The Early Bird Report 10-31-11
Gapping Up– CKSW HUM SAPX
Gapping Down — SOHU CYOU L IART AWI CTB
No indication — UDRL TGE IDSY
Corporate news/rumors: MNTA PCRX NBR BGS CP
Under $10 long looks with strong closes/actionable charts: TAOM GURE REE AVL QRM MWW ALJ GEVO DANG BORN GMXR CNTF
Over $10 long looks w/ strong closes/actionable charts: VFC TSLA VPHM WMS HLF LNKD ZAGG NKE WPRT
Weak closes/short looks: SINA AM NUVA LOW OPEN EXPE AGCO WHR
3 ideas for today’s trading day: A big gap down Monday today, into what has been an historic month long run in equities markets…will make for a tricky trading day.
1) VFC/NKE longs
VFC and NKE are retailers with similar looking charts here, pushing up to 52 week highs. Neither are obnoxiously extended at these levels, and VFC has already digested a recent earnings report (NKE to report Dec.20). With the market gapping down today, I am looking at these two for longs today, but not necessarily out of the gate. For these trades to trigger, I’ll need to see some stabilization in the market (ideally gap fill action) and/or the retail sector in general. If this can happen, I can see these two relative strength names go from red to green and push toward new 52 week highs.
2) SINA short
A few things to like about a SINA short today. First, peer SOHU is selling off hard after its earnings report overnight. Second, SINA absolutely did NOT participate w/ some of its other Chinese online/social peers in last weeks rally, and appears to be breaking down out of a bear flag this morning . Third, ongoing concerns about government regulation of Weibo. The hardest part of this trade today will be getting in w/out chasing to the downside, and avoiding the (seemingly inevitable) short squeeze in the shares. As it is currently gapping lower, we’d ideally like to see a bounce up TOWARD unchanged, but w/out going green. IF we can get this bounce, it would seem like good risk/reward to take a shot short. Should be a volatile stock today. I would avoid chasing this short on the open, just because of the potential for a nasty early bounce.
3) ZAGG long
ZAGG Finally showed its hand a bit on Friday, pushing up out of consolidation on the daily chart. Follow through today is not a given however, especially with the gap lower in the broad market. Assuming it gaps lower w/ the market, I’d like to see it hold Friday pivot lows around 13.40. If it can do this on the open and the market firms, it could be a nice pullback area to get in. If it never tests this level we will be forced to make a decision whether to chase through the 14 resistance area. There is alot of supply here, and if it can get past there, it has a chance to really squeeze as short interest is VERY high in this name.
The Early Bird Report