May 27: Stocks gain slightly during the Close. Financials, General Motors among major losers…

The market these days seem to be all about volatility and no general direction. Major positioning plays have to be taken earlier in the day to maximize profits. The S&P futures went down almost to the 1,370 range before bouncing back to 1,385 at the close. Just to give an idea only a week or so we were in the 1,415-1,418 range. Market sentiment along with data seem to indicate that the credit crisis is far from over and the market will continue to fluctuate as the economy recovers. The rally towards the close was assisted by lower oil prices and decent housing Data but overall the market is still moving sideways and will continue to do so this month.

Citigroup (C) had a lot of volume today and had some decent size during the morning which allowed for some good long positions to be taken. A more effective  play however seemed to be for traders with large  shares and throughout the day quick profit taking was the order of the day. Another good stock was General Motors (GM) which tanked hard during the day. The company has been in trouble for quite some time now and with the high oil prices it’s SUV and truck sales are dropping further. Traders might have noticed the ADFN ECN (electronic communication network) which was selling pretty hard and often had reserve shares behind it. A great technique today on GM along with American International Group Inc. (AIG)
was to wait for the ADFN to show up on the Ask with around 9,000 -12,000 shares and go short with it. There was almost always reserve size behind and allowed for easy money opportunities throughout the day. Disney (DIS) was another stock which after hitting the low $33.26 turned direction and closed at $33.64. After every few levels  the Archipelago ECN (ARCA) would show up on the Ask with around 20,000- 25,000 shares which almost always got hit as the stock kept rising throughout the afternoon. Again good entry and exit positions were provided by the ECN and the market specialist with decent sizes. Bank of America (BAC) and JP Morgan (JPM) were other stocks which had decent sizes and liquidity.

The market as I stated earlier is just sliding back and forth and no general direction has appeared as yet. The remainder of the month should follow in a similar manner unless we hear some good news (Oil going down) or bad news (housing worries, Inflation, Credit crises etc. etc.). Those of you who are looking to invest in Stocks for the short to mid term are advised to be cautious and more careful in choosing stocks. For the longer term investors there are actually quite a few big players who are at very LOW prices. The Stock price of General Motors was last at this level back in the 1980s and Citigroup has also come down to the $20-$21 level which for the longer term is a very attractive buy in my opinion. Questions and comments are most wlecome!

-Danial Jameel (www.daytraderlog.com)

May 14 NYSE: Stocks rally on diminishing inflation fears, Yahoo acquisiton still in play??

As I stated in my last blog that this week will be all about economic numbers and we could expect a small rally on good news. The S&P Futures and DOW were both up with the futures hitting a high of 1,421 range before sliding back to 1,408.66 at the close. Consumer prices reported better than expected despite worries in the market at the affect of higher fuel prices on food prices.

The Financials such as Citigroup (C) and Bank of America (BAC) were all good plays with decent volume and volatility which allowed great entry and exit positions. Fake sizes and Pushers were also very evident on many Big Cap stocks which provided unique opportunities and at the same time increased the risk factor today. EMC Corporation (EMC) was a very good long early in the day with a good bid size near the open. The stock pretty much went up the entire day.  Nabors Industries Ltd. (NBR) had a pretty big level for its volume at $40.00 which allowed big short positions to be taken and for those with lower share sizes, scalping between the ranges throughout the lunch and afternoon session. Honeywell International, Inc. (HON) was another good candidate today which broke key levels and allowed some great punches (Hitting the Ask Side) and hold positions to be taken.  Overall the market was not clear on a direction and will be analyzing the numbers coming out this week to determine the direction of the economy. Expect similar market activity during the next two days.

Yahoo had some interesting developments today as Billionaire investor Carl Icahn (who owns significant shares of Yahoo) is attempting a proxy slate to change the Yahoo board of Directors. This is definitely a key development as it might lead to a potential Yahoo acquisition depending on who Ichan brings on board. Rumors are running around of Microsoft’s covert backing of Ichan and an attempt to acquire Yahoo through proxy means (i.e via the shareholders).  The proxy slate is to be announced tomorrow which should give us a good idea on the players behind the scenes. The decisions of two other key shareholders namely Gordon Crawford who has a history of influencing Yahoo’s board, and Bill Miller (their combined holdings total to a 23% stake in Yahoo!) will play a major role in the future shake up of Yahoo and whether Microsoft will be coming in again.

From a business point of view it is important to ask whether this deal is a solid proposition to both companies. Yahoo which had been in dire straits since last year clearly needs to redefine itself and its core business (something which it has failed to do for a long time). It’s competitor Google knows its core business which is search and has ensured its entire focus on search and search related products. Yahoo on the other hand views itself as a Web Portal rather than a search engine but has yet to define itself on what exactly it needs to focus on and what are its core areas of revenue generation. The DNA of the company is also very different from Google (which is a more chaotic business model) and does not motivate innovation which is a key element of web businesses. The same problem also exists in Microsoft’s DNA (i.e innovation) and it is one of the reasons why it is simply unable to compete with Google on the Internet domain. Microsoft if anything needs this deal badly so it can seek to have a presence in cyberspace which is increasingly being viewed as the next evolution for software (i.e Cloud computing etc.). Just like IBM was killed by Apple and Microsoft in the late 80’s the process of creative destruction seems to be re-occurring once again and MIcrosoft knows it needs to have a greater presence in cyberspace to ensure its future survival and dominance over the Software and IT market. I will be keeping a close eye on this deal and it should be interesting to see what efforts Microsoft undertakes in order to pose a serious challenge to Google’s dominance over the Internet…

-Danial Jameel (www.daytraderlog.com)

 

May 12 NYSE: Stocks continue sideway slide amid economic numbers, HPQ – When Wall Street punishes acquisitions…

Monday saw a small rally in the market with S&P pushing back up to the 1,400 level and recovering some of its losses on Friday. The DOW was up 1.02% (12,876) while the S&P Futures closed at 1,403 (up 1.10%). The Market is expected to continue its sideway movements as economic numbers come out this week. Investors and traders alike will be looking at these numbers in order to determine the shape of the economy and market direction. Stocks rallied today due to the decline in Oil prices to around $124.23 at the NYX (New York Merchantile Exchange) as it eased some Inflation fears.

Major moves included Bank Of America (BAC) in early morning where the stock continued to rally throughout the day. Some decent size and volumes along the way helped taking easy positions for quick profits as well. American International Group Inc. (AIG) was another stock which allowed good short positions around 10am and the stock pretty much tanked the rest of the day. It closed at $38.37 with $41.15 being the high of the day at around 9:45am. Good short positions with decent size were available at around 10:00am -10:05am.

The most significant move was ofcourse Hewlett-Packard (HPQ) at around 3pm where the stock litreally crashed in a matter of minutes with big market orders. Wall Street apparently did not like the logisitics of the new acquisition of  Electronic Data Systems Corp (EDS) which is HPQ’s biggest acquisition after Compaq. Unfortunately I wasn’t able to capitalize on this move despite being a second away from punching short at $28.25. Fear and Greed are the two dominant emotions which run the market and in this case my fear prevented me from getting into this insane tank. With hindsight ofcourse one can argue of the lack of courage on my part but in these moments it is hard to determine the direction of a stock. My advice for those who love taking crazy risks is to take fewer shares in order to protect their losses. Two good moves that I did participate in were Alcoa (AA) at $40.00 during the pre-noon session and later near the close with Citigroup (C). There was a big seller who showed up at the $23.50 with around 350,000 shares. This allowed for big positions to be taken as the seller tried to chase down the stock to get filled (Good exits were at the $23.37-$23.38 range in front of a 120,000 bid at $23.36).

As for Tomorrow, eyes are going to be on the Retail sales number which is expected to increase by 0.2% and ofcourse earnings from WalMart (WMT) the largest US retailer. The Market is expecting good news from Walmart and we might expect a short rally if numbers look good. This week will continue to be volatile as the market analyzes the upcoming numbers on the economy.

Question and Comments are most welcome. Cheers

-Danial Jameel (www.daytraderlog.com)

 

Updates to be back daily on Monday!

I will be out of the city till Sunday. Daily updates will be be back on Monday 12th of May. Cheers…

May 2008 NYSE: Market recovery in progress, Oil record High! Stocks grind upwards…

First of all, I apologize for the disappearance the past Month and a half. The Market, University, side ventures and exams took its toll and i was pressed for time. Well now that things have settled down, its back to business and hopefully this time ill try to post daily updates and make some time for the blog

Today apart from the open it was a relatively uneventful day with major moves on Sprint (S) and of course Yahoo (YHOO, NASDAQ) due to news. Another interesting stock in play was CFC. Big sizes and level breaking allowed traders with decent share sizes (10,000+) to make some fast money with quick entries and exit. Major plays for today during the open included COP (Conoco-Phillips) which was a good short at $87.99. I was hoping for a big position on this but got filled much lower than expected. Long Story short the stock tanked to around $87.50 in about 15 minutes and it was on heck of a position. To put it in perspective, taking lets say even 2000 shares short at $87.99 and exiting at around $87.59 would have made around $800 in 10 minutes or less. NewMont Mining (NEM) was another interesting play, however it failed to break the $45.40 level for much of the day. The best moves were of course YAHOO (YHOO) and potentially Sprint (S) and just a look at the chart and volume is enough evidence.

The S&P futures remained in their 1,404 – 14,16 range but closed lower than Friday (1,413). The fall in the futures and the brakes in the market was partly due to the Yahoo, Microsoft dealing falling apart; partly due to the weakening US dollar and rumors on certain financials (*Cough* CFC). I expect the market to continue its grind upwards and hopefully as i stated in my previous blog (when the market was on a free fall downwards) that the Us economy should start to rebound significantly by 2009 unless there are other hidden surprises in store for us. Oil prices should also start to decrease as the dollar rises again.

Before closing, I would like to review some of my past posts to see how far I have grown into understanding some of the market fundamentals. My first and biggest call was to buy Citigroup at around $20-$24 range for the long term. The Stock actually went all the way to $18 before rebounding back to its current $25-$27 range. I still think for longer term investors Citigroup remains a promising investment and should expect to see the company re-surging in 2009.

Another question that seems to be on people’s mind is the rising price of oil! Why is this happening and are we running out of oil??? My simple and reasonable understanding is NO. The current rise in crude oil prices has more to do with the weakening dollar than demand and supply. As i stated before as long the oil stays above $50, huge reserves such as Alberta’s Oil sands (worlds biggest) and Venezuela’s offshore deposits are economically viable. OPEC is also pumping out more oil but are also aware that the issue is not of lack of supply but purely speculation and protection against the weakening dollar. The US dollar is currently the major currency used throughout the world. Several countries including oil producing ones in the Middle East are pegged to the dollar. When the dollar weakens, investor worry about their declining value and in order to protect its value (also from future inflation) they start investing in commodities instead. As a result we are seeing record rises in the prices of commodities such as oil, gold, copper and other resources etc. Hopefully by 2009-2010 the US economy should settle down, restore investor confidence and the prices of commodities as a result may start to see a decline. The rise in oil prices unfortunately has an impact on more than just our fuel pumps and the rise in world food prices resulting in major food crises around the world is one example of its effect on our society….

Any thoughts or comments are most welcome. If by chance there are any oil traders reading this, I am curious to know how you guys are viewing this. Cheers

Danial Jameel – www.daytraderlog.com