Yesterday was a pretty solid day for The Oxen Report. We were able to do pretty well with our Buy Pick of the Day Pacific Sunwear (PSUN). We liked this one to rally on the positive retail data we were seeing and the fact that the company was reporting in after hours. PSUN was worth 3% for us as we bought in at 4.85 and exited at 4.99. Our Short Sale of the Day worked okay for us. We got in at 3.45 in the AM and held the stock throughout the day. We did not gain anything and had to sell at 3.50 at the end of the day for a 1.5% loss. 1/2 on the day…hope you made some on the PSUN!
Today’s picks:
Short Sale of the Day: Solarfun Power Holdings Corp. (SOLF)
I only have time for the one pick today. I think the market is looking really toppy right now. A lot of sectors are getting pretty close to their upper bollinger bands, and we are due for some pullbacks. One of those sectors that has really skyrocketed is solar energy. Across the board, all the stocks have jumped 10-15% in the last couple weeks as the sector has seen a lot of positive earnings. Today, however, we are seeing futures in the red in the morning even though there is more good news than bad news, which is not a good sign. One major piece of bad news we are seeing are the Core PPI numbers are showing that prices deflated again in the month of October after deflating in September, as well. The deflation in October, however, was much greater. This is definitely worrisome.
On the other hand, this morning Canadian Solar reported very positive earnings, beating estimates. Yet, the stock is up only over 2% in pre-market trading because the stock is already outside its upper bollinger band…too much movement up is creating sellers! Solarfun is holding on to a slight gain in pre-market trading, but I think that will soon be wiped away when the market opens.
Solarfun has moved up 33% since the start of November…not bad. The stock is extremely overvalued, nearly to the red alar, area, way overbought on slow and fast stochastics. The slow stochastics are right at
the peak where momentum cannot be sustained. Any weakness in the market, and the fundamentals will be ignored.
SOLF does report earnings tomorrow, as well. In the past year, SOLF has not done well at all with earnings. Most investors in my guess are going to take those profits today and get out. Waiting till tomorrow could be detrimental. With the stock starting to lose some value that will compound upon itself, and before you know it, SOLF will be deep in the red.
Get it early and watch out for a late day climb!
Entry: We are looking for an entry of 5.90 – 6.00.
Exit: We are looking to exit at 2-3% gain on bottom.
Stop Loss: 3% on top.
Good Luck and Good Investing!
David Ristau
