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Thursday, March 28, 2024

The Oxen Report: Slow Wednesday to Be Led By Macy’s Earnings, Dollar, and Overseas News

Hey everyone. Sorry for missing yesterday. I came down with a fit of exhaustion and was not able to make the post. Anyways, I hope all my alert members got the long term plays we started on Monday. I recommended a play on Kohl’s Corp. (KSS) and JCPenney Co. (JCP) for Tuesday as longer week plays. We got into KSS at 56.75 and JCP at 30.75. KSS has moved down about 0.5% while JCP is up about 1%. If you want to read my analysis, check out the alert. We are going to hold KSS through tomorrow and JCP through Thursday. We are hoping for some good Macy’s earnings to help us get out of these for gains before the earnings announcements, however, I am definitely okay with holding them through earnings if we don’t get much out of them before their announcements. I will be giving some feedback throughout the day on these.

Otherwise, let’s get into today’s plays and make up for the past two lackluster performances (yippee!).

 

Buy Pick of the Day: Ultrashort Proshares Oil and Gas ETF (DUG)

The market on Wednesday is looking to be a slow, low volume day, which will tend to push down gains naturally, but I think we have reason to believe that the market might be headed lower this morning, especially the oil market. As of right now, we have Dow futures up above 50 points on relatively little news. The overseas markets are really powering this morning gain as we saw slight gains in Asia and Europe. Additionally, we saw Macy’s report better than expected earnings with an EPS of -0.03 vs. -0.07. This should give the retail some strength, but I am not sure it is in a rallying point. There are some definite bearish signals we can see in the market. For one, the World Bank has commented that the US unemployment rate really should be a worry for the USA. I still do not think that unemployment has been priced into the market. That warning may spark some further concern over a 10% unemployment rate. 

The reason I am looking at commodity prices to come down, as well as DUG, is because of this general market sentiment that I see as moving bearish. Additionally, we saw the American Petroleum Institute showing an increase in crude oil inventories, rising 1.2 million barrels over the 1.0 million expected and the decrease we saw last week. A lot of analysts seem to think this market is going higher, but I just do not see it happening. A lower market will bring down this thing and oil prices. The dollar is definitely a concern, but at some point we need some fundamentals and technicals entering the market.

DUG is definitely in a position to rally, technically. On fast stochastics, the stock is extremely oversold and the momentum downward is waning and looks ready to move back upwards. The stock is fairly undervalued on RSI, and it has plenty of upside on bollinger bands. If the ETF starts to get any momentum whatsoever, a lot of short and bearish players will pile into this one and drive things way up on this low volume day.

I think we can wait for a slight pullback before buying into this one in the morning. Check back in the Morning Levels alert to see if we have adjusted the price down even further.

Entry: We are looking for an entry of 12.15 – 12.25.

Exit: Looking for 2-3% on top.

Stop Loss: 3% on bottom of entry price.

 

Short Sale of the Day: LDK Solar Co. (LDK)

With the market looking to go down from the morning and open area, I think LDK may be a great place to put our money. LDK has jumped nearly 10% in the past week, but today it may be a significant down day for LDK. We got some bad news on solar leader JA Solar, as it got a large downgrade from RBC Capital Markets down to $4. The company downgraded LDK after the earnings report came out, commenting that they believe the company will not be able to compete with NVIDIA and First Solar as well as they have been able to.

Further, Q-Cells announced that they may not be able to deliver money to LDK that is promised to the company….uh….uh oh. Anytime we see any news like this it is not good for either side. LDK is not seeing the type of gains a lot of the other solars are seeing, and it should be a market leader downwards as the pre-market love of nothing wears off.

Technically, LDK is definitely in position for a sharp, fast drop. With the quick movement up in the past week, the stock has moved too fast. Fast stochastics are showing a sharp reversal of buying interest, meaning we should see a lot of selling in the short term. Additionally, the quick move made bollinger bands expand significantly on both sides. We should see these start to narrow down, which means either the stock will continue to rise or fall back down. The latter seem much more approriate. The low volume day won’t help.

Look for a slight pop to start before getting ready to make some money.

Entry: We are looking for an entry of short sale at 5.90 – 6.00.

Exit: Looking to cover on 2-3%.

Stop Buy: 3% on top of entry price.

 

Good Luck and Good Investing,

David Ristau

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