Bullish Percent Indices

A number of the bullish percent charts have gone into a Bull Confirmed status at extremely low levels. We will be analyzing this further over the weekend but events like this will shift the model portfolio significantly to a long bias.

Shorting Some DFS - With a Really Tight Stop

Adding a short position of 300 shares in DFS this morning at $11.60. The target for this trade is $10 with a stop going in at $12.15.

Getting Long - TIVO, PLXS

Adding 1000 shares of TIVO at 6.75 this morning. The P&F chart is not with us but the strength on the Netflix announcement yesterday and the breakout today suggest that $10 can be seen within a couple of weeks.

Adding 400 shares of PLXS this morning at $17.50. Target of $25, downside stop TBD (in the 14-15 area).

DAL looks great - stay with it.

Repositioning - Shorting Some Drugs

JNJ - Shorted 200 shares this morning at $60.75 - stop goes in at $65. Downside to the low-40s.

ILMN - Shorted 300 shares this morning at $30.80 - stop goes in at $34. Downside to the mid-teens.

AAPL - Stopped Out at $102 on Wed.

CSCO - Mistake but Not a Huge One

Stock never really broke $16. Taking advantage of the bounce to close the position this morning at $17.5.

CSCO Long Position Was a Mistake

The P&F Chart has issued a new sell signal and we were not prepared for that. This position will be monitored and hopefully kicked out on a bounce. Worst case, stop will be put in at $15.75 after trading opens on Monday.

AAPL - Stop is in at $102

This stop point is based on the new P&F formation.

Bought 300 DAL at $8.75

Stop is in at $7.40

Ouch - GS stopped out at $102

That was a swift kick in the (your choice).

Bought 50 shares of GS @ $120

Airlines Are On Watch

Delta (DAL), Continental (CAL) and Republic Airways (RJET) all look to have some good upside for a short term trade.

It seems crazy to think about buying airline shares as we head deeper into a recession, but perhaps lower oil trumps those bad feelings?

We should not be chasing these stocks higher, the entry points and stop points are below:

CAL - Entry $16.5, Stop $14.75, Target $23
DAL - Entry $8.75, Stop $7.40, Target $14
RJET - Entry $11.25, Stop $9.75, Target $15

Based on the above, I will target DAL for the Model Portfolio

Going Long Goldman Sachs

Yesterday GS broke above $120, and while the Point and Figure chart is not with us, we are going to dip our toe in the water for a short term long trade. The stock can make its way back toward the $135 mark, and may have enough strength to get to the upper $140s.

If it opens down today that would be a gift as the target entry would be better around $120.

Purchasing 50 shares for a short term trade.

Covered Up Some Shorts

The retail stocks seem to have found a short term bottom and I am closing out the short positions, declaring victory and waiting for higher prices to put them out again:

300 M @ $10.60
100 GPS @ $13.25
100 ARO @ $25.50

I want to reiterate that I do not believe that retail and related stocks are done going down. It just feels like there is some small upside and better prices to short at in the near future.

Getting Long Some CSCO

Opening a position in CSCO, 300 shares @ 18.50. Looking for a short term move into resistance at $22.

Shorting More AAPL - $98.75

Shorting 50 more shares of AAPL at $98.75 ahead of earnings next Tuesday. Expecting disappointing guidance and a swift move downward.

Should take my own advice

Had I simply taken my own advice and executed the trade strategy outlined last weekend in the Blog I would have cleaned up. But alas, focus was diverted into a stock someone else mentioned and clean up I did not.

There are a lot of good patterns developing that will prove profitable - more to come.

Short List

In addition to the quick long ideas, I am also looking at the following short ideas, either soon or after a bounce:
a@d@v@ s@

MGA - after slight bounce
CRMT - soon
CACC , ACF - Monday
PCAR, KMX, CPRT - after slight bounce
BNI, UNP - before CSX's earnings on Tuesday

The RLX should be watched closely as retailers should be shorted as the index bounces above the 300 mark. Top candidates would be BBY, ANF, URBN, LULU, JCP, SHLD, JCG and GES.

Plan for Monday - Select Buys for a Short Term Trade

Now that we have had a good night's rest, let's try to assess some of the recent chaos.

There were a number of stories that came out after the market closed on Friday about forced margin selling on behalf of company executives as well as rumors of potential hedge fund liquidations and closings.

To start, Aubrey McClendon (CEO of Chesapeake Energy) apparently used borrowed funds to acquire his millions of shares. As a result, it is reported (by Bllomberg and other sources) that he has involuntarily sold all of his 33.5 million shares to meet margin calls. Sort of a real life Trading Places moment. Now, why a billionaire would use borrowed money like that to increase his position is something I do not uite understand but you have to figure that kind of forced selling will mark a bottom in the stock.

Apparently birds of a feather flock together because Bob Simpson (CEO of XTO Energy) sold more than $101 million dollars worth of XTO stock for similar reasons.

The rumors of some hedge fund closings are unsubstantiated at this moment but if you take a look a the chart of virtually any oil-related stock, it would appear that one of two things is happening:

1. A Hedge Fund or Funds that were long energy are being liquidated involuntarily, or
2. The world is coming to an end

Will keep an eye out for confirmation of the news, but some thoughts for next week are that you can get long some energy names for a trade. I repeat for a trade. Since the plans are short term in nature, I am considering buying October calls on some of the names below but need to do more work this weekend to put together the actual plans.

At a minimum, in the PTS Model Portfolio we will get long some of the following:

CHK
XTO
XOM
NOV
RIG
DO
HAL
SLB (appears the strongest at first glance)

Food and drug stocks are now a place where we can dip our toes in as well for long term bargains - specifically PEP, GIS and PG. But that is not what this blog is for. Trying to develop a thesis for GIS getting back to $65 quickly but am not loving the idea right now. Perhaps the Oct 60 calls are cheap for a reason.

Lastly - what the hell happened to JNJ - Christ Almighty - just checked on that one.

Oh wait, a friend of mine bought JNJ earlier in the week - WHY DID WE NOT GO SHORT IMMEDIATELY.

All kidding aside, that one will be added to the long list, perhaps on a long term basis as there has to be some value there as its business is sounds and it does not need access to the capital markets. JNJ releases earnings this coming Tuesday, but I am not sure earnings matter at this point as the markets are being ruled more by fear - check out the VIX chart.

Til tomorrow.

Sticking with the AAPL Short

Missed a good opportunity to cover the AAPL short in the high 80s but am confident we will see that again. Although folks will continue to try to rally this stock, the earning of AAPL are going to get hit hard - it is just a matter of time.

Will look to put out more shares if the stock approaches the $105-$110 range

Covered the Majority of the Retail Shorts

Essentially covered half of the retail shorts yesterday as the velocity of these declines leads me to believe that a bounce is near. Unfortunately none of the trades were done at the open but all result in great profits. Trades were as follows:

Buy to Cover 300 shares of ARO at $24.50
Buy to Cover 400 shares of GPS at $14
Buy to Cover 200 shares of KSS at $32.50

Buy to Cover 200 M at $10.50. Only covering 200 of Macy's as I believe the company is heading straight toward bankruptcy after we get through General Motors, Ford and Chrysler.

Seeing things a little more clearly

Executed a lot of trades today, here they are:

Sold JNJ at $68 and PKI at $24. Healthcare stocks are breaking down one by one. JNJ has put up a good fight but the upside is no longer there.

Now, while I wish I had been more aggressive on the AG front, the trades were just not meant to be. They will be very shortable on a bounce, along with oil and oil service.

Today we dipped our toe in the retail arena via a number of shorts. The next few months are goign to be even more brutal for retailer and each of the following have at least 25% downside.

Shorted 200 KSS at 43.50
Shorted 400 ARO at $30.50
Shorted 500 M at $17
Shorted 500 GPS at $17.50

Also put in a small short position of 50 shares of AAPL at $103.25. Price target for the stock is in the low 70s based on the current chart behavior.