It Feels Good To Be Right
By Magician
10/3/2001
Shorts found themselves on the wrong side of the tracks today as the market staged a remarkable rally. Hopefully readers of the last two commentaries positioned themselves for some very nice profits. A much-needed dose of good
news propelled stocks today. First, non-manufacturing NAPM came in much stronger than expected, posting a reading of 50.2 for September, a solid jump from August's reading of 45.5 and MUCH higher than the consensus estimate of 43. This news helped to get the rally going. Second came news
from New York where President Bush proposed a $75 billion fiscal stimulus package, another huge positive for the economy. Finally the news that caused quite a few shorts to squeal in pain came from CSCO when the company stated
that it was comfortable with estimates for the current quarter. The major indices rallied into the close with a couple of weak profit-taking dips. All in all the Nasdaq acted exactly as we had predicted, if not better.
The Dow surged 173.19 to close at 9,123.78, the Nasdaq popped 88.44 to close at 1,580.77 and the S&P added 20.94 to close at 1,072.27. Volume was extremely heavy today with 2.6 billion and 1.6 billion shares trading on the Nasdaq and NYSE respectively and should be viewed as a good sign. There were MANY winners today, too many to go into detail about. Needless to say, it was a good day in the market. Nasdaq resisitance is at 1,600 so traders should be on the look out for a retrace in that area. In after hours RIMM
soared after the company released better than expected earnings. RIMM added 11% in after hours after closing up 5% for the day. Unfortunately RIMM reduced its guidance on the call trapping many longs that bought in after hours on the positive earnings news. RIMM's pr department must have run out of ink when they were writing today's earnings release. It is shameful that companies are allowed to still do this. Some movement was seen in related companies HAND and PALM.
If the market continues to follow the May and June post FOMC trend then tomorrow should be another up day for the Nasdaq. October 4th is an up day on the Nasdaq 50% of the time with 11 up days and 11 down days since 1971.
Stocks to Watch:
Our play yesterday, SUNW popped 13% as predicted, closing at $9.07 for the day. SUNW will be a mover with the Nasdaq for next several days so traders should be looking to re-enter positions on profit-taking pullbacks.
On Monday we mentioned our FOMC Strategy, buying the QQQ at the close of yesterday and holding for $1 gain. Well we got that plus some. We used today's surge in the market to take profits on 2/3rds of our QQQ position. We continue to hold a 1/3rd position in the QQQ and also a position in some QQQ January 2002 $29 calls. While we remain bullish it is always prudent to take some longs off the table on such a profitable day. We will be looking to re-load those shares on any profit-taking dips.
ANCX had a great showing popping 48% on the day. We have been saying for a week now that a run was coming. Patience, patience, patience. Traders with patience are profitable traders. We fully expect ANCX to make a run into the
$1's in the near term. Once in the $1's we will take 50% off the table and place a stop profit on the remaining shares
Traders should be scanning their rally buy lists (you have them ready right?) for small cap laggard plays. Previous mentions that should see some poppage include BVSN and GMGC. We added some HAND in after hours on RIMM's
positive movement. Unfortunately it was before they reduced guidance. Still, we will hold until tomorrow as HAND may ignore RIMM's news.
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