Saturday, May 23, 2009

Hedge Trade of the Week, May 26-29 (bcsi, big, mrvl, azo, nue, spg, wfmi, mar)

BCSI: (Long) 6% short

This one is only a 2 day play here. Theme, yep you guessed it - "pre-earnings". Earnings are after the close on Wed, so get OUT before the close on Wed, no "gaming!" To me, this stock is a tech version of WFMI, an overvalued PIG. So also after earnings get's out of it's system, it will be one to look to short-bombs away. Did you see WFMI and how it was trading on friday on NO news? the life-alert!! Anyhow, getting off-subject, more on that later. BCSI-long, tue / wed. Ideally on a gap downs of course.

BIG: (long) 14% short (favorite long)

Another "pre-earnings" runner here. Yep. Earnings are before the open on Thurs, so again get OUT before the close on Wed.
JCG: (Long) 27% short
Earings are after the close thurs, so GET OUT before the close Thurs.

MRVL: (long) 3% short? 32%?

Same theme. Earnings are after the close on Thurs, so GET OUT before the close Thurs.

I like BIG the most. I do think the market goes LOWER this week, so longs are going against what I think will be the "tide" here. I am also getting some conflicting data on MRVL's short float, one site says 3%, another says 32%!

Hey, I could be wrong, maybe the market rallies!? That's why I always like to try to have longs and shorts selected, under any weather, to play the difference.
As far as the broad market, like I mentioned in my last post. I "think" the higher probability is to play more heavy on the SHORT side, and with signal/target to "back-off" of VIX 36 (ie: the "main" resistance line)
I would not look to "jump" into all these long plays right from the open on TUE, especially MRVL, since they don't report till even later.

I do NOT have a set price target on any of these perse, I just feel they head higher going "into" earnings, via short covering + spec buying, that's all. That has been the trend pretty much all earnings season long. So for target, target is 5 min BEFORE the close - PRIOR to when they report, that's the target.

Also AZO reports Wed before the open, if your looking for a TUE only long, that looks to be in play.

NUE: (long). No earnings play here. (ballsy huh?) I do like the T/A set up it has. RSI is just a hair below 50 on both the daily AND the weekly here. I "think" it has some good support at the 37-38 range, which looks like it would be a better entry spot, so again I would not be drooling to gobble up this one up out the gates Tue, as I think it might be had a little bit cheaper. It's been trading in a 38-45 range, so if 38ish comes again especially, I would like it even more.
Target: 44-45

As for the Shorts: (inverse...ideally market GAPS up to start the week for better entries)

SPG: I think it has a decent shot to hit 40 this week. Weekly rsi AND daily rsi are both barely hanging > 50 by a thread. They both cross, perhaps at the same time, it's gonna be ugly. (similar to an opposite technical set up from NUE, albeit it SPG is much higher beta, so it makes bigger candles). Heck to just go "pure" hedge. SPG short + NUE long for the entire week, and profit the difference I like.
Targets: 44, then 40.

MAR: Targets: 19.90, then 18.42
(if you do not already use fib's as at least an adjunct to setting target's, I would. Recall my weekly 7.84 LVS target from 10.50?.....being off .05 isn't too bad)

WFMI: Targets: 17.51, then 16.04
(I like these 3 equally)
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