The Oxen Report: Long Weekend Kicks Off Positive Tuesday

February 16, 2010

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Hello Oxen Report readers,

Hope you all had a fantastic weekend that was a nice extra day. Today, I will be doing one pick for you all that I think is a solid play for us to get involved with to make some money. Also, I will be posting a schedule of when I will be doing picks and what you can expect from me this week.

Let’s get into some picks.

Short Sale of the Day: Advanced Energy Industries Inc. (AEIS)

Analysis: I am not really bearish for today, but I am not bullish either. There is not a whole lot out there this morning to indicate to me where we are going. Earnings was a mixed bag with Kraft giving us a nice profit, but Merck and Qwest just met expectations. There was not a whole lot of market moving economic data out there this morning either. The New York Manufacturing Index came back better than expected, but it is not really something to turn to for major support on the day. Therefore, I did not feel like I had a really strong ETF to play with the market being sort of questionable and ho hum. It looks to be maybe a pretty slow day in the market.

For that reason, I think we can make some solid money off a company that is doing exceptionally well as of late. Advanced Energy Industries (AEIS) reported its first profits in some time, beating estimates with 0.04 vs -0.09. AEIS for that reason has jumped up over 12% in pre-market trading, which is just such a large leap. While I do think that the stock has a little more upside, we have adjusted our entry to allow for that. In the end, though, when a stock jumps 12%, there is going to be some mighty fine profit taking that will occur.

With the 12% increase, it puts AEIS right at its upper bollinger band, which is set right at 16. AEIS had been trending upwards as of late and fast stochastics were in an overbought mode. This means that buyers were getting involved going into earnings, which shoudl signal that there will be a large amount of sellers. Will there be a lot more buyers? Its a Tuesday after the holidays. The market is looking slow moving. AEIS is no blue chipper. I don’t think we will see more buyers. For that reason, we will see the price dip.

Make sure you don’t get in too fast because this one will probably pop up, but we don’t want to miss the opportunity to short sale and cover later. Good luck!