With a shortened week, we still made small gains, but I'm growing more cautious as the days go by. We have not seen the bears gain any sustained control, but I find it hard to believe we can keep moving much higher without at least a mild pullback to relieve some pressure.
The oil sector continues to be a hot theme as oil stocks are seeing significant momentum as oil prices run higher. It could be just a matter of time that the negative impact on the consumer from high oil prices pushes the market lower. Until then, even garbage oil plays are even exploding higher, but these plays are very hard to hold large positions overnight. The day oil starts to pullback or that we get market pullback, these risky stocks will be the first to get punished very hard.
As noted last week, I will be having shorter updates for the next few weeks as I am working on a few side projects outside the stock market. These have been very time consuming as of late. It is this reason you will notice smaller and less detailed articles for the time being.
Economic Calendar
We have a fair amount of data this week with the big monthly jobs data the week after. This week manufacturing and consumers are the key data points.
Tuesday we have Durable goods orders to watch for. This may set the early morning sentiment for the bulls or bears. Consumer confidence is after the market opens and that could provide some extra early morning movement.
Wednesday we have the second estimate for 4th quarter GDP and Bernanke also speaks in the morning.
Thursday is back manufacturing and the consumer with retailer chain store sales in the morning that I am personally going to be cautious for. After that, we have personal income and ISM data in the morning that could also create waves.
| Date | ET | Release | For | Actual | Briefing.com Forecast | Briefing.com Consensus | Prior | Revised From |
|---|---|---|---|---|---|---|---|---|
| Feb 27 | 10:00 | Pending Home Sales | Jan | -0.5% | 1.0% | -3.5% | ||
| Feb 28 | 08:30 | Durable Orders | Jan | -1.3% | -1.4% | 3.0% | ||
| Feb 28 | 08:30 | Durable Orders -ex Transportation | Jan | 0.6% | 0.2% | 2.2% | ||
| Feb 28 | 09:00 | Case-Shiller 20-city Index | Dec | -3.6% | -3.6% | -3.7% | ||
| Feb 28 | 10:00 | Consumer Confidence | Feb | 63.5 | 62.5 | 61.1 | ||
| Feb 29 | 07:00 | MBA Mortgage Index | 02/25 | NA | NA | -4.5% | ||
| Feb 29 | 08:30 | GDP – Second Estimate | Q4 | 2.8% | 2.8% | 2.8% | ||
| Feb 29 | 08:30 | GDP Deflator – Second Estimate | Q4 | 0.4% | 0.4% | 0.4% | ||
| Feb 29 | 09:45 | Chicago PMI | Feb | 59.0 | 60.0 | 60.2 | ||
| Feb 29 | 10:30 | Crude Inventories | 02/25 | NA | NA | 1.633M | ||
| Feb 29 | 14:00 | Fed's Beige Book | Feb | |||||
| Mar 01 | 08:30 | Initial Claims | 02/25 | 355K | 355K | 351K | ||
| Mar 01 | 08:30 | Continuing Claims | 02/18 | 3450K | 3425K | 3392K | ||
| Mar 01 | 08:30 | Personal Income | Jan | 0.4% | 0.4% | 0.5% | ||
| Mar 01 | 08:30 | Personal Spending | Jan | 0.3% | 0.3% | 0.0% | ||
| Mar 01 | 08:30 | PCE Prices – Core | Jan | 0.2% | 0.2% | 0.2% | ||
| Mar 01 | 10:00 | ISM Index | Feb | 54.5 | 54.5 | 54.1 | ||
| Mar 01 | 10:00 | Construction Spending | Jan | 0.5% | 1.0% | 1.5% | ||
| Mar 01 | 14:00 | Auto Sales | Feb | NA | NA | 5.00M | ||
| Mar 01 | 14:00 | Truck Sales | Feb | NA | NA | 5.73M |
Game-Plan
I have been highly leveraged to oil stocks and last week was a great week to be in them. Looking for oil stocks that have not fully surged higher is the continued strategy.
NOG)">Northern Oil and Gas (NOG) is one of those plays and is currently my favorite swing trade. I am looking for a surge higher as soon as Monday to put the squeeze on the significant amount of shorts.
DEJ)">Dejour Energy (DEJ) is one of my two speculative long-term trades that has seen recent strong volume in it. The volume has been so strong as of late that the odds of a new 52-week high soon are dramatically increasing. Gun to my head, we see a new 52-week high within the next two weeks. Keep in mind, that is a very bold prediction so don't trade this risky speculative play based solely on that. Trade what is in front of you, not the prediction. Anything can happen to change that, especially if oil falls or the markets pullback. That said, I'm very bullish on this position.
If you can't make it to the live-chat where all the magic begins, you can view my real-time trade updates throughout the day by following me on SeekingAlpha StockTalks.
I am sticking to stocks showing overall relative strength for my swing trades. Preferably, these companies have more cash than debt and valuations showing reason to believe it is undervalued, but more homework is needed to sort through the list. If they have upcoming earnings, I may not trade until after the earnings. My style does not allow me to hold swing trades into earnings unless I am only holding “profits” into them.
I look for these stocks to pullback towards favorable support levels (the price area designated next to the stock below) where I can start to buy incrementally if the conditions feel safe upon reaching the support area. Again, the price target is just an area of interest, it is not a firm buy just for touching it.
I am cautious of buying on breakouts unless I am in a very aggressive mode. This aggressive mode may be just for a day-trade rather than risking the large position overnight where my stop-loss may not protect me from a large gap-down. Market players have been reluctant to buy stocks on breakouts over the past year and I have adjusted my strategy to be more selective and patient. If we can gain some very positive sentiment or a QE-based environment, I'd expect that will change. The first list is my normal weekly radar using my proprietary settings on my stock screener. For all my radars, I tend to keep four weeks worth before deleting them allowing me to rotate through a greater number of recently bullish stocks.
Advanced Energy Industries (AEIS) – $12
Affymax (AFFY) – $9.75 to $10.25
Alnylam Pharma (ALYN) – $13
Amkor Technology (AMKR) – $5.75 to $6
Accuray (ARAY) – $7
ATP Oil & Gas (ATPG) – $7
Abraxas Petro (AXAS) – $4 to $4.25
BPZ Resources (BPZ) – $3.25 to $3.50
Boyd Gaming (BYD) – $8 to $8.25 (risky as it has also created a good short setup)
Cerus (CERS) – $3.30 to $3.40
CLDX)">Celldex Therapeutics (CLDX) – $3.85 (Secondary offering at this price)
Cytori Therapeutics (CYTX) – $3 to $3.25
Delcath Systems (DCTH) – $4 to $4.15
Digital River (DRIV) – $18
Dynavax Technologies (DVAX) – $3.75 to $4
Exterran Holdings (EXH) – $13 to $13.50
FTK)">Flotek Industries (FTK) – $11 to $11.25
Goodrich Petro (GDP) – $15 to $15.50
Glu Mobile (GLUU) – $3.75
Lucas Energy (LEI) – $2.75
OraSure Technologies (OSUR) – $10 to $10.50
PharmAthene (PIP) – $1.50
Raptor Pharma (RPTP) – $7 to $7.25
Sangamo Biosciences (SGMO) – $4.75 to $5
Smith Micro Software (SMSI) – $2.25
Willbros Group (WG) – $4.50
Zoltek (ZOLT) – $12.25 to $12.50
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The second radar is the short squeeze radar which is compiled of stocks showing relative strength, but having high short interest (you will notice duplicates among both radars because of this). Any bullish spark may set them off in a short squeeze run netting significant profits if you trade correctly. Always trade these short squeeze candidates carefully as stocks with high short interest will have negative rumors swirling around them trying to shakeout investors who have not done their homework. However, some of those rumors may indeed be true, hence the importance of doing homework and being very selective. The risk is higher for these types, so make sure you know what you are getting into before you buy, not after you buy. The key is to be selective and find those stocks which the shorts are wrong about, not to blindly believe every high short position is wrong.
Amkor Technology (AMKR)
Aeropostale (ARO)
AsiaInfo-Linkage (ASIA)
Briggs & Stratton (BGG)
Brown Shoe (BWS)
Boyd Gaming (BYD)
Corinthian Colleges (COCO)
Carrizo Oil & Gas (CRZO)
Cenveo (CVO)
END)">Endeavour International (END)
Flotek Industries (FTK)
Glu Mobile (GLUU)
Harvest Natural Resources (HNR)
KOG)">Kodiak Oil (KOG)
Northern Oil & Gas (NOG)
Stillwater Mining (SWC)
Take-Two Interactive Software (TTWO)
Uranium Energy (UEC)
Veeco Instruments (VECO)
Wabash National (WNC)
W&T Offshore (WTI)
ZAGG (ZAGG)
Zoltek (ZOLT)
You can follow my trades alongside the 36,000 plus market players who follow me on SeekingAlpha (Shameless promotion). As always, do your own homework to see if you agree. Good luck out there.
Mike
At the time of publication, Kudrna was long END, NOG, and DEJ, but positions may change at any time.
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Tags: Bernanke, Boyd Gaming (BYD), Celldex Therapeutics (CLDX), Cerus (CERS), Dejour Energy (DEJ), Durable Goods Orders, Economic Calendar, Endeavour International (END), Flotek Industries (FTK), Game-plan, GDP, Glu Mobile (GLUU), Kodiak Oil (KOG), Michael Kudrna, Northern Oil and Gas (NOG), short squeeze, Stillwater Mining (SWC), Stock Radar
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