Friday, September 19, 2008

New Live Long List for Killing the Upside


Will it work?

Is the crisis over?

Was the whole financial system really about to crumble before our very eyes if those Feds didn't goose the market and run the shorts out of town?

Forget all that. The public and the media are as confused and tentative about current market conditions as ever - in fact, no one understands the rules to the game anymore, so even if they knew what to do they fear they cannot trust it.

That's the good news too, because meanwhile new leadership stocks are emerging. Volatility remains high (VIX) so opportunity is alive and well. Assuming the internals are reasonable-to-strong, this is the greatest wall of worry set-up in 7 years.

If it weren't for that last part I'd be just another blog, railing right now at how God damned ridiculous all of this intervention is - not the least of which is that the masterminds in control of the new rules did not include GE in their list of only 799 financial stocks now forbidden to short. Think about that for a moment? I guess if they'd have rounded up to an even 800, GE would have made the cut? That company makes lightbulbs or something, right?


Anyway, here is the Maximum-Woot Live Long List for killing the upside in the near term. I'm here to make money, not to complain about who's running the asylum. Over the next several sessions I am looking for a good tape first (further strong/positive mkt internals) and then zero-in on which groups are acting best on that day. If Financials and Homebuilders are leading on a given day and the market action is resolutely positive, I'll choose Financials and Homebuilders from the list below. Some of these might seem counter intuitive to some of you. Good!
**see below for a note regarding short interest percentages.

Banks Savings/Loan:
PNC
HCBK
WFC
BAC
BBT (16% short int)
SIVB (13% short int)
DCOM
FNFG
TRST (13% short int)
CFFN
UBNK

Finance Investment Bankers:
SWS
JEF (13% short int)
NITE (12% short int)
TWPG
KBW (15% short int)
SCHW
RJF (17% short int)
ETFC (24% short int)
AMTD

Financial Services Misc:
RMG
CYBS
NDAQ
ECPG

Homebuilders:
MHO (25% short int)
MTH (25% short int)
PHM (12% short int)
TOL (15% short int)
NVR (20% short int)

Oil/Gas Exploration:
REXX
ARD
APA
CXO
DVN
WLL

Oil/Gas Machinery/Equipment/Services:
GTLS
TDW (14% short int)
SII
RES
NR
SWSI

Machinery-Gen Industrial:
DXPE
FSYS
PNR (10% short int)
GRC

Retail Clothing/Shoe:
BKE (15% short int)
URBN (20% short int)
PSUN (23% short int)
ROST
HOTT
GES
NWY
DBRN (13% short int)

Apparel - Clothing/Shoe Manufacturing:
WRC (15% short int)
TRLG (daytrade consideration only due to 51% short int)
COH
NKE
DECK (26% short int)
SHOO
KSWS (13% short int)

Retail-Restaurants:
PZZA (9.5% short int)
BWLD (daytrade consideration only due to 39% short int)
PNRA (daytrade consideration only due to 32% short int)
CPKI (20% short int)
MCD
EAT
SBUX
CEC (24% short int)

Retail Misc Consumer:
POOL
SBH
CRMT (23% short int)
ZLC (daytrade consideration only due to 49% short int)

Medical Systems:
VAR
BABY

Medical - Biotech/Genetic; Medical/Dental Services:
CELG
PRXL (12% short int)
SQNM
GENZ
VPHM (13% short int)

Medical-Software:
QSII
ATHN (12.5% short int)

Energy Other:
ENER (21% short int)
SOL
CSIQ (13% short int)
SOLR

Transports-Rail:
GWR
NSC

Airlines:
AMR (13% short int)

Internet Software:
WBSN
ARBA (12% short int)
OMTR (uncomfortably high short int - 21%)

Electronic - Component/Connector:
IIVI

Electronic - Military Systems:
AXYS
FLIR

Utility - Power:
HE
EOC

Misc:
GEF
AZZ (15% short int)
SEAC (11% short int)

**Short interest percentages: I've noted the companies above where short-interest is higher than 10% of the float. Depending on a variety of factors, a high percentage of shorts can be either bullish or bearish from a trading perspective, but it is a giant red-flag from the point of view of investing. I avoid intermediate and long-term investing (long-side) in companies with a high-percentage of shorts (>15%). Longer term, the shorts are usually right when their numbers are aggressive. Smart money isn't shy about homework and when a short percentage is exceptional, you can be sure much of that is smart money. At the same time there is a giant short-squeeze at this moment, so quick trades on some of these might be a good idea.

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