Making Moves With TIGHT Stops

Out of all hedges.

Into underweight positions:

• ORLY @ 39.05, stop 37
• CAT @ 35.03, stop 32
• URBN @ 19.07, 17.50

10:10 AM

• SMH @ 20.71, stop 20

Using Twitter to Trade

Everyone is using Twitter. Here is a list of financial personalities to twitterer or tweet or follow or chirp or...whatever you do with that thing. Congratulations to Brian Shannon, AlphaTrends, for being considered in the #2 spot.

Read more by SmartMoney.com via Yahoo Finance

Teed Up and Looking For a Reason Not To Buy

S&P 500 at 880!

• BRCM
• URBN
• CAT
• GME
• BEBE
• SMH
• financials

875/77 is a brick wall.

Picking a Bottom

"Monkeys spend all of their time picking bottoms" ~ Hugh Hendry

Q1 GDP Down More Than Expected

Q1 GDP -6.1% vs -6.3% Q4.  Analysts expected ~4.9%.  

This three quarter decline is the first since 1974-75.

Consumer spending (2/3 of the economy), however, was up 2.2% for the quarter riding on a durable goods increase of 9.4%

Semiconductor Holders (SMH)

Out of SMH @ $20.17.  Not feelin' it. We'll be back in here if the S&P cracks 877.

5 Reasons to Avoid Index Funds

This piece by Wayne Pinsent in Investopedia is interesting. Of the five listed I can only really buy into one argument, lack of downside protection. This reason was listed as one of five and along with discipline is our foundation for intended success.

Read more on Investopedia.com

GameStop (GME 30.50)

No matter the itch, don't scratch it, stay disciplined.  This is THE difference between the individual investor and the pro. GameStop is inching North, beyond the $30.50 limit we've identified, but it's doing so on little volume. This move higher must be with conviction or no deal. What's the worst that can happen. We miss out on the next move up in the stock? Nah, it's all good, we currently have an underweight position.

So Much to Talk About

• Financials continue to post good earnings. Credit Suisse profit exceeds forecasts.
• Apple blows the lid off. Apple came in above on the top and bottom line.
• AutoNation beats expectations and is up $3.42 (+20%) in pre-market trade. It is back to $17.70.
• Continue to tee up names in leading sectors in the case that the S&P moves through 877 and 943.

Will financials prove to lead this market out of the cellar once again? Despite the paradigm shift in the financial sector and the implosions that ensued it is logical to think that the backbone of the economy, the financials, will indeed pull through again.  

And remember, the US citizen has the shortest memory on the planet.

Financial sector is setting up for a breakout. SPSY currently 137.51 and we'd been watching the 138/139 level. On UYG, it's $4.

Watching Select Names

We've had SanDisk (SNDK 15.54) since October 27, 2000. With the stock breaking down we'd advised a sale of a majority of the stake October 12, 2007.  This is the first time since that we're contemplating adding shares.  It's moved above its 200 dma, its 4o week and uptrending 50 dma. Watching for a convincing break above $15.

Also:

• More GME?
• CAT
• BRCM

New Positions: SMH & BEBE

Into underweight positions in both SMH and retailer, BEBE.

I like the way semis are acting and, based on Broadcom's willingness to buy Emulex, I'll speculate on the sector as a whole.

We've been in and out of Bebe Stores for 10 years. New position is underweight with a stop at $7.50.

Freddie Mac CFO Found Dead

Freddie Mac CFO, David Kellermann, was found dead from an apparent suicide.

Read New York Times

Pivotal Levels for the S&P 500

S&P 500 was up 27% in December to January run, 741-944.

31% in the current run, 667-876.

The 944 to 667 Fib gives us 838, 805 and 773.

A 667 to 876 Fib would give us 796, 771 and 746.

Is ~770 important or what?  Not only that but a downsloping line from 944 and February 10's 868 intersects 746.

S&P 500: 832

GameStop (GME 29.04)

GameStop, down over 2% into the 28s on above average volume, has reaffirmed Q1 numbers. The move that we'd wanted above $29 April 8th and 9th occurred with little volume and was not very convincing. If the stock moves higher, with volume, buying into and up to 30.50 will be the play. Looking for vol. > 7 or 8 mm shares. Judging by the 1mm or so in the first half hour it looks as though the volume is gonna' be there but which way will the stock go?

ETFs on CNBC.com

Interesting piece on ETFs.

Site: ETF Trends

RAlly for Real?

Investors Still Wondering if Stock Rally is for Real, CNBC.com

Credit to Fund My Mutual Fund

Posted yesterday on the state of buy and hold. Both, the herd and buy and hold, are topics in which we have strong opinions as well.

O'Reilly Automotive (ORLY $37.88)

O'Reilly is nearly breaking out to all-time highs. Like AZO, O'Reilly is a player in the automotive aftermarket parts and accessories market. I'll add with an underweighted position after it bases around $38 and prepares for a move higher on heavy volume of 7 or 8 mm shares. Don't pay more than $39.90.

Wells Fargo Record Profit

Equities will open strong this morning due in no small part to Wells Fargo's (WFC 14.89) record $3 billion in earnings. This surprised the analyst community and will likely shock Washington as well. They will likely step in and take some of those profits away from Wells since it is unfair to produce such an obscene profit.

WFC is indicating near $20, up 30%.

Read more on CNBC.com

Are financials telling us something?

GameStop (GME 29.25)

We've gotten the move we'd wanted from GameStop. Accompanied with big volume another move above $29 would warrant buying up (<$30.50) to equal weight.

S&P Throwin' Up Horns

P&F suggests a bullish triangle breakout for the S&P 500 with a price objective of 1065. We'd gotten a similar signal in December in the low 900s. I'd rather play close to the vest but queue names: 14% long & hedged to 10%.

S&P 500: 834

AutoZone (AZO)

AZO falling over 3% today on a Citi Analyst's downgrade to Hold.  I'm not worried about it unless it falls below its 50 dma, currently ~148.

Tee 'em Up

bebe Stores (BEBE): I've been in and out of bebe since September 25, 2000.  Watching for it to break above the 200 dma and, subsequently, the 40 week moving average coinciding at around $7.50. Anything near a million shares would be high.

Urban Outfitters (URBN): A lot of teen retailers are shining right now while Urban has been sluggish. Why? I'd like to be back into this favorite company of mine but not before we dig a little.

Free Enterprise at Work

Government just needs to give us a chance.  I know, I know at times it doesn't seem as though we can do anything for ourselves and that Big Brother should hold our hands all of the time.  But it seems as though AutoNation will have nothing of it.  A few weeks ago the company announced plans to assure car buyers that their payments will be paid in the event that the customer loses his/her job.

They came up with that all on their own?  Why?  To drive traffic to their capitalist machine?  To garner market share?  To turn a profit?  Oh no, the horror!  What if it works.  They'll prove that they didn't need assistance and that in dire times it may take some creativity and brass balls to be successful.

Now this is not to say that these programs aren't an indirect result of some government warm-and-fuzzy that allowed Ford, GM and AutoNation to proceed but it does raise the question as to what would have happened if bailout nation wasn't bailout nation.  Would have capitalism and the free markets prevailed?

We'll never know.

Read about Ford, GM and AutoNation in the South Florida Business Journal

GameStop (GME 29.82)

GameStop recently released good numbers and is acting well. I'm looking for it to fall back to a 28-29 range whereby it can launch a renewed assault above $29 on volume of 7 or 8 million shares. With that move we would go to an equal weight position.

AutoNation (AN)

AutoNation has been a WINNER.  Up over 8% today and eclipsing $15 for the first time since June 2008.  Support around $14.

Watch and Wait

US equities are expected to open stongly this morning on news coming out of the G20. Don't get too excited. Notes from March 30 post:

Keep longs and hedges in place and watch the floor of ~800 on the S&P.  The Fib. from the January 944 top would suggest support levels of 805 and 773 and resistance of 838.

S&P 500: 811

S&P Support Broken

800 on the S&P 500 appears to have been breached. Next support around 772. 

I was weary of any exuberance on March 10th (Bear Market Rally Begins?) and 11th (No Buying) when warning against buying and holding.  I mentioned that while a trade to 8000 was possible the odds of seeing 6470 again were good.  

I'd be weary now too. DOW 7608/S&P 797 is not a time to buy the dip.  It is time to maintain a high level of caution and discipline being highly proactively against losses.

S&P 500: 797