Thursday, October 01, 2009

Raid and Fade (swing-list of longs for no-jobs report)

Market neutral and leaner here tonight, with pure longs down to 27% of accounts.

But although the trend of the market is now downward and notable damage has developed, there may be a decent set-up for swing-trades long, tomorrow into some of the more extended leaders.

Maybe.

The reason is that much of the weakness today was heightened by the realization that tomorrow's employment report looks to be worse than expected. Following today's weak ISM report, which included weak metrics on hiring, and the weaker than expected weekly jobless claims this morning, Goldman and then others on the Street upped their estimates on total job losses for tomorrow's monthly report (from 200k to 250k in Goldman's case). Jobs is a lagging indicator, although it gets a tremendous amount of attention, and the market has already braced now for the negative news. You may recall the market has a tendency to react to a dramatic jobs report early and then fade it the remainder of the day. Add to that, leadership growth is suddenly slicing worse than the major averages. Therefore...

If the more extended leaders slice hard at tomorrow's open I would be a buyer of several candidates at proper entry points. Important - if we open up or flat, following the report, then this post should be dismissed (or modified at minimum). But if we get the bad news and the leaders gap down hard at the open - I'll have several open orders, which in most case would be simple 1-to-3 day swing trades.

I'm not going to give out entry prices, because it depends too much on the exact dynamics tomorrow. However, I especially like a 50-day MA entry for a strong leader slicing down on market weakness. And while the more emotion the better, for this idea, if the name does not recover within an hour or two at most (and/or the market show signs of stabilizing or reversing), the trade is wrong and I'm blowing it right back out.

This is not a recommendation to buy. This is my personal list of names I will look to accumulate from, only should the situation play out as explained. As always, don't do what I do.

Extended Leaders (with an opportunity for hammering down to decent entry points on Friday's expected-ugly jobs report):

Chinese ADR's:
SPRD
RINO
CFSG
PWRD
CISG
HMIN
VIT
BIDU
CTRP
DGW
TSL

Non Chinese:
WMS
JBL
RHT
FIRE
SYNT (thin)
CTSH
SWM
CLW
EBIX (thin)
SWI
NEU
ININ (thin)
TECD
MELI
WRC
PCLN
PTI (very thin)
KLAC
CYMI
NETL
MU
INFA
JOYG
LULU
GES
ATPG
ROSE
BAK (thin)
LZ
BCSI
RAX
ARST
ULTA
GMCR
SBUX
WLT
IOC
DRQ (thin)
SXCI
CERN
QSII
AAPL
GS
USTR (thin)
FFG (thin)
GNW
PEGA

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