Guest View
User: Pass: | become a member


The Oxen Report: Dubai Looks to Weigh on Open But Can Holiday Buzz Take Us Higher?

I feel a slight buzz in the air about the holidays lurking right now. The malls were busy to start the holiday shopping season and sales are up from one year ago. On recap, last week was definitely a tough week due to my illness, but I am back with full powers this week. Friday, we had one great pick and one horrible pick. On QLTI, we lost 3%. The stock did pretty much the exact opposite of what I expected and ended up, even with a almost 2% down day. We did, however, have good success with Fifth Third Bancorp’s short sale. We got in at 9.80, and we were able to sell it at 9.61 for a solid 2% gain right before the close of the day.

1/2 not too bad for having the flu. Let’s get into a 2/2 day.

Buy Pick of the Day: Aeropostale Inc. (ARO)

Analysis: 

Retailers got some good news this morning on a number of fronts that I believe should help the market challenge the overhand on the Dubai market issues we saw Friday. ShopperTrak, which is a research firm on retail, said that they saw the after Thanksgiving season up 0.5% in sale totals from one year ago, according to initial data. The total was $10.66 billion. Online sales were up 11% from one year ago. Even with the encouraging news, the National Retail Federation is still expecting a 1% decline from one year ago in total sales.

Not all analysts were excited, as John Long from Kurt Salmon Associates commented, "Forget Black Friday for bricks and Cyber Monday for clicks — this year it’s all about making it easy for customers to satisfy their shopping fix … we’re still seeing cautious spending. The pie isn’t increasing whether you decide to buy in the stores or online."

Yet, some analysts this morning, including myself, are excited about these stocks. American Eagle received an upgrade from Lazard Capital Markets, and Abercrombie received an upgrade from FBR Capital. These two upgrades have helped to lift these stocks in the morning. Further, in after hours, we are getting an earnings report from Guess?. I think all of this is reason for retail to look towards a positive day, and it could even be the market leader.

Aeropostale is my pick of the day because it has gone under the radar and is undervalued, but it will definitely get some added attention from the upgrades and overall retail sentiment. ARO has lost 25% over the past month, it is extremely undervalued, and way oversold. It has been pretty tough since earnings reports started for Aeropostale and October sales were reported. Today, though, is the perfect day to get involved because the rise will compound with the fact that the company is reporting earnings on Wednesday.

The stock is not up significantly in pre-market, but it should be a big mover. Futures continue to move higher, and we should ARO having a very solid day today. 

Entry: We want to get in at 31.70 – 31.80.

Exit: We are looking for a 2-3% gain on the day.

Stop Loss: 3% on the bottom.

Short Sale of the Day: Direxion Daily Energy ETF (ERY)

Analysis:

As the futures continue to get better for the Dow and S&P and the market starts to turn away from the Dubai news, we are looking at what could be a rallying day in the market. If that is true, then we are going to want to avoid short sales on most sectors and stocks because they will be rallying on the dips experienced last week. One ETF, though, that had a mega jump last week was ERY on the drop in oil prices. ERY gained 7% on Friday, setting it up for a nice dip today. Oil is neutral, but as the market continues to trend higher, ERY will be moving downwards. 

Brent crude dropped again today, as Europe got hit by the Dubai news. The American market, however, I am believing is more resilient. Oil should be on the rise if the market is on the rise. There is not a lot of news to keep it down, and if the dollar remains weak, it will continue to increase.

"The long-term prospect for commodities including oil looks strong amid expectations that the value of the dollar will remain weak," Victor Shum of Pervin and Gurtz noted.

A lot of people I think are believing that the Dubai problems means somehow oil problems, but this is just not the case. Oil analysts know this, and I see a gain on the day for oil. That will translate into a tough day for ERY. We want to get in early and ride this one down.

Entry: We want to set our short sale entry at 11.75 – 11.85.

Exit: We are looking for a 2-3% gain for the cover.

Stop Buy: 3% on top.

Good Luck and Good Investing,

David Ristau

This entry was posted on Monday, November 30th, 2009 at 8:32 am and is filed under Uncategorized. You can leave a response, or trackback from your own site.

Do you know someone who would benefit from this information? We can send your friend a strictly confidential, one-time email telling them about this information. Your privacy and your friend's privacy is your business... no spam! Click here and tell a friend!



Comments



  1. emcginley
    November 30th, 2009 at 9:06 am | PermalinkIgnore this user

    Hi David is there any chance that you could also give us the range for the opposite ETF i.e. ERX please?

  2. David Ristau
    November 30th, 2009 at 9:09 am | PermalinkIgnore this user

     Emcginley – Yeah. you will want to look at entering ERX around 39.05 – 39.10. I think that will be a pretty solid entry point for the day. I think that will let for a slight pullback that may occur to start the day and get you into the pre-market jitters.

  3. David Ristau
    November 30th, 2009 at 9:11 am | PermalinkIgnore this user

    Oxen Alert Morning Levels

    ARO – We are going to adjust down our entry for ARO to 31.45 – 31.55. The stock has come down some in the morning, and I am worried about a slight dip to start the day. I think this range will give us a solid entry point that will allow us to maximize profits. 

     

    ERY – I still like our entry range for ERY. 11.75 – 11.85.

     

    Good Investing!

  4. JNjr
    November 30th, 2009 at 9:43 am | PermalinkIgnore this user

    ERY is tough to fnd shares to short. Would ERX be the same play?

  5. David Ristau
    November 30th, 2009 at 9:51 am | PermalinkIgnore this user

    JNjr – Yeah you could play ERX, but it may not have the same type of upward movement as downward movement one can expect on ERY.

  6. emcginley
    November 30th, 2009 at 10:08 am | PermalinkIgnore this user

    JNjr – I have the same sort of problems also. I got into ERX at 38.54 and it got to the 3% and I am now out. It’s cool having both ETFs. I still haven’t managed to get into ARO at $31.5 yet.

  7. David Ristau
    November 30th, 2009 at 10:23 am | PermalinkIgnore this user

    The reason I like ERY, is it just has a ton more volatility than ERX. Plus, the 3x ETFs move down a lot more than they move up on bad vs. good days. ERY will have its 5-7% days, but it has trouble holding a 2-3% gain on any given day. There seems to just be this never ending decay with ERY.

  8. David Ristau
    November 30th, 2009 at 12:13 pm | PermalinkIgnore this user

    Oxen Alert Midday Message

    ARO – Our buy pick of the day has done not so wonderful for us. We were able to buy into this one at 31.50, and things were looking good until the market hit a wall at about 11 AM. Everything has moved down from there. We are looking at about a 1% loss right now. We may consider holding this overnight if things don’t make a drastic turnaround because it should be rallying on a pre-earnings buzz, especially after two upward guidances that occurred over the past 1.5 months.

    ERY – We got into ERY at 11.85, looking for an exit of 11.62 – 11.51. We were able to get out at 11.51 for a 3% gain before ERY took off around the time the market turned around. A solid 3% gain on the short sale. 

    Good Investing!

  9. lynn2long
    November 30th, 2009 at 2:26 pm | PermalinkIgnore this user

    Hi David,
    What do you think about the SRS? will it go higher as market is bearish

  10. David Ristau
    November 30th, 2009 at 2:34 pm | PermalinkIgnore this user

    Lynn – I mean SRS is not one of those ETFs that is really a long term play. I only play it at most 2-3 days. I think today is a great day to buy it because we get pending home sales tomorrow. Housing data has been horrible over the past couple weeks. It should help propel SRS up, and you can get it today for a great price. It will open higher tomorrow if that data is bad, so you want to buy it today.

  11. emcginley
    November 30th, 2009 at 2:55 pm | PermalinkIgnore this user

    Hi David, I think you missed this on Phil’s side – what do you think of Vista Print (VPRT) and CIEN?

  12. David Ristau
    November 30th, 2009 at 2:59 pm | PermalinkIgnore this user

    Emcginley -

    Not too familiar with VPRT. What is your take on both of these? Are you looking for long positions? Short positions?

  13. samz3700
    November 30th, 2009 at 3:03 pm | PermalinkIgnore this user

    David – going to take you up on the ETF advice.
    What’s your take on XLE – I know it’s kind of like owning xom -
    I like to write covered calls on this – front month and very slightly OTM – depends on my short term view what strike I pick – just trying to earn a little extra income.
    I am a little concerned about oil inventories knocking the price down – how much is xle dependent on spot prices of oil.
    Thank you – Sam?

  14. David Ristau
    November 30th, 2009 at 3:08 pm | PermalinkIgnore this user

    Samz…I think oil is on the way down to probably 75 before it moves back up, which lines it up to either take another dip or take a big swing up on the inventory reports. I wouldn’t position yourself in this one until we get that news. I would say if inventories are good XLE is a great buy, and you can ride it for awhile … until oil gets back up to its higher range say 80. If inventories are bad, avoid XLE. I wouldn’t buy it until things then smooth out around 74. Closer to the end of the week. I don’t think oil has much more room to swing down past 74 though.

  15. samz3700
    November 30th, 2009 at 3:30 pm | PermalinkIgnore this user

    Thanks David – I am thinking more in terms of long term play but xle does have a fairly high correlation to the uso – so I guess you are right and I do need to worry about this.

  16. lynn2long
    November 30th, 2009 at 3:44 pm | PermalinkIgnore this user

    SRS selling off hard into close. are they expected good data tomorrow?

  17. David Ristau
    November 30th, 2009 at 3:56 pm | PermalinkIgnore this user

    Lynn – Nah…its just market following…market is going up, SRS getting hard sell.

  18. lynn2long
    December 1st, 2009 at 9:41 am | PermalinkIgnore this user

    Hi David, when is housing data coming out?

  19. JNjr
    December 1st, 2009 at 10:46 am | PermalinkIgnore this user

    For those looking for something to play today: SKF – short Financials has held up nicely.

Dashboard

 Sector Performances (Today)

 Thermal Imaging
Retail-Wholesale-0.57 %
 
Finance-0.86 %
 
Business Services-1.07 %
 
Consumer Discretionary-1.13 %
 
Construction-1.19 %
 
Auto-Tires-Trucks-1.23 %
 
Multi-Sector Conglomerate-1.25 %
 
Utilities-1.34 %
 
Medical-1.50 %
 
Consumer Staples-1.52 %
 
Industrial Products-1.60 %
 
Aerospace-1.61 %
 
Computer and Technology-1.62 %
 
Basic Materials-1.81 %
 
Transportation-2.00 %
 
Oils-Energy-2.16 %