Thursday, April 23, 2009

Hedge Ideas of the Week, April 27--May 1st (fslr, ma, jrcc, bcsi, aem, aapl, ms, bac, fslr)

Let the earnings trend be your friend (and the gravitation up OR down towards the 200ma...see charts)
Almost all stocks are BLOWING out earnings (yes the bar is set very very low, so it's all relative, but mentally no one wants to be short before a "blow-out earnings", even if it's still only b/c the estimate was lowered 20 times over)
Once trends begin to become visible to most, they start being "front-run" even sooner. Look for some short covering in these longs next week.

I narrowed it down with the highest short %, and most "momentum/cult" I could find that report next week, then selected the best 3 charts.
Longs (report next week, > 10% short float)

- MA (reports Friday AMC)
- JRCC (reports Friday AMC)
- FSLR (reports Wed AMC)

MA: 10.% short, target 174

JRCC: 10% short, targets 15.75, 17.00.....20.07 *my favorite*

FSLR: 15% short, targets 158....168

(200ma possible target for all 3)

***** sell BEFORE the close on earnings day NO matter what, no reason to "gamble"!******

Shorts: (stocks that have already reported, or do not report for another month)
"Sell the News!!"

- BCSI: 7 % short, target 12.05, reports may 22nd
- AAPL: 2% short, target 115, already reported
- MS: 5.7% short, target 16, already reported
- AEM: 4.9% short (wait to enter AFTER earnings on Wed)
- FSLR: 15% short, target 130, (wait to enter AFTER earnings on Wed)
- yep, trading this PIG both ways here
- BAC: targets 6.70, 3.50 (see chart entries)

*these shorts are all my favorites lol!*
*short float data is provided by (link is under my resources), it is updated twice a month*
If you have or know a site or program to view short float % updated DAILY, let me know please. Every broker or site I have seen are all twice a month, that's it.*


  1. I took 40% profit on MS put today. Waiting for another short re-entry around 26. That late afternoon dollar sell-off had me worried.

    MA looks like an interesting play.

  2. love it.... you are one great trader..... how do you do this and your other job??? thanks erik.....

  3. jp, the one think i do NOT like about MA, well is the RSI, is just barely above 50.

    but i also think that tommorow the market sells off, peoples memory is short, and last weekend and monday (ie the 16/19 are insolvent! blog or whatever) will be i think on enuf people's mind tommorow, that we get a good sell off.

    in other words, i think MA pulls back here first, tommorow, and gives a better entry for next week.

    I think the market goes lower tommorow.

    JRCC is the only one i will probably enter tommorow, at the close.

  4. girlcantrade,

    b/c i love studying the market

    + i got stopped out last week b/c I don't feel I put enough effort in accounting for more trend's and factors.

    I personally think these are going to hit 9 for 9 next week


  5. Very nice work Erik. I'm looking at shorting AAPL, SHLD and AMZN among others. Problem is the earnings trough and rigged markets. the indicators are screaming sell and the market keeps going up up up. (Not to mention the SOUND economic conditions of this fine country). I'm just suggesting very short term moves with extreme caution either way you go. You got a big set playing anything long here. Opions are the safest (read - only) long alternative. Nice post. Thanks.

  6. AMZN mathmatically (ie valuations) should actually fall off a cliff here.

    Current pe is what, like 55 i believe.

    Last qtr they earned .52 (estimate was .39)

    This qtr they earned .41 (guess what the estimate was? .31! lol)

    If they earned .52 last qtr, and beat the pants off the estimates, why would the LOWER the estimate this qtr?

    it's all relative, so they now just earned a PE of 70, overnite!! (eps went from .52 to .41)

    I almost put amzn up there instead of aapl, debated between the 2...back and forth for a lil while.

    Oh i think the market is going lower here, and im playing it as such, (net short). But i also do like those-longs, b/c of the short % going into earnings. Those are probably THE only 3 plays i like long. And it's more for a hedge, if i was extremly confident about the market swing direction, i wouldn't hedge.

  7. Great idea Erik. V creative.
    I also think we are in for a move down next 1-2 days. UUP v oversold on 60 min chart also. You know what that usually means.

    And any idea why AMZN is holding up so well? Is it just a safe haven trade?

  8. yep

    uup is in a very bullish medium to long term chanell, and is now very short term oversold.

    I think we sell off into the close tommorow, and pretty hard too. No one is going to want to be long like they were this past Monday. (fear monger or not) Always trying to be a "step-ahead"...but think we sell off pretty nice tommorow.


    amzn is cult....the ralliest are sick, the falls are sickening, hard to call tops and bottoms on those kinda plays....dunno what retail investors think. Friggin rally chasers, guess they don't wanna miss the rocket ride to azmn 300 LOL

  9. Erik, what is your opinion with axp? Even based on lower low estimate and expectation, their profit tumbles 56%. Meanwhile, the credit card crisis is expecting to be worsen. I thought AXP was a good short above $17, but surprised to see it went from mid $13 over $22 in 2 weeks. Your opinion and teaching will be greatly appreciated. Thanks.

  10. stocker4949,

    I don't trust any longs for more than a couple days at best. (but the market is also telling us to not fall in love w/ the short side just yet, even though it looks like the better place here, based on technicals)

    To me it's all about comparing what they did last qtr. If revenue and earnings INCREASED, they are growing. If they decreased, they are contracting.

    But iv'e foind that looking too hard at the valuations IMPAIRS trading. Why does amzn trade at a 60 multiple?? who know, but if you went short at 40, b/c it's too high, then you would be in a lot of pain since then, ya know.

    i'm just as shocked as you, and have no clue why axp is trading this high, alot of it i'm sure was short squeezing.

  11. I shorted AMZN twice. Once 20,000 shares at high $39 and covered at high $26. Then again shorted at $40 by 10,000 shares and covered at $75. It went as high as $95 after I covered. After that, I don't mess with AMZN's shorting anymore. Its valuation is extremely high, but appears to be highly held by loyal institutions and investors for some reason. I wanted to get in 10,000 shares at $26 right after I covered and missed by a couple pennies and ended up caught big losses shorting it after it zoomed to $40. Now I have learned that it is important to give in a few pennies to the market makers if you like something big enough to share. My personal opinion that aapl, goog, bidu and isrg all way ahead of itself, but who knows. The market doesn't always make its sense such as VMW got slammed over 20% off after it missed its earning while MSFT jumped near 6% after its earning fell 32%. Go figure.

  12. AXP's profit tumbles 56%, and its stock jumps over 17% today. Like you said earlier, probably a huge short squeeze, though all the financial stock seems to be getting a huge push in the last 2 weeks over 30% increase. Some say the trend is still looking up and predicting SPX to go as high as 1000 when in between with 4 to 5% pull back at best and heading up higher afterwards. All I have been reading and hearing mostly are bad news, but the market wants to go up. It would have been nice if it were behaving this way in the last 8 months so I didn't get stopped out by a lot of stocks with losses. This time I want to trade smart and rebuild, but no longer can based on charts and news completely. Sometimes the over confidence can overwrite it all, do you think?

  13. sounds just like a "cult" tech for ya...

    they are very hard to pick out reversals and get cute with

    but when a larger trend is established they can moter very well for ya...

    amzn has always been a tricky trade, it seems to many people (yes even bulls, or so i have seen, read, heard)

    they all seem way ahead of themseves to me too....

  14. Institutions like to get in gold in Nov. and sell into April. I think a good aem play is coming to place soon. Do you want to pull the trigger right before its earning on Wed.? I think it reports after hour.

  15. id rather see how it digests the earnings first, then jump on after....(like thurs possibly)

    not many7 plays are tanking immediatly after the report, in the a/h ya know....i dont think there is anything to miss waiting till thurs, and seeing how it plays out, THEN grabbing em...

    plus they always jack up the options prices the days prior to earnings, b/c they know everyone and their grandma are playing straddles and such.

  16. Erik, very unusual strength for all the financial stocks and tech stocks. It has tried all day today to recover from its low of the day. GS actually stays positive by more than a dollar gain most of the day. I think that it is the financial strength helps keeping the DOW strong from slipping. Although I can't help thinking that financial sector had a huge run over 30% in the past 3 weeks and really due for a pull back for 10% at least. Any opinion about financial and tech sector entering this week or what you are mostly focusing on this week? Thanks a lot in advance.

  17. Erik, the market is completely amazing today for its strength after a worsen than expected GDP report combines with higher consumer spending to wash off the bad news instead. This is so unreal. Back in January and February, the market would have dropped like a rock based on the GDP. There is no denial of the conspiracy and the manipulation by possible of tarp money is getting put into use or people are just so darn naive to believe that we are out of the woods. Sold FSLR before the market closes instead of chancing it further. I believe there must be a lot of shorts got stopped out today. I don't use stop order in case of days like this. I can only say the mm must have seen enough stop orders out here so decided to push further up over 882 to scrape up all of them. Many weak hands of shorts jump ship. I close a lot of my long position between 87o to 872 and added faz and averaged srs. I maybe playing with fire, but needlessly to say, who have the right mind will be chasing the market at this level really! When do you plan to pull the trigger on fslr and aem next week? I didn't have the chance to get in on MA, maybe too late now. Closed jrcc, but may get in again next week. Please share your view about next week. Thanks.

  18. Erik, fantastic call on JRCC, FSLR & MA longs. I tried to short FSLR on Scottrade, it wouldn't let me. It went much higher after that. I might try today from my Ameritrade account. SPG does looks like a good short at this price. Thanks for sharing your diligent work. Really appreciate.

  19. Will MA see 180 next week? Please let me know what your analysis says? Thanks, Uma

  20. Nice job Erik
    here is my blog

  21. thanks for the kind words, glad ya made some $$$$

    uma, i dont like ma long here at all

    the trade (to me) was to run it long INTO earnings, and sell immediatly prior

  22. MarketHunter,

    I see you an me were both all over the LCC / Swine Flu trade (i think there are more alot more legs on it, imo)

    how did you find my blog? lol

  23. Erik, check out BX with over 21% short interest ratio. Watching it from $8 towards $12 in a few weeks. May go higher, I think. Could you check it out and give me your view please? I have been slowed to pull my trigger on this one and missing the boat, but not sure if I totally miss the entire boat yet. Do you think that this has more money to be made short term for a few extra bulks?