For the past year, considerable attention has been paid to the issue of public debt. In the US, we are running larger deficits than ever and the country’s outstanding debt continues to grow at a heightened pace. In Europe; Greece, Spain, Italy and Portugal are all drowning in debt and are progressively having a harder and harder time servicing their current outstanding loans. Without interference by the ECB, these countries would be forced to pay considerably higher borrowing costs for future issuances of notes and bonds as the market begins to see them as being at a greater risk of default.

For many, the thought of a country defaulting on its debt sort of boggles the mind. What are the repercussions if a country defaults? We’re all familiar with what happens if a household defaults on its debt. In the case of a mortgage default, the lending bank(s) will foreclose on the home. In the case of someone defaulting on an auto loan or boat loan, the lender will send out the repo men to recapture their collateral. There are even reality shows on television about this topic now, I saw one the other day based on a team of jet repo men that go around the country repossessing private luxury jets.

Can a Country’s Collateral be taken in the event of a debt default?

So, we all know the ramifications for the average citizen if they default on a loan. But do the same rules apply for countries? Well, this exact situation is playing out in a court in Ghana as we speak.

Early last week, hedge fund manager Paul Singer detained Argentina’s prized Naval vessel, ARA Libertad, in the port of Ghana effectively using it as ransom for payment on distressed bond positions he acquired in 2001. Argentina’s lawyers filed suit in a Ghana court and argued that military vessels are immune from seizure. They then rejected the demand of $20 million made by Singer and ordered that the vessel be released immediately.

Later in the week, the judge presiding over the case ruled in favor of Singer, effectively making him temporary Captain of the ship that is carrying 70 naval cadets and close to 200 passengers and had been on a good-will tour throughout the world. Pretty crazy, right?

A little background on the story

Elliot Capital Management is a hedge fund firm in NYC that currently manages roughly $16 Billion in AUM and is owned by company founder Paul Singer. Singer currently runs two funds, Elliot Associates LP and Elliot International Limited and often takes positions in distressed debt at both the Corporate and Government level. He received considerable attention for distressed Peruvian debt positions in the mid 90′s but will surely be even more well known for his current case against Argentina.

In the late 90′s, Argentina experienced a perfect storm of economic conditions that over the course of a few years culminated in a bank run, riots, and a government default on roughly $130 Billion of public debt. In the midst of Argentina’s unwinding, Singer acquired roughly $1.6 Billion in Argentine bonds at pennies on the dollar. Since taking these positions, Singer has pursued Argentine assets all around the world in an effort to recoup his investment.

During the case in Ghana last week, Argentina alluded to Singer’s fund as a vulture fund and expressed that it will not turn over sovereign holdings to such entities. Singer’s argument of investing in distressed debt is that he only targets the country’s that are able to pay that debt but have just decided not to.

Potential ramifications for the future?

Ultimately, Argentina’s argument during the court case in Ghana last week was that the Naval ship was sovereign property and therefore immune from seizure. However, Judge Richard Adjei-Frimpong ruled that the ship’s detainment was "properly and validly made" by Singer’s NML Capital (a unit of Elliot Capital).

Aside from probably making history as the first time that a hedge fund has seized a military vessel as captured collateral from a country, this ruling could have major implications down the road.

We hear our own politicians all the time warning about how we’re being bankrolled by China and alerting us to the amount of US debt that China holds. Could this case set a precedence that could end up biting us down the road? Obviously, we will constantly hear that the US is never at risk of defaulting on its debt. But as they say, "never say never". We have major military and diplomatic assets spread all throughout the world. Could those be at risk of seizure if our creditors called in our debts and we were not in a position to meet those calls?

What is currently a novel political story could grow even more interesting as things progress from here. The dispute between Argentina and Singer will likely be resolved financially and the ARA Libertad will continue its mission. However, as many other countries around the world stare down a combination of mounting debt and falling GDP, I’m sure they are concerned by the precedence that a case like this may establish in the World Courts.

On Sunday evening, CBS’s 60 minutes devoted a piece of their program to eyewear company Luxottica Group (symbol LUX).  Luxottica Group was founded in 1961 in a small town in Italy and designs, manufactures and sells eyeglasses and sunglasses worldwide.  Over the course of the segment, it became clear that LUX is not just your average eyewear company but rather a company that dominates the entire industry on a global basis.  The interview started by focusing on the elevated prices that consumers pay for both prescription glasses and designer sunglasses.  What many of these consumers don’t know is that just about every pair of glasses that they look at are likely being designed, made and sold to them by Luxxotica.

Do you like high end fashion lines like Prada, Versace, Dolce and Gabbana, or Chanel?  Do you stretch your budget a bit each year to splurge on the newest sunglasses that come from the talented designers at these fashion houses?  Well, the truth of the matter is that the sunglasses from all 4 of these companies are designed and made by Luxxotica.

Maybe you don’t follow the fashion trends from these designers but instead seek out smaller independent lines to separate yourself from the herd and instead opt to by sunglasses from small labels like Oliver Peoples. Well, I hate to break it to you but you’re buying Luxxotica glasses as well.  Finally, for all of you out there that don’t buy into the whole “sunglasses for style” thing all together but choose to just support classic American brands like Ray Ban or Oakley?  Do I even need to say it?  Well, I will anyway, Luxxotica again.

So, why should we care?  Luxxotica is a company that has proven itself as a talented designer and manufacturer of sunglasses and as a result all of the brands turn to them for their lines of glasses.  That shouldn’t matter to us should it?  Well, the problem with any monopoly is price control and reduced competition.  Let’s start with price control.  If there is one thing that can be said about all forms of glasses these days is that they are incredibly expensive regardless of the brand.  Now, you may ask yourself, won’t the retail stores naturally put these glasses on sale at some point giving consumers a break on these elevated prices?  Well, it just so happens that the retailers like Sunglass Hut, Pearle Vision, and LensCrafters also happen to be owned by Luxxotica.  Starting to get interesting isn’t it?

Just to put the icing on the cake, I’m going to ask one more question for you.  When it comes to sunglasses, we can all understand that they’re expensive but prescription eyeglasses?  Wouldn’t the health insurers and vision plans take issue with escalated prices that have to be paid for eyeglasses these days?  Not if those insurers are also owned by Luxxotica.  That’s right Luxxotica is also in the insurance business as well. Check and mate.

If you have any question about the strength of Luxxotica’s position, you can just look the experience that Oakley had.  A few years ago, Oakley voiced some discontent about continuing to work with Luxxotica for the design and manufacturing of its sunglasses.  This happens in business all the time.  In a normal competitive environment, Oakley could have just moved its business elsewhere.  However, it was made pretty clear that if Oakley wanted to continue to be able to distribute its sunglasses through Sunglass Hut and other Luxxotica retailers, it better play ball.  Eventually, Oakley gave in and became part of the Luxxotica portfolio.

At the end of the 60 minutes segment, the average viewer was probably left frustrated by the fact that both their tastes and spending were being controlled by one company when maybe they thought they had a little more control over their own decision making.  But we don’t want to just be the average viewer.  We want to act on this information.  Monopolies normally do pretty well, until they’re broken up that is.  But until then, let’s see if there is a way for us to profit off of the dominant position that LUX has managed to secure for itself.

By looking at the stock’s chart we can see that the market hasn’t had much issue with the company’s monopolistic position. Quite the contrary.  The market has pushed the stock up close to 5 year and all time price highs.

From the chart above, we can see that the stock has reached valuations in the past of as high as $39/per share.  We can also see some significance in the past to the $35 price level, which has acted as both a support and resistance level to the stock over the years.  Most recently, it has been acting as a support level and is a level that we can use as an entry price for a buy as well as level to enter a sell stop loss below as a protective measure on a long trade.

If we see LUX pull back to the $35/level and bounce off of there (indicating continuing support), we can buy the stock at this level.  Our sell stop loss can be entered around $34.30 to get us out of the position in case the $35 level fails and the stock is about to enter a downtrend.  Our price target will be initially the 52 week high of $37.70 but hopefully a breakout to the all time highs and above.  We can adjust our stop loss up as the trade works in our favor to guarantee some profits.

The other entry level we could consider is when the stock breaks up through its 52 week high of $37.71.  We could consider a buy around $37.75 or just above $38 but I would play this trade with a smaller position being that the risk reward is different than if we were to buy it at the $35 level.

All in all, LUX deserves to be on our radar.  It dominates every piece of a major industry that we are consumers of.  The stock has been outperforming the broader market and is trading close to an all time high and possibly positioned for a breakout.  If the market is going to take this stock to levels we’ve never seen, we’d like to be on board for that trade.

Who knows we might even be able to make enough money to buy a few pair of nice sunglasses?

Throughout human history, booze in all of its various forms, has played a major role. It helps us weather the tough times and is also where we turn when its time to celebrate. The Romans practically bathed in it and gangsters murdered each other over it during the days of prohibition. As the old saying goes “the more things change, the more they stay the same.” We may live in the age of technology, which offers us unlimited options for entertainment and escape but humans still turn to a bottle or glass of spirits when its time to unwind at the end of the day.

As a producer and seller of alcohol, its pretty safe to say that you’ll have a strong customer base for a long time to come, regardless of the economic gyrations we encounter. Today, one such company, Constellation Brands Inc. announced their second quarter results and beat analysts estimates. The company generated $699 million in sales for the quarter, besting the consensus estimate of $646 million. EPS came in $.67/share also outperforming analyst expectations.

Just to provide you a little background on the company,Constellation Brands, Inc. (symbol STZ) produces and markets beverage alcohol in the United States and internationally. The company’s Constellation Wines North America segment produces, markets, and exports wine, as well as sells various wine brands across various categories, including table wine, sparkling wine, and dessert wine. It offers wine under the Robert Mondavi Brands, Clos du Bois, Blackstone, Estancia, Arbor Mist, Toasted Head, Simi, Black Box, Ravenswood, Rex Goliath, Kim Crawford, Franciscan Estate, Wild Horse, Ruffino, Nobilo, Mount Veeder, Inniskillin, and Jackson-Triggs brands; and spirits under the SVEDKA Vodka, Black Velvet Canadian Whisky, and Paul Masson Grande Amber Brandy brands.

The company also imports, markets, and sells beer primarily under the Modelo Brands that comprise Corona Extra, Corona Light, Coronita, Modelo Especial, Pacifico, Negra Modelo, and Victoria brands. The company is in the process of acquiring 100% of Crown Imports through which their beer importing business is run and expects to finalize the acquisition in early 2013.

So far, the market has reacted strongly to the company’s earnings announcement with the stock touching all time highs of $36.49/share. As of the time of this article the stock is trading at $36.17/per share up $1.45 (4.15%). STZ’s 90 day average volume is 2.7 million shares and so far today 3 million shares have traded (with 2 hours of trading left in the day).

So, should we buy the stock here? Well, it can be a risky proposition to chase a stock after its moved 4% already over the course of the day so its probably best to hold off on entering into a position this afternoon. Starting on Monday, we can watch the stock to see how it behaves in relation to today’s trading range and enter into a position near one of two target prices.

First, let’s take a look at the stock’s chart:

(Click for full-sized image)

In looking at the 1 year chart above, you’ll see how strongly the stock has performed this year. Additionally, you’ll notice that today’s breakout is taking the stock to a new high for the year. If you bring up the stock’s “max” chart, you’ll see that this is the highest price the stock has ever traded at since its IPO in 1992, 20 years ago. For many investors, they feel uneasy about buying a stock that is sitting at an elevated price level because they are plagued by that old saying of “buy low, sell high”. From our perspective, we play the trend and momentum in a stock. If the market seems to be indicating upward strength and bullish momentum in a stock, we are happy to ride the wave. We buy stocks that we feel we’ll be able to sell higher, period. We use stop losses to protect us on the downside in case we have chased the stock too much.

Now,take a look at the 5 day chart for STZ.

(Click for full-sized image)

The stock gapped up this morning and rallied hard after that gap up. The lowest price it trade for today was $35.05/share which is a level we can use for our stop loss. Since breaking through $36/share this morning, STZ has spent the entire day trading above $36 seemingly indicating a certain amount of support at that level. We can use these two price points to determine our entry point in the coming days. If the stock starts to selloff a bit this afternoon or next week but bounces around $35.05, they can be our first entry point to buy the stock. We can also look to enter a position if the stock does not selloff but rather remains strong at and above $36/share.

Regardless of our purchase price (around the $35 or $36 level), we can put a stop loss below today’s gap, say around the $34.60 range. If the stock sells off hard enough to break down through the gap and stop us out at $34.40, it is a sign that the market likely no longer supports this rally (for the time being) and we’ll be happy to have our money back with a small loss. In this case, we’ll have anywhere from $1 to $1.60 per share at risk with our stop loss.

However, if this earnings report is going to serve as a major catalyst to propel the stock higher, we should see continued buying pressure pour into the stock over the coming days/weeks. So, where could it go to from here? $40/share? $45/share? It’s up to the market to decide that. If the trade works in our favor, we’ll continue to move our stop loss up to guarantee profits during its rally.

Inertia is a hard thing to overcome. We are all creatures of habit and easily fall into routine in many aspects of our lives. For any business entering into a competitive market environment, stealing market share from an established competitor is an incredibly challenging task. The present market leader only has to be able to maintain its current client base and is usually able to acquire additional business through its established presence and brand recognition. Being the newcomer requires convincing the current clients of your competitor to change their habits and choose your product over the one they’ve grown comfortable with. This is true regardless of what business you’re in. So what possesses a newcomer to even take on the risk of entering into an established company’s domain? Well, typically the newcomer feels that the present industry leader has a shortfall in their offering and that they can serve the market better.

So, when Rupert Murdoch launched Fox Business Network in 2007 it was with a clear goal of capturing market share from CNBC by offering the industry leader’s viewers something different. Murdoch’s explanation for what would differentiate FBN from CNBC is that FBN would be “friendlier to business” and expressed his view that CNBC is “hostile to business”. Those are interesting statements to make about a TV station dedicated to business related news and viewed by traders and members of the business community on a daily basis. It is also very bold to go after an industry leader as ingrained in the general public’s psyche as CNBC is. For as long as I can remember, CNBC is synonymous with the market. My first impressions of walking onto the trading floor of a large investment bank when I was a senior in college were complete shock and awe at the number of computer monitors with charts and the number of TVs playing CNBC. That was in 2000. From then on, any office I’ve worked in and anyone I’ve encountered in the trading/financial world had CNBC on their TV all day.

So what could possibly make people change their mind and more importantly change the channel from CNBC to Fox Business Network? Murdoch’s view is that the catalyst to change the channel is clearly one of business and political philosophy. Fox Business Network’s parent company, Fox News, clearly leans to the right politically and garners huge ratings, as well as criticism, for this “bias”. If stereotypes are true, than this “bias” should certainly be advantageous for a business oriented news channel. When you think of “Wall Street” and “trading” it is nearly impossible to not immediately think of terms like “fat cats” and “greed” as that is the primary narrative that is disseminated by most media outlets. It is hard to argue against the fact that most new networks push a negative narrative of the financial industry. Aside from the terms “fat cat” and “greed”, when you think of “Wall Street” and “trading”, you probably also think “republican” and “the right”. To complete the circle, when you think “Republican” and “the right”, you likely immediately think of Fox News.

Where does CNBC fall in this narrative? Well, like Fox Business Network, it is important to look to CNBC’s parent network, NBC. Many on “the right” would argue NBC is a hostile network to their business and political views. NBC’s “Saturday Night Live” and other shows have consistently targeted and attacked Republican candidates over the years and Republican’s have also complained of a “liberal” “anti-business” agenda from NBC’s nightly news for years. This issue came to a head in 2011 when NBC failed to report that its parent company GE paid no taxes on $15 billion of profits, calling the story “not newsworthy”. Many market participants argued NBC likely would have demonized other corporations in their coverage of the story but outright ignored the topic because GE was NBC’s parent company.

NBC recently found itself in hot water again recently due to a topic that will always be near and dear to everyone in the financial communities heart, 9/11. Many in the financial community, myself included, witnessed the horrors of 9/11 first hand and had friends and colleagues in the towers. Earlier this month, on the anniversary of 9/11, just about every news network held a moment of silence in recognition of the attacks and those who were lost. NBC’s Today show opted to interview the matriarch of the Kardashian family instead, creating quite an uproar especially within the financial community.

So, is the parent network’s perceived political leaning strong enough to influence business news viewer’s channel selection? Well if last quarter’s performance is any indication, Murdoch might be on to something. For the first time since its March 2011 launch, FBN’s “Lou Dobbs Tonight” beat CNBC’s “The Kudlow Report” in the coveted advertising demographic of viewers age 25-54 for the entire 3rd quarter, according to Nielsen Media Research. This is a feat that should not be ignored when considering the relative history of these 2 channels. FBN is a baby by network standards, only being around since 2007 while CNBC has been a force for decades.

So how can we apply this information to our portfolio? Being that we’re heading into peak election season, the parent companies for both of these financial networks should be attracting strong viewership and ad revenue. Let’s take a look at the charts for both companies:

NWS – News Corp. is the parent company of the Fox Networks

(Click for full-sized image)

Over the course of the past few days, NWS has rallied to a new 52 week high that also happens to be a new 5 year high when we look all the way back to 2007, the year FBN was introduced to the market. It currently sits right near this high at a price of $25.22, up 1.24%. From a trading perspective, if we were to buy the stock here we can use the $25 price level as a buffer for our stop loss and manage the risk of this trade by placing a stop around the $24.30 level. The stock has not traded as low as $24.30 since September 11th, 2012. If this upward strength and momentum continues, we’ll be positioned to profit as the stock rallies toward its all time high of roughly $33/share. We can adjust our stop loss up as the trade works in our favor to guarantee some profits.

CMCSA – NBS networks are majority owned by Comcast Corporation

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As you can see in the chart above, Comcast Corporation is also sitting near a 52 week and 10 year high of $35.83, currently trading at $35.24 up 1.35% on the day. CMCSA is trading within striking distance of its all time high of roughly $37.50. Similar to NWS, we can look to add a position to CMCSA and use the $35/level as our protective stop loss level, entering a stop loss down around $33.80 to account for higher intraday volatility in the stock. As the position moves in our favor we can adjust the stop loss up to protect profits.

In the end, we all make decisions as consumers and select the brands of product we’ll purchase and the websites/channels we choose to provide us with news. Based on last quarter’s results, more viewers chose FBN’s Lou Dobbs over CNBC’s Kudlow. The question is, do viewers prefer Dobbs over Kudlow or was Murdoch right and viewers are choosing FBN over CNBC altogether? Stay tuned for this quarter’s results……

As we enter earnings season, it is important to keep an ear open to developments mentioned during a company’s earnings call. Many analysts and media sources tend to focus primarily on the revenue and EPS numbers released for the prior quarter and the company’s expectations for the upcoming quarter. After an earnings call, you’ll see news items all over the web referencing that XYZ earned $.45 per share which did or didn’t meet analysts expectations and how next quarter’s earnings expectations will be lower, etc. However, the stories behind these earnings results and projections can often provide great insights and reasons for us to take note of a particular company and to put it on our radar for future opportunity.

A good example is a call that took place for The Finishline Inc. (FINL) last week. The Finish Line, Inc., together with its subsidiaries, operates as a mall-based specialty retailer in the United States. It operates Finish Line stores that offer performance and athletic casual shoes, as well as apparel and accessories for men, women, and kids. Friday, Finishline released their Q2 earnings results and outperformed consensus expectations for both YOY revenue growth as well as earnings per share. Analysts had expected YOY sales to increase from $331 million to $358 million. The actual results came in almost $30 million higher than expectations with Q2 revenues reaching $385 million. Earnings per share were $.49 share, which is $.05/share higher than consensus estimates (a YOY increase of 26%). The company announced a generally slow September as well as muted expectations for the remainder of 2012.

Aside from releasing their sales results and expectations, Finishline announced a new partnership with Macy’s (M) that will put 450 Finishline stores in Macy’s locations throughout the country. Finishline currently has roughly 630 stores throughout the country and this new partnership will certainly represent a large expansion of the brand’s presence as well as an interesting cross over opportunity for the two companies. As a sneakerhead myself, I will be the first to tell you that Macy’s sneaker section is lacking to say the least. The sneaker business has grown more and more interesting over the years with exclusive color schemes, limited releases, and outrageously priced editions becoming more and more frequent. The demographic of shopper that is into these sneakers is also the key demographic for some of the main brands in Macy’s retail lines (Polo, Hilfiger, The North Face, etc.) which makes this a very interesting partnership.

So far the market has reacted positively to this news with both FINL (+1.6%) and M (+4.2%) rallying on greater than average volume. The real impact of this new partnership will be seen down the road as final details are ironed out and the actual rollout of the stores begins. With the announcement of this partnership, there will likely be renewed institutional attention on these new stocks. As a result, we should keep a watchful eye on the price momentum and correlating volume activity to see whether large institutional investors (hedge funds, mutual funds, pension plans, etc.) begin acquiring these stocks based on this news.

Let’s take a look at the stocks’ charts:

FINL – The Finish Line

The $22 price level seems to reflect past significance as both a resistance and a support level for FINL. If the stock appears to hold and appreciate off of this level further, we can look to build in a position with a protective stop loss below $22 ( say around $21.50ish). This stop loss will allow us to manage the risk of this trade while positioning us for price future price appreciation. The stock’s 52 week high is $26.16, giving us a possible appreciation of 10% plus if the market feels this new Macy’s partnership warrants the stock revisiting its yearly high.

M – Macy’s

Similar to FINL, M is roughly 10% from its 52 week high and is kind of trading in “no man’s land”. The 52 week high is $42/share and M closed the day at $38.58. Macy’s has yet to announce their quarterly earnings (earnings announcement scheduled for Nov 7) and Black Friday is around the corner so I would trade this one with a smaller position until earnings are announced and Black Friday sales are announced. The $38 level could be used as a buffer for support, with stop loss placement initially being around $37.20.

For all practical purposes, technical analysis is what I do as a CMT. I analyze stock charts not just because it provides me with my livelihood, but also because I truly enjoy the hunt for a nice looking chart! Finding a great stock chart that sends a message honestly feels like finding money on my computer screen. When I look at a stock chart I simply see trends and patterns that provide me with buy & sell points.

Ascending Triangle

An ascending triangle is easily recognizable by the distinct shape created by the combination of an upward sloping trendline and a horizontal resistance.

Although ascending triangles are typically considered to be bullish chart patterns, they can just as easily break lower as higher. Traders will enter into long positions when the price of a stock breaks above the top resistance, or enter a short position if the stock breaks below the trendline.

Ascending triangles are generally considered to be continuation patterns, meaning that they usually form as a stock consolidates within an uptrend. Think of it as a pause before continuing higher. Once the breakout occurs, buyers will commonly send the price of the asset higher, usually on higher volume. As stated earlier, traders must always remember that these patterns can form within downtrends and can break lower instead of higher. The key to the trade is the direction of the breakout.

A great example of this formation is found on a stock I’ve been watching – VECO (Veeco Instruments, Inc.). By looking at the chart you can see that VECO is currently forming an ascending triangle. The company is within the technology sector and semiconductor equipment & materials industry.

As you can see from my notations (pink), VECO is forming a very nice ascending triangle pattern. At some point, the stock will have to break one direction or the other, which is when a trader would want to consider a trade. It’s like money on the screen, right?

Before making any trading decision, remember to consider which side of the trade you believe gives you the highest probability of success. For example, analyze the overall market to see which direction it is trending. Making this type of decision ahead of time will help you decide which side of the trade you believe gives you the best opportunities. Regardless of your strategy, or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.

Good luck and great profits!

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With the market starting to look a little bit soft since the Fed inspired rally two weeks ago, it can be a tough environment to find any exciting to stocks to add to our watchlists, let alone actually trade. As traders, we should always be focused on the current market environment we’re in and constantly be assessing where we are in respect to the broader market’s trend. As we’ve seen over the course of the last few trading sessions, we haven’t had much follow through on the rally and market indices have been pulling back and drifting a bit over the past week and a half. Generally speaking, our individual stock trades should correlate to the broader market environment that we’re in. For example, we don’t want to be buying stocks (for the most part) when the broader market is experiencing a sharp downtrend and there is clear selling pressure present. On the flip side, we wouldn’t want to be looking primarily for shorting opportunities during a strong overall market rally. We want to trade with the trend, not against it.

As important as it is for us to focus on the technical trends, support, and resistance levels in the market, it is equally important to recognize the fundamental catalysts that drive the market and create trading opportunities for us. One of the biggest fundamental catalysts in the market happens every three months and creates a great deal of opportunity for traders, that catalyst is earnings season. Every three months, companies report their business results from the prior quarter and announce their projections for future quarters. The information disseminated to the market during an earnings call can trigger a break out in a stock leading to new highs and a continued uptrend or send a stock crashing down through past support levels and trigger a cascade of selling. Earnings season is a time where broader market trends are less important to an individual stock that just had its announcement. During this time, the market clearly picks winners and losers and with proper analysis, we can position ourselves to profit from those earnings reactions.

Below are two stocks that are trading in response to earnings announcements and are sitting near opportune technical levels:

DFS – Discover Financial Services – Discover Financial Services, a bank holding company, offers direct banking and payment services in the United States. It operates in two segments, Direct Banking and Payment Services. The company reported net income of $621 million for the quarter ending Aug. 31st. Earnings per share registered $1.21, topping analyst estimates of $1.03/share.

Currently the stock is trading at $40.10, up $.39 (.98%) for the day on 1.5 times normal daily volume on a day where broader indices are down.

The $40 level presents us with a trading opportunity. If the stock is able to close above $40, we can buy the stock around this level and enter a stop loss somewhere below $40 (we can use the day’s low of $39.08 as a barrier for our stop). If the market feels DFS deserves a valuation in the $40′s, then we have dollars and dollars of upside potential with roughly $1 worth of risk (due to our stop loss). If the market does not support a valuation in the $40′s then we’ll be stopped out as the stock falls back into the $30′s, with a small loss and our capital back for the next trade.

RIMM – Research in Motion Ltd – Research In Motion Limited designs, manufactures, and markets wireless solutions for the mobile communications market worldwide under the Blackberry brand. RIMM announced quarterly revenues of $2.9 Billion triggering a loss of $235 million, or $.45/share. Analysts expectations were a loss of $.47/share for the quarter.

Currently the stock is trading at $7.67, up $.54 (7.49%) on 5.5 times normal daily volume on an overall down day in the market

Assessing RIMM for a trading opportunity presents two options. Firstly, this move seems to have broken the long term downtrend that the stock had been in. Once a downtrend is broken, the stock should start trading in one of two trends: an uptrend or a sideways/range bound trend. There is a resistance level roughly around $8.25 per share and the stock had difficulty breaking above there today (intraday high today is $8.20) . Support seems to be roughly around the $7.50 mark (intraday low is $7.46. Traders can either enter into a position now with a stop loss below the day’s low (of $7.46) or wait to see if the stock has sufficient strength in the coming days to break through resistance around the $8.25-$8.30 mark. Either way, as today’s volume illustrates, RIMM is on the market’s radar and should be in play in the coming days.

Earnings season is just getting started so be sure you’re aware of which stocks have announcement coming up. The coming weeks will present us with numerous trading opportunities regardless of what the broader market indices do.

Editor’s note: Through our Smartmoney Tracker Service, subscribers are alerted to stocks receiving institutional buying and selling pressure and position themselves to profit off of those moves. Sign up now and see how our subscribers have experienced returns of 66% in a matter of weeks!

Two weeks ago, the Fed announced it’s newest shell game to excite the markets. When Bernanke started to speak on Thursday September 13th, the Dow was trading around 13,370ish (give or take). After moving the shells around the table a bit he lifted the middle shell and exposed the money ball: a new program that will run indefinitely and will entail the Feb acquiring $40B/month in MBSs “until the unemployment situation improves” (whatever that means). The market got incredibly excited when they saw the money ball and started to get confident that they understood the game now. Sure the economy has cracks and ongoing issues seem to persist but if you keep an eye on the Fed’s hand, you’ll be able to guess where the ball is and riches will soon follow. Bettors came pouring in and pushed the market up to a new 52 week and 4 year high of 13,653 in a matter of 2 days. Many market participants saw this as the catalyst that will spark a large rally potentially taking us to all time highs in the market.

Since hitting that high of 13,653 on Friday September 14th, the market drifted sideways for days and over the course of yesterday and Tuesday sold off down to roughly 13,400 (giving back almost all of the rally that was sparked by Bernanke’s announcement). We’ve now bounced back up through 13,500 at the time of this article. So was this pullback the last entry point before a major rally? Let’s take a look at the charts.

In general, we are big proponents of that old adage “The Trend is your friend until it ends”. Our first step should be to assess the overall trend that we are in and then utilize trend lines as well as support and resistance levels to signal our entry point and exit points.

Looking at the chart above you can see the projection of the uptrend intersecting with the prior resistance level in the Dow roughly around 13,350ish. Markets naturally tend to retest and confirm their trends over time. The same is true for the market naturally wanting to revisit a past resistance level to confirm that there is now support at that level. Being that both the uptrend line and prior resistance level meet around the 13,350 ish level, it would not surprise me to see the market pull back to retest that level for confirmation of the trend.

If we see continued weakness and selling pressure over the coming days, I would wait for a test and confirmation of this level as a signal for entry into any new long trades. The other level we can watch out for is 13,500 as this level had acted as support for the past week and a half when the market was channeling sideways. If the Dow keeps its head above 13,500 we can also consider entry into long trades on strong stocks. However, definitely be sure to have your stop losses in place. After exploding upwards after the Fed announcement two weeks ago, the market has lacked follow through and enthusiasm for the past few trading sessions.

While we trade based on technical signals, we do not ignore the fundamental catalysts that drive the market. Two big catalysts that will be coming up in the near term are earnings season (starting in October) and the Presidential election. Keep a close eye on the market’s reaction to the earnings announcements for bellweather stocks at this can be a catalyst to either continue our trend or potentially spark a reversal. If we see a lackluster earnings season, we could very well see some choppy trading until the Presidential election on November 6th.

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Growing up as a kid, we never had Cable. Other than the fact that it was expensive and there wasn’t cable money in the budget (with a family of 4 boys), our parents didn’t want us spending our lives in front of the TV. With nothing but boring network TV channels to choose from, my brothers and I were forced outside to find entertainment and trouble in the real world. There was always something exciting happening at the neighborhood basketball courts but it was definitely frustrating when the conversation turned to whether you’d seen the latest episode of some show that was on cable. I remember feeling envious of those kids that had the luxury of 50+ channels to choose from.

Les Moonves, the head of CBS, seems to be having cable envy as well based on comments that he’s made recently. While all of the other kids in the neighborhood have major cable holdings at their fingertips: Disney (DIS) has ESPN, Time Warner Inc. (TWX) has HBO, Cinemax, and TNT, News Corp (NWS) has Fox News, CBS has just plain old network TV and Showtime (aside from a couple of small Cable channels).

Now CBS is not doing badly, let’s get that straight. The company has maintained strong revenues and the stock has been trading up near 52 week and all time highs as can be seen in the chart below:

Last week, Moonves, attended the Goldman Sachs Communacopia Conference in New York where he was asked the question about whether he had interest in adding Cable. He responded: “Would we like a general entertainment channel at the right price?. Absolutely.”

So how can we get cable added to our portfolio so we can profit off of expected future revenue growth in this space? Well, aside from DIS, TWX, and NWS we can also take a look at Viacom (VIA) which is the former parent company of CBS and currently the owner of MTV, BET, VH1 and many others. All 4 of these companies have substantial presence in the Cable network segment and should be well positioned to benefit from growing advertising revenues.

Another, stand alone, Cable network that is definitely worth taking a look at is Scripps Network Interactive, Inc (SNI). Scripps Networks Interactive, Inc. operates as a lifestyle content company in the United States and internationally. It engages in the operation of television networks, including Home and Garden Television (HGTV), Food Network, Travel Channel, DIY Network, Cooking Channel, and Great American Country. The company has experienced quarterly revenue growth (YOY) of 12.50% and its stock is exhibiting continue strength, trading near all time highs:

Ultimately, the market is showing continued interest in both Broadcasting and Cable TV as advertising revenue continues to pour in. We have heard a lot about TV being dead as advertisers take to social media and the web, while at the same time new services like Apple TV and Netflix fight for consumer attention. However, don’t overlook these TV related stocks for your portfolio, rumors of TV’s death seem to be quite premature.

Editor’s note: Through our Smartmoney Tracker Service, subscribers are alerted to stocks receiving institutional buying and selling pressure and position themselves to profit off of those moves. Sign up now and see how our subscribers have experienced returns 66% in a matter of weeks.

Playing a stock after a recent IPO is a tricky situation for just about any trader.  The subsequent days and weeks following the IPO can be very hairy as both buyers and sellers overreact, which leads to wild price fluctuations.  Ultimately, the market reaches an equilibrium and the stock begins to establish its price range and trend.

Last week, Trulia (symbol TRLA) introduced itself to the market and received a very warm response with shares rallying 41%.  With the Fed’s announcement that it will be buying $40B of MBSs a month and numerous housing sector stats starting to exhibit stability in the sector, investors have strongly embraced Trulia.  The Fed is committed to keeping mortgage rates low for years to come which over time should help the real estate market stabilize and eventually rebound (as long as unemployment doesn’t get worse and people can still afford homes).

Trulia provides a national real estate listing service allowing home buyers to find properties in their area and sellers to list their homes on the market.  Over the coming days and weeks, this stock will likely experience some gyrations as both fundamental an technical traders wrestle over what should be the right valuation/stock price for the company.

In the interim, there are 2 stocks that have a longer track record of history on the market and can get investors access to this segment of the real estate industry:

MOVE – Move, Inc. Price $8.64 Down $0.03 (0.35%) on the day

Move, Inc., together with its subsidiaries, operates an online network of Websites for real estate search, finance, and moving and home enthusiasts in North America. The company operates REALTOR.com, a Web site that offers property listings and neighborhood profiles; and consumers information and tools designed to assist the customers in understanding the value of their home, preparing the home for sale, listing and advertising the home, home affordability, the offer process, applying for a loan, understand the mortgage options available, closing the purchase, and planning the move.

Move originally hit the market with its IPO in 1999 and soared to a stock price as high $400 in the year 2000.  After collapsing from its $400 peak, the stock has spent the last 10 years trading close to its current share price, there hasn’t been much excitement in this stock since 2001.

Zillow on the other hand, is a different story:

Z – Zillow Inc. Price $44.78 down $0.50 (1.10%) recently set a new 52 week and all time high on more than 2 times its normal daily volume

Zillow, Inc. engages in the operation of a real estate information marketplace in the United States. It operates Zillow.com; Zillow Mobile, the company’s suite of mobile real estate applications; and Zillow Mortgage marketplace, where borrowers connect with lenders to find loans and get mortgage rates. The company, through its Websites and mobile applications, provides information related to homes, real estate listings, and mortgages that enables homeowners, buyers, sellers, and renters to connect with real estate and mortgage professionals.

Zillow originally had its IPO in September 2011 and has rallied strongly over the past three months.  The company has strategic partnerships with both Yahoo and AOL and is a strong player in this segment.

Many analysts speculate that these companies may be good acquisitions targets for the likes of Google, further adding to investor interest.

Regardless, I would let Trulia figure itself out over the coming days and if you’re interested in adding exposure to this space, watch for continued upside momentum in Zillow as your entry signal.

Editor’s note:  Large increases in volume are often indicative of institutional activity.  Through our Smart Money Tracker service, our subscribers are constantly alerted to stocks that are experiencing both institutional buying and selling activity so they are positioned to profit from the momentum triggered by institutional money flow.