday, I will make a decision to dump it or not. EPS looks to come in around .06 There is still a buy rating on the name, though the P/E is rater high at 39.

Above FTR, looking for a possible breakout to the upside after it has been beaten down pretty bad.

Invesco Mortgage Capital has also been hit after the US government shutdown fears, then the broad market decline and has not recovered much of its losses. In my opinion, this is a very safe company as long as there is no talk or action of US default/shutdown. $IVR has been hanging between $14.00-$14.4 for a month, finally broke out of that range last week up to $16.

Above $IVR with a nice move up last week, looking for another good report here and a possible move toward $17

Eastman Kodak I bought at $1.50 and holding a small position spec. only. There is a lot going on right now with patents and I figured I’d put a couple hundred dollars in, might go up, might not, but I think that they are working very hard to try and recoup losses and cut costs. They are expected to post a .62 cent loss EPS.

$EK is given a slight bias sell rating.

Have a good week everyone.

Commentary/Earnings week preview

Well, it has been awhile since I’ve posted (about 3 weeks) and before I begin, I just want to say thank you for whoever reads these, I hope you understand and get something out of them.

I have been quite busy with school, as to why I haven’t been writing, grades have not been where they need to be for the semester, been pretty anxious about that. Getting halfway through the semester already and having a 2.4 is not good news, but on the bright side there is nowhere to go but up from here. Just one more semester of these required classes then the real stuff comes, honestly cannot wait.

Lets look at the last three weeks in review: The Monday and Tuesday following my last post we saw some huge volume pushing the ES down from 1,130 to near 1,068 by Tue. AM, that seemed to me like a bit of capitulation, and a rally off of that was possible to take us back up to 1,100. Last hr of trade Tuedsay we rallied 40 handles to begin the 2 week long buying on no news (hope) to bring us to where we are now. We closed out Friday on the highs, right about 1,240; mind you NOTHING AT ALL has been resolved in Europe and we still have our own problems here. Unemployment still sucks, although we created jobs, the U6 is at all-time highs which is the real indicator. Thank you to the Federal Reserve for inflating all of these companies balance sheets over the past 2 yrs, we are reporting stellar earnings, probably somewhat of a contribution to run this thing up 180 handles in 2.5 weeks.

I keep stressing this, but we have seen no real signs of growth, keyword “green shoots” (yes I know that term was used Mar ’09) but literally until we get a handful of +300K Non-Farms and strong positive Philly Fed, Chicago PMI, Housing turns around, etc. we’re not going anywhere. I am a seller of any run up, including this one.

This does not mean I am a seller of every single stock, there are still value plays out there. Consumer staples and Utilities are what I am bullish on, people still need to eat and need electricity; the dividends they pay are also a plus. We have many companies that will be reporting this week, almost 1,000, but I want to focus on a few names I will be looking at. Before I get to that, how I see broad markets setting up and trades I have made.

I expect to give a little bit back from the run up we’ve seen. Closing below 1,240 and not hitting it intraday tells me we could be in for a rude awakening. I can see possibly one more squeeze up to 1,255 (Fibonacci #), but one can only juice a dry lemon for so long. I still like the 1,230 for resistance, so trade that. 1,200 or below definitely a possibility by the end of this week if we get a few bed reports and EU continues to disappoint.

Notice how we pushed up above 1,230 then pulled back then ran it up again, watch that because even though it broke resistance doesn’t mean it is a buying opp.

I made one trade in the past 2 weeks, and it has done quite well actually. American Airlines on the huge slam it had on Oct. 3rd on rumors of bankruptcy. I got in at $1.90 still holding on for now and has made it’s way back to $2.9.

Right now it is hanging around the 2.74 pivot, I’m looking for a little break to the upside, especially if we see a nice selloff in WTI this week. Unless they actually do file (In my opinion they are pretty safe) then seeing it drop below $2 again is unlikely.

Potential trades this week: [Monday] Manitowoc ($MTW), [Thursday] Bunge ($BG), [Friday] Dominion Resources

Manitowoc is a capitol goods service company that specializes in crane service and food service. “engineered lifting equipment for the global construction industry, including lattice-boom cranes, tower cranes, mobile telescopic cranes, and boom trucks. Foodservice is a manufacturer of commercial foodservice equipment serving the ice, beverage, refrigeration, food-preparation, and cooking needs of restaurants, convenience stores, hotels, healthcare, and institutional applications” (Google Finance). The food service part of the company interests me, people are starting to eat out more and food is a necessity. I can see with the reaction of Darden and other restaurant names they have rebounded quite well. The stock got killed in ’08 and has not really rebounded.

Looking at their past reports, they actually are not bad at all. Comparing March to June, they dug themselves out of a 52.4M deficit to make 2.7M, definitely a start. Revenue increased, though expenses also increased. I’m looking for a pop to above $10 on the report of better than expected earnings.

Bunge ($BG) is a global agricultural and food company The agricultural business is “involved in the purchase, storage, transport, processing and sale of agricultural commodities and commodity products. The sugar and bioenergy segment produces and sells sugar and ethanol derived from sugarcane, as well as energy derived from sugarcane bagasse, through operations in Brazil.” Like I mentioned above, I am bullish food and agriculture, I see this as a very strong growth stock as the world population continues to increase. From September of last year, their net income is up 30% while increasing revenue from 11.6B to 14.4B, though expenses were 2B more than expected which contributed to a large decline on their last release.

Above $BG, the median price target is $80 and with a p/e of 8 it is still very cheap based on valuation, I have a strong buy.

Last is Dominion Resources ($D), they produce and transport energy in 14 States. Dominion has and in my opinion will continue to do well due to demand for energy and utilities. The 3%+ yield is also very nice. They manages to cut expenses 400M q/q though revenues were a bit lighter. I would buy any large dip in this name (5% or more) they usually selloff on the report then jump right back up in a couple of days

That’s all this week guys, we are getting right into the middle of earnings season, look at the beaten down names with strong reports and make some $, I may also be getting in a few others this week but these are the big ones that caught my eye. All of my trades are done on my twitter (peter_eller10) so you can catch me there.

Good Luck Everyone!

September Jobs report Friday

Yet another rollercoaster ride this week to bring us 60+ handles up and down to end up on Friday basically unchanged. Technically speaking, the markets are breaking down and the lows are nowhere close to being put in for the year. My guess is that we will continue to play this rope-a-dope for another couple weeks until the EU can no longer give us “good” rumors. Speaking of rumors, that is basically what the markets have moved on the last 2 months, it only takes one person to say something completely untrue to move the ES in a ten handle range within a minute. How do you expect to make money when the game is rigged?

The third quarter ended Friday and it was the worst quarter since Fall ’08. Broad markets down 8-10%, small cap Russell 2000 down 20%. I honestly would not be surprised to see continued downside and heavy selling into the closeout of the year, granted the Fed does not step in. You can all very well see that out gov’t has done absolutely nothing but put a band-aid on a gushing wound twice. Right now, we are slamming it down because this is what should have happened 2 years ago. We would literally still be at S&P 700 if the government did not intervene. Unemployment is worse, banks are still in bad or worse shape and still losing money, jobless claims still printing above 400k, Chicago PMI, Philly Fed, consumer sentiment, etc. all multi-decade lows. Those of you who buy on these slams, especially the banks, good luck with that in the next few months because we won’t be seeing a next day ramp; it might work now because investors are so confused. The problem with banks is they are not at all benefitting from the low interest rates set by the US gov’t, while still suffering from the housing crisis. Read this great piece in the Fiscal Times written last December explaining how lower interest rates can be beneficial to our economy: http://www.thefiscaltimes.com/Columns/2010/12/17/Rising-Interest-Rates-Really-a-Bullish-Sign-of-Recovery.aspx#page1

Alright, that’s enough of my view, back to what happened last week. As I was saying, we moved quite a bit but still stayed pretty tight in the range. 1,130 held support this week, but don’t trust it next week, we have a lot of data coming out, especially the much anticipated September jobs report. As you all remember, August’s was not very nice at all +0 with revisions negative. This one may very well be negative, and I’m going with the fact that it will be a loss; we will break below 1,100 by Friday. We are literally at the breaking point.

An updated ES chart showing what happened this week from last, once again we literally did not move, just some huge swings. Also, drew in some predictions which I explained below.

What I see happening in the ES this week leading up to the jobs # is a nice ramp to start off Monday on an oversold bounce, close at or near highs, Tuesday unch to slightly neg, Wednesday open lower, move up midday then 3:00 slam to lows, unch to positive Thursday and Obliteration Friday.

If you look at what happened last month, exact same thing.

As some of you may have noticed, I have been completely off Twitter for a week now. Got three test grades back and they were not the best (72, 76, 80, one of them Economics) nowhere close to where I should be, figured I was spending too much time on there so this is just an experiment; I will probably be off for another week or two, I need a break anyway lol. I was active at the desk this week though. Before I begin with Eastman Kodak’s huge plunge Friday, let me say that yes I did buy some at $1.50 and I’ll explain. Basically this is probably the biggest spec stock right now, no one knows exactly how much their worth, but I saw an opportunity for a bounce above $2.

Notice how back in early Aug we saw a dip, then recover. Friday’s move was very very overdone strictly on rumors of a bankruptcy filing. Even in after hours, they are back up to over a dollar, but whoever bought it at .54, congrats you just doubled your money in 2 hours. Still waiting it out for now.

Got lucky on Ener1 $HEV on a slam Thursday. Broke below the .12 pivot Thurs, bot at .1 and sold out at .14 on Friday made $60 bucks, so that would negate out about 2/3 of my loss on $EK this week.

Above $HEV

Not much in the way of reports this week, going to stay pretty quiet until mid-term exams are over with Friday, then get back to it next week when Q3 earnings come out. Good luck everyone and stay safe.

Range bound or get loose under 1,100?

Another wild week we had, markets were very ugly: Dow -6.4%, SP500 -6.6%, Nasdaq -5.3, Russell -8.8%. Commodities took a heavy beating also: Copper -16.5%, Gold -9.6%, and Oil -9.2%. Only two indexes up last week were the volatility index +30% and the US Dollar +2.5%. The moves we have seen in the US dollar since Bernanke spoke in April have been bullish to say the least. With no set idea of anymore stimulus, it is pound town for commodities as investors flock back to King Dollar and treasuries.

Bernanke’s speech was anticipated by many on Wednesday afternoon to once again prop the economy up with “Operation Twist” buying of long dated maturities (30yr notes). Investors did not like this as they sold the ES off 35 handles in 90 min. Those hoping for a rebound Thurs. morning were not going to get it as it continued from 1,166 breaking through a strong support of 1,120 to 1,113. Shorts covered in the last half hr to 1,130. Friday was more of a digestion/ slow day pretty much with a 10 handle range from unch to positive.

It was also a historic week for the 10 year note; we saw the yield dip under 2% earlier this month just to shoot right back up to 2.13% last week on a hope rally. This week was the sure test of Jeff Killburg’s (@thekillir) 1.67% target. We took a huge gap down to 1.7% this week, a 30+ basis point move, something not seen since Fall ’08. As of right now, the 10 year note is at historic all-time lows.

Picture above is the 10 year note showing huge drop-off since ending of QE2 in June. How many more weapons does Bernanke have up his sleeve?

I have also established new trading ranges in the ES this week. Even though we have broken through a huge 1,120 level, we have not closed below there. Thursday afternoon was indeed dicey trading under 1,120; it seemed as though the bulls were trying to defend, lost for a few minutes then bought them back again. This to me signals a bullish sentiment, if we closed on those lows, the ES could have gone anywhere below 1,120 Friday.

Notice how the same thing happened back in late August when we broke the pivot, we saw huge gyrations for a couple days, then shot back up again to the upper 1,230 resistance. If we start off the week with 2 red days and a close below 1,110 sell it till my next ultimate low target 1,050.

Did not do any trading this week, so I have nothing to update in that way, though I would like to highlight what I mentioned in last week’s blog about AutoZone ($AZO). As I said, after the earnings report, we would see profit taking down to near $300-310 then load back up. The report was very good, still seeing a lot of growth in the company as they blew past expectations.

Chart of $AZO above shows a nice bounce after breaking through pivot near $312; sold off about $20 from its all-time high. I’d be a buyer if it did a stock split, too pricey to trade as I have said before.

Earnings front this week has me looking at a couple cheap names where I could put some $ to work. First is Sealy Coropration ($ZZ). Via Google Finance they manufacture and market a range of bedding products, including mattresses and mattress foundations. The Company’s bedding products are manufactured and marketed in the Americas under its Sealy, Sealy Posturepedic, Stearns & Foster and Bassett brand names. In addition, it manufactures and markets specialty (non-innerspring) latex and visco-elastic bedding products under the Embody, Stearns & Foster, Reflexions, Carrington Chase, and MirrorForm brand names, which it sells in the specialty bedding category in the United States and internationally.

The company has recently hit a new Mar 2009 low of 1.55, closed at 1.59 Friday. Quarter By quarter, the company has had a loss since August of 2010 to their recent report in May 2011. Aug. 2010 showed a 15M loss and they have managed to bring the loss to only 377K this May. I am being optimistic in them reporting a slight profit to a better than expected loss. I will buy $ZZ if it goes under $1.55 Monday before the report Tuesday.

Shown above is a chart for $ZZ with my target.

Another is Micron Technology ($MU). Micron specializes in making semiconductor chips and RAM. Looking at their income statement comparing March and June 2011 q/q they appear to have brought their operating income from $179M to $237M by cost cutting from 1.82B to 1.66B. They also ended up with less revenue (2.25B v. 2.13B) Net income went up by only $3M dollars compared to March. I’m looking for a little more bottom-line growth and a test of the 7.00-7.25 range. Median target for Micron is 9.65 via Yahoo Finance.

Above is ($MU)

Going to be another fun, volatile week folks, stay tuned to @peter_eller10 for more. Good luck trading!

Profit from a good week

Wall St. expected to open lower last Monday, instead stayed down 1% to unchanged until the last hour were we saw a 20pt ES ramp, starting a week-long 55 ES pt churn higher. This was the best week for investors in almost 2 months, but are we out of the woods just yet? From chart patterns, I can see that we are still stuck in this range that has been hard to get out of since early August. The ES bounces between 1,120 and 1,220, then if broken through those levels, we see huge volume spikes, and movement back down to the range again. Since end of August, we have held that tight rage. The ES seems a bit toppy here around 1,220 though with Europe always in the rumor mill, a lot of hot air can push this up or slam it down at any second. Breaking above the R3 pivot (1,234) is key for those of you who are bullish.

Notice ES range still staying very tight with this near 5% move up last week.

I was very busy at the desk last week making 3 different trades, 2 of them doing well and the 3rd looking for an exit point this upcoming week on a minimal loss. Intraday Monday, National Bank of Greece hit a new low at .76, looked like a buying opportunity for a quick in and out bounce. Bought 500 @ .78 shot up to .82 Tuesday, but hung on for one more day till end of the day Wednesday and sold there around .95 or so. These European banks, especially $NBG are huge rumor names and just by looking at the chart and hearing the news, something might be getting done. Investors flocked to bid it up huge but then knocked it down again Thursday and Friday.

Chart above shows $NBG breaking down through S3 but then the last green candle on the line showed a bid up.

Another trade on the whim was PMI Mortgage insurance. These bond insurers and the line have been total dead money since Ambac’s collapse 4 years ago. Was looking at the S2 pivot on this name and seemed to bounce off it nicely. I literally had no idea what I was getting myself into, but this trade was pure luck. I bot at a .2 limit early Thursday AM and sold it when it scraped .27 on a nothing but hot air bounce.

$PMI seems to bounce off .2 rather nicely, if it dips again, I may put the money to work for a quick day trade.

Third and final trade was a hail mary pass that sort-of failed on Friday. Via Brenna Hardman (@RMBrenna) on twitter, I got quick word that $YRCW was stopped, took a look and it was down 70%+ , a definite circuit breaker to say the least. This Trucking company has basically dealt with bankruptcy and now got a second notice for a de-listing from the NASDAQ. They will convert their preferred shares and all other shares in the company to common leaving about 1.9B shares outstanding vs. current 47M now. It has been trading under $1 for quite some time now, even after its 1:25 split last October. Honestly, I thought 70% was a bit overdone, and that some bidders might bring it back up a few cents before closing down hard. I was about half right.

$YRCW Initially was trading mid .20’s then got a huge sell order for .11 got a bid to .17 then another slam back to .09 and a grand finale (which I thought was day’s low) to .08 I bought 2,000 @ a .09 limit then watched it tick up to .14 by midday, would have been a nice profit, but ended up losing $40 when it closed at .07; looking to hang onto it through this week to see if it can make its way back to that level again. Huge volume on this name by the way, traded through the company 7x (353M shares; 5-10M on a normal day)

Earnings front this week looks rather busy, but I only trade stocks under $15 (A college student w/o the $$)

Looking at $AZO (would never trade, too expensive) but this company is a monster. All-time highs basically everyday, very good recession name, people keep buying parts for their car to keep them running, rather than outright buying one. Expect some profit-taking on the report, stock is up 20%+ in a month’s time and they usually sell-off on the report a bit, but then get right back in for the ride.

One I’m looking at this week is Rite Aid $RAD. If I can get it for the right price, this could be a winner. Looking at q/q, although still a loss, it was cut down almost 75% from 205M in Feb from 63M in May. Expected earnings are (.17)/share.

If $RAD can make it’s way to between $1-$1.05 that’s the sweet spot.

That’s all everyone, have a good week ahead, get at me @peter_eller10 on twitter if you have any questions.

Ride the pain train for another week?

Whew, busy week indeed, in the economic and academic sense. Made some time to make a couple of trades which I will go over in a bit, but for now, let’s review last week. ES had a large gap down on Tue. morning, held 1,140 and ramped 25 handles to close at high of day. Same BS Wednesday, more ramp to 1,199 (bulls failed that 1,200 on the last candle of the day by THAT much) Thursday bears finally crawled out of the cave after 1,200 was challenged and broke through once again for the 3rd time in 3 weeks. I am still bearish this market, the longest so far we have held above 1,200 was 2 weeks ago for 3 days after Bernanke’s last ditch effort speech that fizzled out. Any huge ramp we get for the long term, take the profits.

Chart above is ES showing break down in S3 pivot Friday on a 31 handle selloff, brought us to lowest close since Aug. 22nd. From lows to highs, we see to be in an upward momentum trading range that has held for the last month. The range is tight (80-100 handles) trade the charts, always sell Bernanke and Obama. If we break below 1,150 (which is almost certain to happen, ES just opened down 15 Sun. night), downside to 1,100 is our next stop; I don’t anticipate anything above 1,180 this week, Expect a huge push to the upside on any sign of good news, then a fade.

Last week I made a profitable trade with $TLB pre-earnings release strictly in and out. Studied the charts, looked like a bottom, took a chance. The report was ugly, worse than expected, it dropped a good 8% pre-market before spiking higher in the AM. I bot @ 2.4 limit 200 shares [very small] got out at end of day @ 2.95 made a few bucks.

Chart above of $TLB shows tight range between the b-bands, broke through 2.4 earlier, did it again last week and bot it there.

Two weeks ago I mentioned I bot $CWTR @ 1.00 limit 300 shares. The report was also not good, but sold off substantially afterwards. Downside made it to .80, bounced back to the mid .90’s 2 days following. Next day huge volume spike to upside right out of the gate, had absolutely no idea what was going on, but glad I was not out of the position just yet. Found out CEO was buying up a bunch of shares ramping the stock nearly 25% that day.

Above $CWTR chart. Once again, I day trade so I really had no reason to hold this speculative company after a spike like that. I got out at $1.25, made a few bucks.

This week is going to be a very busy week for me, I’m looking at $NBG for a quick trade. Now I know there is still a lot of contagion going on over there with default issues, but this does not mean there will be a one day pop and out, right? I’m looking to get in under .80 in hopes of a shoot up over a dollar. Then again, anything can happen, banks are no longer “too big to fail”.

Above a chart of $NBG, notice the large spike up to 1.15 from .83 at the end of last month, if some rumor news gets out, could drive the stock up.

While on Twitter this morning, I found this chart of how commodities, equity and interest rates have fared in the last 10 years, via zerohedge.com. Very interesting to see how the market has gone basically nowhere in this past decade, but consumer prices and commodities have skyrocketed (money printing, anyone?)

I will close on this 10th anniversary of Septermber 11th with a picture, if you follow me on twitter of have seen my Facebook page, I put it up a couple of days ago. It is indeed me on the right looking out into the city with a friend of mine the weekend before 9/11. Props to my dad who happened to snap the photo with the American Flag flying over the towers. We will never forget the lives that were lost that day and the tragedy that struck us. Have a good week of trading everyone, God Bless America.

A long labor-less weekend for all

Was last week exciting enough for you folks? From Aug. 26th close of 1,176 in the ES, we ramped up about 55 handles in 2 trading days, just to give it all back and more to 1,173 by Friday. Let me stress this again, nothing has changed. We can clearly see that with the three dismal jobs reports we got out, especially the +0 Non-Farm Payroll number on Friday, that we still have some problems that are not going away in the near term. The 55 handle move up was as one would say the “post Bernanke” rally that faded into oblivion. When Quantitative Easing 1 was announced, we saw a huge ramp up, that ended and QE2 followed. During this time, we were actually seeing “some” very little if any job growth, just to calm those perma-bulls down. Now Bernanke has come out saying they could take action (cough QE3 cough) if needed. The people who bought into the QE happiness in the past have now realized that it was a bad decision. Printing one more dollar devalues the previous one, soon enough we will be driving pick-up trucks to the store full of worthless dollars to buy a box of cereal. Investors have lost confidence and the zero job growth for the month of August was the nail in the coffin. Take the Birth/Death adjustment of +87K and we have a -87K job loss. In the past year, Birth/Death has added 491K jobs, with the biggest increase coming in January ’11 (via ZeroHedge).

Let’s look at a chart of the ES:

Below is a 2 yr chart showing S3 downside pivot of 1,170, no doubt we will smash through that we are already down about 9 handles pre-market for the open Tuesday (markets closed Mon. for Labor day). I still stress the 1,050 level or “begging QE 2 level” as being pretty close to fair value for now. At this level, P/E for the S&P will be below 15 but I believe it belongs to be around 10 until we see job growth.

I did some trading this week, bad result, probably never doing it again (I always say that) but I bought 300 $CWTR @ $1.00 limit before the earnings report, sad to say I got smashed on that call, lost about 60 bucks so far, for now will wait it out, not a big concern.

$CWTR chart gap down after report

I am a bit concerned with my holdings in my long $IVR fund, have lost about 20% since I put $$ in a month ago @ 19.75 (now @ 16.41) being a REIT it does pay a huge dividend of 23%, so I will wait this one out and get paid in the process. Below is a chart of $IVR, notice the gap down on the 18th on heavy vol, secondary offering diluting the shares took place that day.

Second week of classes begin tomorrow, first week went very well, I am really going to enjoy this semester, new interesting professors with different backgrounds to help me along the path to my dream job. Pretty quiet earnings front this week, so very unlikely I will be trading. Have a good labor-less holiday weekend everyone, always buy protection!