Catching A Falling Knife?

Since January 27th, Qualcomm Inc. has plummeted from $47.31 to $35.46. This is a drop of almost 25% in just over a month. Qualcomm Inc. specializes in the development, design, manufacture and marketing of digital wireless telecommunications.

With the smart device revolution going on and 3G technology becoming as necessary as oxygen to the consumer, it’s hard to believe one of the biggest chip makers would be getting hammered. However, today with the NASDAQ up 1.58%, QCOM sold off 3.06% and was a great short all day, closing on its lows.

So when is it safe to catch a falling knife? Maybe tomorrow? After the close the company raised its dividend 12% to 19 cents a share and announced a new $3 billion stock buyback program. After market the stock is up 2.59% to $36.42.

The question remains if this will be enough of a boost to bring in buyer’s to form support? Will QCOM finally start to participate in this tech rally that today saw SNDK rise 11.94% and WDC up 4.79%?

True confirmation that it has reached a bottom will be found if it closes above it’s 2/18 highs of  $39.94. Now it’s going to be volatile and may still have room to go down, so be careful on the long side.

If this level fails to provide support, the next level QCOM would likely find support is the low of $32.67 made on 3/6/2009.

Resistance at $39.94 from 2/18

Support level of $32.67 on 3/6.

$ Keystone Morning Quickie

Keystone Morning Quickie     November 17th 2009

Market Commentary   Futures are backing of this morning after advancing 9 of the last 11 sessions. The S & P Index closed above the 1100 level for the first time this year. The U.S dollar is on the rise this morning, which means some profit taking should take place in the Gold sector, as well as the overall market.     Yesterday afternoon, Meredith Whitney was interviewed on CNBC and said “I haven”t been this bearish in a year”. “look for a double dip recession next year”. Whitney had called the downturn in the financials before the worst of the financial crisis took place.   The 110  level in the $SPY will be the level today to watch. If we trade below, we will be looking for some support at the $109.47. Below this level, $107.98. We expect a bit of selling pressure at the open, to be met with some buying, as that strategy has worked for some time now. However, we believe that, traders will sell into that rally.                 Technical Levels                                                             200                   50     S&P                                                                      1065                 932 DOW                                                                     9857                8701 NASDAQ                                                               2118                1822 Research Round Up     Goldman Sachs (GS 177.25), long considered the market bellwether, has been underperforming the S&P for a few weeks now. Should we be alarmed? Yet the market seems to be strong enough without Goldman because other sectors are taking the lead.   Goldman upgraded Coach (COH 35.99) and Nordstrom (JWN 35.05) to Buy. There are expectations of a strong holiday season for Wal-Mart (WMT 53.16) and it will be a stock that investors will focus on. The market had a lift from strong retail sales (up 1.4%). Consumer credit (AXP 41.44, COF 39.89) has been reported as improving in quality. Affluent consumers and some pent up demand are driving the credit cards.  It is noteworthy that these stocks and the Market continued to rise even though bank analyst Meredith Whitney had some bearish comments.     Keystone’s Trades      Bristol Myers Squibb(BMY) Long Trade- BMY soared yesterday   + 1.16  (+5%)   on news that it is planning  to split off its nutrition unit Mead Johnson [MJN  43.23    -2.02  (-4.46%)   ] into a separate company. It traded above and held the 200 EMA on the Weekly chart at $24.04. Technically, this stock could make another big move up, as we do not see any resistance until $26.  Our only concern is that the markets may be ripe for a short term pullback. We will see how the volume looks at it pulls back to the 200 before entering.   Closing Price:$24.30   Target: $26.04   Stop: $23.77   20 EMA:$22.83   50 EMA: $21.48   200 EMA: $24.07 (Weekly chart) Research in Motion(RIMM) Short Trade -  RIMM has been on our radar for some time now as it has been  relatively weak compared to the major indices. In the month of November, we have seen it bounce from $55 to $65. We see this as nothing more than a bit of a short squeeze as some rumors arose that MSFT might buy them.. On the bounce, it never traded above the 200 EMA. If the markets pull back, as many expect, including us, RIMM should have a hard time holding the $55 level.   Closing Price: $61.27   Target: $50   Stop: $66.10     20 EMA: $62.81   50 EMA: $69.17   200 EMA: $65.98 Tuesdays Economic Calendar  5:30 Fed’s Yellen: Lessons from the Crisis 7:45 ICSC Retail Store Sales 8:30 Producer Price Index 8:55 Redbook Chain Store Sales 9:00 International Capital Flow 9:15 Industrial Production 10:00 Results of $75B, 28-Day TAF Auction 10:00 Hearing: BofA-Merrill Lynch Merger 10:00 Markup: Investor Protection Act 10:15 Fed’s Lacker: Economic Outlook 11:00 Hearing: Financial Stability Improvement Act 12:30 PM Fed’s Pinalto speaks 1:00 PM NAHB Housing Market Index 3:00 PM Hearing: U.S. and the G-20 5:00 PM ABC Consumer Confidence Index     Notable premarket earnings: CSIQ, COV, DDS, HD , JEC, MPEL, SKS, TGT, TJX Notable postmarket earnings: ADSK, CRM, LZB   Top News Stories AIG bailout was muffed. TARP Special Inspector Neil Barofsky said in a report Monday that the New York Fed mishandled the AIG (AIG) bailout by paying its trading partners in full, where it would have been possible to negotiate partial payments. The Fed didn’t use its leverage in negotiations, Barofsky complained, including failing to stress that its participation in the process was purely voluntary. In a response letter, the Fed said the terms of the $85B AIG bailout were appropriate given the severity of the crisis, and that leaning on domestic institutions would have been a “misuse of our supervisory authority” and provided an advantage to foreign institutions. Bernanke gives mixed signals. The recent pickup in the economy “reflects more than purely temporary factors” and continued moderate growth is likely, Fed Chairman Ben Bernanke said in a speech Monday, though constrained lending and weak labor market remain headwinds to robust growth. Inflation expectations haven’t responded to upward or downward pressures, he said, noting plenty of resource slack. Bernanke pledged that low-interest, loose monetary policies would continue for an extended period. In a follow-up Q&A, Bernanke said it’s “not obvious” that asset prices are out of line, at least inside the U.S., and that “we can never say never” on using interest rates to deflate bubbles, adding we won’t have a “real market-based financial system until it’s safe to let a financial firm fail.” Smelling danger, banks respond. The Financial Services Forum, a lobbying group for 18 of the world’s largest financial firms, urged House Financial Services Committee Chairman Barney Frank not to pursue big bank break-up legislation, an idea attracting interest in Congress and causing alarm on Wall Street. In a letter a day before Frank’s panel resumes debate on financial reform legislation, the group stressed that size alone does not make firms risky: “The problem is not that some institutions are too large. It’s that there is currently no legal authority to unwind, in an orderly way, a failing financial conglomerate.” UBS urges patience. UBS (UBS) CEO Oswald Gruebel asked investors to be patient, assuring them the bank was on the come-back track. “We have stabilized UBS’s financial condition but we still have some serious topics to address,” Gruebel insisted. The bank has fixed a goal for pretax profit at around 15 billion Swiss francs ($14.89B) in the next 3-5 years. In a reference to the bank’s history of helping rich foreigners evade taxes, which led to a damaging legal tussle with the U.S. government, Gruebel said he was building “a new UBS: one that performs to the highest standards and behaves with integrity and honesty.” Obama and Hu set different priorities. At a press conference in Beijing Tuesday, President Obama and Chinese President Hu Jintao had different priorities for economic action. Obama stressed the need for economic balance: “[We need] a strategy where America saves more, spends less, that reduces our long-term debt, and where China makes adjustments… to rebalance its economy and spur domestic demand,” Obama said. Hu, on the other hand, thought protectionism was a priority. “I stressed to President Obama that under the current circumstances our two countries need to oppose all kinds of trade protectionism even more strongly.” Japan, eyeing bond sales, plans new budget. The Japanese government announced plans for a new budget, seeking to maintain economic stimulus measures to support the economy. But the government may have to cut back on some election spending promises if it seeks to keep bond issuance below ¥44T yen ($494B) in the coming year. There is already pressure on government bond yields as declining tax revenues suggest more extended issuance may be necessary. GMAC chief ousted by board. GMAC CEO Alvaro de Molina was asked to resign by the board after only 19 months at the helm. GMAC had been preparing a request for additional bailout funds from the Treasury. GMAC director Michael A. Carpenter, who will replace de Molina, has said that he will review the need for that request. GM loses $1.5B, but repays loans. General Motors posted a $1.5B loss for Q3, but announced it would repay $6.7B of its $50B government bailout, at the rate of $1B per quarter. Analysts said GM’s results showed a healthier balance sheet, ample cash, and factory production much more in line with consumer demand. BOE director says better keep stimulus. Bank of England director Andrew Sentance, a member of the rate setting committee, said on Tuesday that emergency stimulus measures for the U.K. economy had better remain in place for an undetermined period. “We have to be open-minded” about more quantitative easing, Sentance added, even though he thought that the recession in the U.K. had come to an end. Fed’s Kohn sees no asset bubbles. Fed Vice Chairman Donald Kohn said in a speech Monday that there was no sign of an asset bubble being caused by the low interest-rate policies the central bank was pursuing. Kohn pointed out that the central bank’s loose monetary policies were intended to help investors move into riskier assets. U.K. inflation rises. The U.K. Consumer Price Index jumped to 1.5% from a five-year low of 1.1%, the Office of National Statistics said on Tuesday. Food prices pushed the index higher; economists say it’s likely only a temporary spike.    news provided by seeking alpha     Follow Keystone on      http://twitter.com/KeystoneTrading   Read the Keystone Blog    http://keystonetrading.wordpress.com/ Become a fan of Keystone on Facebook     CLICK HERE  To learn more about Keystone and to receive a free e book and video CLICK HERE  Call us at 212-594-8900 if you would like to discuss any of our trading programs   www.keystonetradinggroup.com

$What is the balancing act that leads to success?

In Investot’s Business Daily, Monday 11/16/09, in the Leaders & Success Section, the author outlines 10 secrets to success that are layed out right beside an article about Art Rooney (Steelers First Owner).

The ten secrets were listed as the following (sited from Investors Business Daily) and I have related each one to daytrading:

1. How you think is everything.

• In day trading where the majority are not succcessful (based on current statistical data), it is necassary to approach the task of learning to master the markets with the correct thinking that is anchored in the positive. Part of our thinking has to be grounded in realistic expectations, an attitude that demands winning, and an “I can do” mantality no matter what happens in any given moment at any given point in time.

2.  Decide on your true dreams and goals.

• Basically if you don’t know where you want to be and how you are going to get there then no one else can help you to get there. In trading, more so than any other profession, it is important to be specific in your overall dream and then break down goals into small steps that lead to bigger steps.

3. Take action.

• Nothing needs to be said here, other than the road to hell is paved with good intentions.

4. Never stop learning.

• This is very important to trading. The learning componant never stops and unless one is willing to put in 12-15 hour days invested in his/her learning then being successful is unlikely.

5. Be persistant and work hard.

• More so than any other profession one must refuse to accept failure as an option in trading. And, then of course, be willinjg to do whatever it takes to achieve success in trading.

6. Learn to analyze details.

• Details in trading take us to the next level.

7. Focus your time and money.

• Like any business trading takes time and money. Invest both wisely and expect that you must do this. You will always need to put forth more time and more money to get better. A good business plan factors in these items as a part of the overall budget.

8. Don’t be afraid to innovate; be different.

• Someone else can give you everything they did to be successful but you won’t taste success until you make it your own and put your own twist on it.

9. Deal and communicate with people effectively.

• The best trading is not done in isolation. We also get more out of mentoring and interaction from peers when we can be great communicators.

10. Be honest and dependable; take responsibility.

• The key word here is really responsibility. We must take responsibility for our learning, actions, failures etc. That is the only way to see truthfully where we are in out trading, where we want to be, what we are doign that is not working, what is working, and what we need to change. Also, being dependable and reliable feeds into letting others know that you are worth them helping you. If you function “under the radar” noone knows how dedicated  and serious you really are.

In addition to the 10 success secrets outlined in Investors Business Daily, there was an article about Art Rooney right next to those success secrets. Art Rooney was quoted as saying,

One thing I learned from experience:

You are a genius when you win and plain dumb when you lose. Believe me, a fine line seperates the two.

I believe that balancing on that fine line by  implementing some form of the above 10 secrets  is the key to being a ”genius” and not a “dummy”.

Profitable Trading All

Debbie, EdD, MAED, BSED

Morning Quickie$

Keystone Morning Quickie November 10th 2009

Market Commentary

Futures are slightly down this morning after a impressive rally yesterday. As impressive as it may have been, we must take not of the lack of volume that was associated with the run up. The Dow Jones made yearly highs at 10023, however the $SPY failed to make a new high and is sitting below the significant resistance level of $110.

A big reason for the rally was due to the G20 meeting in which the leading nations gave no indication to removing stimulus. The US dolard made 15 month lows as both Crude oil and Gold continued the stellar rally. Many believe that the price of Gold is a bit inflated, but as always we will not try to pick a top, but rather wait to buy pullbacks or wait for signs of a reversal.

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Technical Levels

50 Day 200 Day
S&P 1056 1008
DOW 9765 8647
NASDAQ 2100 1805
Keystone’s Trades

CVS Caremark(CVS) Short sale – After gapping down on earnings last week on an exhaustion volume bar, CVS has rallied back and recovered some of the losses. However, we believe that this is nothing more than an opportunity to position ourselves for a short. We will look to see how it reacts around the 200 EMA ($31.78). If we show signs of weakness early this morning, we will enter the trade on the first rally.

Closing Price:$29.79

Target: $27.49

Stop: $31.76

20 EMA:$34.64

50 EMA: $35.97

200 EMA: $31.78

Apple (AAPL) Long – Apple has been tried remain above the $200 “psychological” level since December “07. It failed back in “07 and after their earning release in late October it once again breached that level, only to sell off and retrace back to $186. Yesterday it once again has risen above the $200 level and we believe that it is there to stay. Technicals strong, fundamentals strong. A must own stock. Buy the pullbacks.

Closing Price: $201.46

Target:$210

Stop:$193.66

20 EMA:$193.46

50 EMA:$186.05

200 EMA:$141.82
Economic Calendar

7:45 ICSC Retail Store Sales
8:55 Redbook Chain Store Sales
8:55 Fed’s Lockhart: Emerging Trends in Real Estate
9:00 Conference: Cross-Border Insolvency Issues
10:00 Job Openings and Labor Turnover
10:00 Q3 Metro Home Prices/State Resales
10:05 Fed’s Yellen: The Outlook for the Economy and Real Estate
11:15 Fed’s Rosengren speaks
1:00 PM Results of $25B, 10-Year Note Auction
7:30 PM Fed’s Fisher: Economy

Notable premarket earnings: ARM, BZH, DSX, JASO, TYC
Notable postmarket earnings: AONE, ATO, CLWR, PAAS

Top News Stories

EU casts shadow over Oracle’s Sun. European antitrust authorities formally objected to Oracle’s (ORCL) proposed $7.4B takeover of Sun Microsystems (JAVA), issuing a statement of objections that focuses on whether Oracle ownership of Sun’s MySQL database software would reduce competition. The move doesn’t necessarily mean the EU will reject the deal, but should delay the process. The U.S. Justice Department, which has already signed off on the combo, reiterated that the merger is “unlikely to be anticompetitive.” Oracle, meanwhile, said the acquisition “does not threaten to reduce competition in the slightest,” adding that the EC’s concerns “reveal a profound misunderstanding of both database competition and open source dynamics.”

Lending standards loosen. A smaller percentage of banks tightened lending standards in Q3, according to the Fed’s loan officer survey, but credit conditions remain far from a comfort zone. About 25% of banks tightened standards on good quality real estate loans, down from 75% in July 2008. Banks tightening standards for credit cards fell to 15% from 35% last quarter, the lowest percentage since April 2008. And 15% of banks tightened standards on commercial and industrial loans, down from 80% in October 2008. “We’re back to just normally tight, not pathologically tight,” says an economist.

U.K. most at risk of AAA downgrade. The U.K. is most at risk among large developed economies of losing its AAA rating, Fitch said Tuesday, but the ratings service maintained its stable rating which it said “reflects our expectation that the U.K. government will articulate a stronger fiscal consolidation program next year.” In response, U.K. Trade Minister Mervyn Davies insisted Britain’s sovereign rating is “absolutely” safe, and said the government’s “been very clear that over the next four years there’s going to be a program to reduce the public debt level.” In May, S&P put the U.K.’s AAA credit rating on negative outlook, saying it would make a decision after the government makes its intentions clear.

Moody’s sees AIG comeback. AIG (AIG) will be able to repay its $60B Fed credit line and “much or all” of the Treasury’s $69.8B investment if financial markets stabilize, Moody’s said Monday. In a vote of confidence for CEO Robert Benmosche’s strategy of rebuilding some of the businesses AIG previously targeted for sale, Moody’s said, “We believe that the slower approach to restructuring could help AIG to generate more favorable values from its business portfolio than would be the case under rushed asset sales.”
Employment trends turn corner. In perhaps the most bullish employment report since the onset of the recession, Conference Board reported its Employment Trends Index rose 0.7% to 89.3 in October from 88.7 last month. “The

Employment Trends Index has likely turned a corner in September, and the historical relationship between the index and employment suggests that job losses will end in early 2010,” the group said, adding, “While layoffs have certainly declined in recent months, we still expect to see employers adding hours to their existing workforce before hiring will strongly increase.” The improvement was driven by positive contributions from measures of jobless claims, temporary hires, industrial production, and sales. Conversely, Gluskin Sheff’s David Rosenberg said unemployment may hit a post-war high of 13% as growth stagnates. “This is going to be the mother of all jobless recoveries. At the beginning of the year, who was calling for unemployment to go up to 10%?”

Hedge funds alive and well. Hedge fund assets may top the previous high of $2T by the end of 2010 as double-digit returns lure investors, Deutsche Bank says. “We fully expect to see material inflows into 2010 and beyond. The expected growth is reflective of continuing institutional demand for increased risk-adjusted returns in the face of low bond yields and disappointing passive equity performance.” Global hedge funds have rebounded faster than expected, recovering to $1.53T in September from $1.33T in March, even as regulators turn up the pressure to increase scrutiny of the industry and amid some high-profile scandals.

Barclays accused of huge Lehman heist. In a recent court filing, Lehman’s creditors claim Barclays (BCS) received Lehman securities valued at $50B for just $45B in cash, accusing the U.K. bank of the “largest theft in banking history.” Some Lehman executives who negotiated that deal, the complaint asserts, knew they would receive offers to work at Barclays, and received or were offered plump compensation deals. At the time, the deal was presented in bankruptcy court by Lehman’s lawyers as a wash.

Cadbury bitter at Kraft’s bland offer. Kraft (KFT) took its offer for Cadbury (CBY) directly to shareholders, disappointing investors who had hoped Kraft would sweeten its original bid of 300p and 0.2589 new Kraft shares for each Cadbury share. Kraft said its proposal “offers the best immediate and long-term value for Cadbury’s shareholders and for the company itself compared with any other option currently available, including Cadbury remaining independent.” Cadbury, not surprisingly, recommended shareholders “emphatically” reject Kraft’s (KFT) “derisory” offer, which it says “is worse than the proposal that the Board has previously rejected as fundamentally undervaluing Cadbury and its prospects,” due to a drop in Kraft’s share price. The cash and share offer originally valued Cadbury at £10.2B, but is now worth about £9.8B. Kraft now has 28 days to publish a prospectus on the offer for Cadbury shareholders, and 60 days to collect enough shares to clinch a deal.

Google picks up mobile ad leader for $750M. In a push to expand its digital advertising empire to cellphones, Google (GOOG) agreed to acquire mobile advertising start-up AdMob for $750M in stock. AdMob is a leading seller of banner ads on iPhone apps and mobile-specific web pages; the acquisition could help establish Google as an early leader in the small but rapidly expanding mobile phone advertising business. Aggregate sales of mobile ads were just $160M last year.

Madoff payback fund could swell. Settlement talks between Madoff trustee Irving Picard and lawyers for the estate of Madoff investor Jeffry Picower are making progress, with Picower’s family lawyer saying discussions range between $2.4B (the amount Picower withdrew over the six-year recovery period allowed for the trustee’s claims under New York State law) and $7B (the total amount of his withdrawals over several decades). The estate is large enough to add at least several billion dollars to the $1.4B the trustee has gathered so far.

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$Debbie: Where should our focus be on this challenging first week of November’s trading?

At the end of each day, moments of “what the heck happened today” or thoughts of “I can’t seem to trade myself out of a wet paper bag” flood the minds of developing traders like myself.

As is always the case, Debbie looks back at the charts for answers. In this case the SPY tells the whole story.

Monday (2nd): Spy opens strong, takes out opening range,  turns and sells off breaking previous day’s lows, loses its mojo down, and bounces back up and trades in the daily range from around 1:00 PM ON.

Tuesday (3rd): Spy opens in the middle of the previus day’s range.  The days price action  starts, remains, and finishes inside the day’s price action which was inside the previous day’s price action.

Wed (4th): Spy gaps up (above the previous day’s price action and trades in its daily range all day and then gets wild and crazy due to FOMC announcement. But despite announcement price action remains inside the day’s range.

Thurs, (5th): Spy opens strong, breaks out of opening range, trades sideways from 10:45 till the end of day making highs by a few cents at best and then pulling riught back into the days range. At 3:45 ish the Spy took out its high of day and closed close to it.

So, basically we have been range bound and even when there is movement such as in yesterday it certainly cannot be considered clean price action.

The bottom line is much of the opportunity presented this week has been stock specific and/or available but whippy.

If a trader kept losses small or has small gains then I would consider that a success.

Where should our focus be?

We need to keep focused on the important thing which is ….

With all of this challenging price action presented this week there is surly some  nice, smooth, methodical price action is right around the corner . Our job is to keep things tight until then and then kill it when we get it!!

Profitable trading all!

Debbie