The Day that Was - July 25th 2007

Well.. what a day. In some ways the events of the market today made me think the whole market was in the old TV show "The Twilight Zone".

We started out in pre market with the futures up as was expected on a reaction bounce from yesterdays big down day which closed right at support on the DOW. So it was expected that we would have a reaction bounce. The question was would the bounce hold or would it fade and push us further down.

What we got was a day that went up well in the first hour and then it sold off quickly and took us into the red. Then we went back into the green to only be sold off again and end up in the red once again. By the end of the day the market made another try at going into the green and then as the day got close to the end the shorts started covering and we had a quick run up around 3pm. Which was also sold back down before the market closed. We did end the day in the green but it was not a healthy green in my view.

In the pre market we had good earnings from Boeing and that got the buying going early. Some even thought the comments from CountryWide Financial yesterday were "over done" and so the bargain hunting started. But each time the markets ran up there was someone waiting at the top to take their money and send it back down. That is what I did not like about today. Too many times the market would run up and then it would be cashed in an hour later and brought right back down. For me, today's trading action represents "uncertainty" for the rest of the week. If anything will help the market going forward is the good earnings that came in after the market closed.

And speaking of earnings. Apple... all I can say tonight is that out there in the world tonight there are people who were short on Apple who are feeling tonight they were ripped off, and there are people out there that were long on Apple and are thinking they got away with something.

When the numbers from Apple crossed the wires they showed very good earnings and revenues for the quarter, but then the next line said they were lowering guidance for Q4. And it was a large amount that they were lowering by. I was watching the trading activity in the after market on Apple. It looked like total confusion at first. I'm sure there were traders saying to themselves "was that good or was that bad". Then something happened (I don't know what) but a short squeeze was underway and bingo... Apple jumps up to almost $150 in after market. Personally I had no position in Apple (long or short) and I still don't. Normally when a company guides lower in a forward statement the stock will sell down. It is not "what have your done for me lately" that matters. It is "what are you going to do for me tomorrow" that is more important to the investor/trader community. So today's price movement was really strange. In reading some of the news wire comments crossing the screen tonight I find that even the analysts that cover Apple full time are somewhat confused. I don't think they know if they should upgrade it or downgrade it...

So that is the day. I sold my position in Western Digital (WDC) to lock in the gains and not risk it to a possible bad earnings which they are releasing tomorrow. (Today I mistakenly said earnings for WDC were today. I meant to say tomorrow after the close). And with the trading that was taking place today which was looking "unstable" I wanted to bank the profits today. WDC was a good swing trade and I will keep my eye on it for a future setup once the earnings are out of the way.

The swing trade on NightHawk Radiology (NHWK) I decided to keep through earnings as the first purchase price I made was close to support and the downside risk for an extreme loss was limited. So I decided to let NHWK ride. They released earnings and they raised their forward guidance so we should see NHWK trade tomorrow to the upside (as long as the overall market is healthy).

I was in the process of evaluating the downside risk in the GRP swing trade to determine if I wanted to sell all, part, or none at all going into earnings. But I did not have to make the choice because GRP had a big whipsaw at 10:45 and my trade hit the stop at $52.25 and closed. Because GRP never made it to the next buy point for adding the remainder 1/2 of the funds for this trade the loss was small as it was only on a 1/2 position size. I was disappointed in the whipsaw today but rules are rules and that is how we stay disciplined. If I get thrown from the horse I can just get back on again if it is still healthy. Because I still like GRP and I may re enter this as I see how it develops. I will post my intentions on GRP when I see what it does.

I have many charts on my wall with setups that I really find attractive. Yesterday put a big bruise in the middle of many of them. So I need to watch to see if the setups are now damaged or will recover and establish themselves again as valid setups.

I am watching carefully SCUR. When this makes the move over the trend line in the chart I will be initiating a swing trade on that one. They report earnings tomorrow so that will be a catalyst one way or another on the stock. More charts and setups to come as soon as I can say they are still healthy.

See you all in the morning. Good night fellow Rebels!

P.s.: Michael, you are so correct "have a plan and trade the plan". That is the only way to make money in the markets.

Secure Computing (SCUR)

SCUR reports their earnings tomorrow. I am still liking the chart pattern setup. The stock is poised to break through a trend line and when it will signal a new trend. The stock is trading up a bit ahead of the earnings but I am going to wait until after earnings to see where it goes. Then I will look at a possible entry.

SCUR Live Chart

The Day that Was - July 19th 2007

A good day for the RebelTrader portfolio. This morning I entered a new swing trade on NightHawk Radiology (NHWK) at $19.40 (1/2 position to start with). NHWK continued upward throughout the day and closed the day up 7.4% ( up 3.9% from my entry point). I had NHWK on my watch list since Tuesday and today it performed very well and met my buy point. I will monitor NHWK for the next entry point for the remaining 1/2. With the big gain today I expect to see some pullback on profit taking but I don't see that lasting too long before it continues up again.

Today I sold NetGear (NTGR) because I saw what was starting to look like it was topping out. That means that there just was not enough buyers left to out number the sellers and that we were going to end the day with a doji (doji: The name given to a chart pattern which signals indecision). With that trading pattern developing I decided to take the gains and close the trade. NTGR provided a 5.1% gain in 10 days. Remember that it is not important to squeeze every penny out of a trade, what is important is that you have more winners than you do losers. Don't focus on how big the gain is, instead focus on keeping the losses small. The gains will add up.. Every gain is a winner!

I said this morning that I would watch PDGI to see if there was any chance of a recovery and the trading did not show it was going to recover so I closed the PDGI trade to keep the loss in check. PDGI closed with a loss of 6.2%. The sector just did not gain enough strength to lift PDGI.

Today WWAT continued strong buying in the morning on very heavy volume. But I know from experience that it would not be long before profit takers would step in. After a 25% advance in just two days there would be a lot of profit takers. So I waited for the buyers to continue to buy up WWAT in the morning and then I sold 1/2 of the position at $2.39. That was a 30% gain in 7 days from the first buy point I entered WWAT. The profit taking increased as the day went on and that is OK, that was expected. I am holding onto the remainder of the shares for the next buying surge. That may not happen right away but if it does then I'll sell the remaining 1/2 on the next upward move. I have set a stop loss on the remaining shares at $2.15 (even if the price comes down to that point and my trade is closed it is still a profit on the remaining shares!). At the end of the day the remaining 1/2 of my swing trade is at 14% average gain.

My swing trade in GRP also advanced well today and that trade continues to do well. Same with WDC, and after the market closed today Seagate (STX) reported their earnings and they were good. This should lift the disk drive sector and WDC with it! WDC was trading up another 1.8% in after hours.

BIG finally got some buying today and started lifting that swing trade back up. I'm watching it closely.

Some news on the earnings front. Google reported their earnings after the market closed and for the first time ever they missed the analysts estimates. They missed by 3 cents on the EPS. This sent shock waves through the Google investors and a massive sell off took place. At one point Google was down almost $50 per share (8%). This is a large event, never has Google missed their earnings and this will certainly put the brakes on Google bulls. This will have a substantial impact on the internet sector. In sympathy with Google; Baidu (the Chinese search engine giant) (BIDU) was also trading down in after hours. What we are likely to see now is analysts will downgrade Google, this will further push the share price down in the near term I feel.

SanDisk (SNDK) released good numbers and investors were happy as in after hours the trading was up 6.5%. This will help the PC hardware sector, and may even rub off a little on my Western Digital (WDC) trade.. :)

Microsoft (MSFT) released their earnings also and they were fair. The market responded with mixed reactions and in after hours was trading down 2%.

The financial sector today was still a speed bump for the bulls. Kind of like driving a car with one foot on the gas and the other foot on the brakes. That is what the rising oil prices is doing to the markets. We are now near $76.00 for crude oil/barrel.

I'm keeping my eye on SCUR. This is a stock I mentioned yesterday. It is nearing a buy point when it crosses above the trend line.

On Monday I posted a chart for Apple saying that I feel the $140 price was going to be difficult to break. Today Apple tried to break above $140 but it could not hold the gains and came back down to close right at $140.00. And in after hours trading Apple is down to $139.00. If you look at a chart for Apple (candlestick chart) you will see what we call a gap up doji on lower volume. That is more often than not a signal of upward buying pressure being exhausted. In technical analysis the chart says Apple will pullback now. Eventually Apple will resume a new upward run but not right now according to the chart.

Good day to be a Rebel !

New Watch List Item - SCUR

Add SCUR to your watch list. The technical analysis of this stock indicates a building momentum along with improving financial health. This company is involved with security software. At this time the stock is right up against a trend line (resistance). A buy point is only when it breaks above the trend.

This company reports earnings on July 26th AMC (AMC: After Market Close) so it is too risky to take an entry before then. If on the 26th the company reports good numbers then watch it for the move over resistance.

Live chart

Static chart shown here in this post.