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Mid day update

July 12, 2007 By Chuck

The big winner so far today in the rebeltrader portfolio is ONT. It is up over 10% today so far. A good bounce play this has become. That was why I changed the setup conditions for ONT from the original game plan. When I identified the pullback to a key level the play changed to a buy on signs of a bounce (remember, we don’t buy on the way down, we buy after it hit then catch it as it comes back up).

The metals sector is good today and AKS is slowly making upward movement. Oil Services GRP also doing nicely again today, BIG is another big winner today as the retail sector is hot today.

The only bad play in the book right now is JSDA. Has not been able to keep itself above water as the word of the CEO’s conversation on CNBC has made the rounds and has let the shorts take over control for now. Too bad, without the CEO this could have been a good trend reversal play. It still might but I won’t leave my money in there and risk it. Took my 1/2 position off the table when it hit the stop at $16.90.

The sectors that are doing bad today are biotech & restaurants.

Now, the biggest news of all is that the DJIA has broken out of the trading range (see the DJIA chart on my public chart list: Public charts.) Right now at this time we are above the top of the trading range. If we close above that trading range then we are one step away from returning to a bull mode.

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The Day that Was – July 11th 2007

July 11, 2007 By Chuck
Today the market was able to recover some of its big drop from yesterday. Yesterday the big driving force that made the already nervous market take a dive was that ugly word popped up again. That word is “sub prime”. Any time the market hears that word there is a fear that runs all the way down the spine of the markets. Personally I feel the sub prime issue is still looming over the economy and it will manifest itself into other areas over time. We are not done hearing about sub prime woes.

Today the market was helped by the M/A news of Chaparral Steel being purchased by Gerdau Ameristeel Corp. That boosted the metals sector today. And the rebeltrader portfolio holding A K Steel Holding Corp (AKS) got a boost from that today as well closing up 1.78%.

Portfolio holding Grant Prideco Inc. (GRP), an oil services sector play remains in play. I am still bullish on GRP. Yesterday Motley Fool mentioned that GRP is still on their 10 highest rated stocks list per their investors subscriber base of recommendations.

Yesterday I took a position in JSDA as it was advancing throughout the day after it had closed above a key support level ($17.00). The entry price was $17.85. Today JSDA sold down to $17.07 on a CEO interview that made it through the markets as being “not so hot”. I watched the interview and while the CEO was not well spoken he did not say anything in my view that warranted a sell off. But one always has to remember the market does not care about the old saying “what have you done for me lately”, but instead wants to hear more of what are you going to do for me tomorrow. The CEO addressed that by the end of the year they would be introducing some sort of new product. For me it does not matter what the CEO says or not. I’m playing the chart. And for now $17.00 is still a support line that if there is going to be a leg up it has to start from somewhere. And $17.00 is that starting point. Every swing trade has to have a plan. You can not just buy something you hear about or see flash by on a ticker window showing a big gain. You have think like a tiger, stalking your prey. A tiger waits for the right moment to attack. JSDA was a stock that ran from $14 to as high as $19 in the span of 3 days. It was a moving target in the middle of a freeway at rush hour. Trying to rush into traffic to catch it could either get you run over or when you caught it the stock could change direction and head for the off-ramp. Smart traders will wait for a setup. The setup was the formation of a base above $17.00. That we got, we made the kill on the move up out of the base (albeit a short time frame base) and we will play it by the book. If it fails the base then this stock is not ready for prime time yet.

Discipline is always the key. Never buy any stock that is being talked about in the news blindly without looking at it carefully, plan your attack, and wait for the conditions to establish and then you have your trade. Have a plan and trade the plan.

Today I entered ALGN on a very healthy advance. The volume was good and it closed up 5.23%. Today it set a new 52wk high. I did not enter the second 1/2 of my swing trade funds to this trade yet. Although it did clear the second buy point it did it at the end of the day and by only a couple cents so I will wait until tomorrow. If you had a pre programmed trade setup to grab it at the second buy point then that is fine, you may end up with a better entry than I will when I enter my second buy.

We are still in a place I don”t like being. We are still in this sideways trading range on the major indices and it’s makes swing trading difficult. But perseverance I have and I will keep looking for good trading ideas. For those of you that email me asking me what are some good trades I can only tell you that I have a list of stocks in my office up on the wall that I like, but I am stalking them and looking for the setups to establish themselves. Over the weekend I will post a picture of the RebelTrader ‘research department’ and you will see my wall of stock plays.. LOL

I hope all my fellow Rebels had a great day and to all I wish a wonderful good night.

p.s. – Today I was contacted by Lindsay, a wonderful lady at http://www.ino.com/ asking if I would be interested in providing some guest commentaries for their site. So from time to time I will provide her with some articles that I write and she will share with me some of their content in return. Thank you Lindsay for considering my market views as worthy for your site.

Updated ONT and ALGN charts:

ONT+7 11 07 The Day that Was July 11th 2007 ALGN+7 11 07 The Day that Was July 11th 2007

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Rebel Trader portfolio status

July 11, 2007 By Chuck

Today AKS is up nicely on the strong metals sector, NTGR is up on a breakout into new highs, ONT is accumulating here and is ticking up ever so slowly but looking good so far, BIG is still above the original buy point and is still collecting large buys going through the tape, GRP is also trading up and I am still bullish on the oil services sector, WDC is also holding on even after the big fall yesterday. The tech sector is doing fairly well considering the overall bearish worries of the markets right now.

Only holding not doing well this morning is JSDA. Down 3.7% on what I can assume is a lack of confidence in the company from comments the CEO made on CNBC last night. I was prepared to sell early and not wait for the stop loss point if I saw any panic selling on JSDA. It is down but I don’t see any panic, and it is holding above the stop loss point through the morning. So I am giving it a chance.

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JSDA – Why was $17.00 so important ?

July 10, 2007 By Chuck

JSDA+t a JSDA Why was $17.00 so important ? An email from a subscriber asked why I was so concerned with $17.00. Why I was watching that price level was due to the gap up that took place back in March of this year. During that time Jones Soda broke out on high volume. The high volume is an indicator of a significant increase in money coming into JSDA. And in that increased money was many new investors.

Technical analysis of the charts is at the core the study of human behavior. The price of any stock is the collective result of buyers and sellers fighting each other. And the study of technical analysis is the study of what the buyers and sellers are doing as they confront each other. It also shows us what is likely to happen when buyers and sellers who have not seen each other in a while are reunited.

Many people bought shares when JSDA became popular in March (where the gap is). Lets say you are someone that got in during that time. And your a “buy and hold” investor (which many people are). Then in mid April the price started rolling over so the ‘buy and hold’ investor keeps holding on and hoping that the price will turnaround. Often they ignore their holdings and only really take notice when green turns into red. In late June JSDA dropped below the price where many new share holders got in. Now their holding turned red. And the red made them say “if this gets back to my original buy point I’m selling”. They think that JSDA ended up being a loser and all they want to do is get out and hope they can get out at a break even. They have been ‘burned’ by JSDA in their mind and all they want is to exit the stock, so as the price got back towards the price where many got in they were now getting out. In their view they are taking advantage of the price increase to get out because they don’t trust the company anymore to hold it any longer than that.

This is why I set $17.00 as the significant level the stock must close above. To signal that the number of sellers trying to get out was getting smaller. Now that we have those sellers out of the way we can concentrate on a more stable baseline setup to work with. And with the added benefit that a lot of sellers have left the table. The movement back up through the gap was a war zone of the old buyers now selling, new buyers now buying, and the shorts covering. Trying to establish a swing trade setup in the middle of that war zone is not the smart thing to do. And waiting for the close above $17 gives us the signal that a truce may have been reached.

The swing trade setup I have laid out is for an entry of a 1/2 position once the price advances up past the recent war zone and the second entry as the price advances up past the final remains of the war zone. If we want to make money in the stock markets we must stand back and observe the stock with a wide angle view. Imagine your standing on top of a mountain and can see rival gangs, one off to the left and the other off to the right. They can’t see each other but you can see them getting closer together and think that when they meet there will be a battle. Technical analysis is the standing on the mountain and watching for what might happen at certain times (price levels). And the one that was standing on the mountain waits for the battle to end before making a move. It increases his chances of survival because he waited for the battle to end before moving along the road.

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JSDA – Chart setup for swing trade

July 9, 2007 By Chuck

JSDA+7 9 07 JSDA Chart setup for swing trade

Jones Soda (JSDA) finally closed above $17.00. It did it on weak volume and after a nasty pullback on Friday. That sell off on Friday and the weak volume today reveals that there just is not much interest in JSDA and the price advance has trouble sustaining itself. That is why I did not want to take an entry on JSDA until there was some kind of a base line to work from.

Now that it has closed above $17.00 we have a baseline in which to work from. Today JSDA closed on weak volume which is not good but we will watch to see where this goes. My setup for JSDA is a first buy point on the move over $17.85 (not before!). The second is on the move over the 50MA (the 50MA may offer some resistance but a move over that will signal increasing strength and is why I chose that as the second buy point).
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Market Update

July 9, 2007 By Chuck

Broad market is still “sluggish”. Keep in mind that the DOW is coming close to resistance again. see the DOW chart in the public charts list:

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2147404

Today kicks off the earnings period. If we can get some big names to report better than expected numbers this may give us the extra boost we need to climb above our trading range and get the markets moving again.

JSDA is above $17.00 but I am not going to do anything with it until I see it “close” above that point.

I like Netgear (NTGR) and may take a 1/3 position on the move above today’s resistance which is $38.56. If it moves up beyond that point I will scale in with a 1/3. I’m being a little extra cautious only because the broad markets seem to be undecided here. And the fact that we are getting close to resistance again on the indices.

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JSDA

July 9, 2007 By Chuck

In pre market trading JSDA had run up a bit but has now pulled back again in pre market. JSDA struggles to keep it’s gains.

I will still watch it to see if the health of it looks good enough to begin an entry with a 1/3 position.

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Pre Market July 9th 2007

July 9, 2007 By Chuck

Asian stocks pick up steam, the Nikkei 255 rallies to a 7 year high. European markets up.

Analyst ‘ThinkEquity’ raises their price target for Google (GOOG) to $700.00.

I’m watching JSDA. After pulling back most of its gains on Friday on a steady drop all day Friday it is trading up again in pre market. $17.00 is a key pivot point for JSDA. A close above that point will add confidence that JSDA is reversing the trend. I may take a 1/3 position in JSDA today, but I will watch the trading pattern before I decide. JSDA so far has not shown a commitment to continue the rally. The trading on Friday was a huge signal of a possible failed rally. But today it looks as if it will make another try.

I’m seeing some potential for strength in the metals sector today. May have a boost for our open position AKS. Also seeing strength this morning in solar stocks. The solar plays have been volatile, fast runs then hard stops and some wild pullbacks.

The week ahead:

  • Monday: 10 year TIPS data (description of TIPS)
  • Tuesday: Redbook, Consumer credit
  • Wednesday: Wholesale inventories, Crude inventories
  • Thursday: Initial claims, Trade balance, Monthly budget statement
  • Friday: Export/Import price data, Retail sales, business inventories

On Tuesday Fed Chairman will be speaking about inflation in Massachusetts, on Wednesday Fed reserve governor Kevin Walsh will testify before the House financial Services Committee on hedge funds and systematic risk.

Futures are essentially flat, oil has dropped some but is still above $72. Note: If oil moves to $75 then we will start seeing more pullbacks in many sectors.

“May the bulls be with you”

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