Well, we had an interesting week to say the least with our selections. We had some definite winners and losers, but we ended up better than worse. The week was mostly poor as the market dropped just under 5%. Friday, however, the market began its movement up, and there is some buzz that the market might be bottoming for the short term. Some decent news came out over the week as housing starts were seen rising for the month of April, prices of goods are staying stable, and earnings continue to be pretty strong across the board. Yet, the market is facing some tough news out of the job market as unemployment claims continue to rise, there are scary rumors of future deflation, and crude inventories continue to rise, which should decrease the price of oil but shows an overall lack of demand throughout the States.
The big news of the week was the Euro and the stability of Europe. Next week’s success will definitely be linked to signs that some measure of bringing stability to the region has been established. Additionally, this week, the market will get some big news from the real estate market on existing home sales on Monday and new home sales on Wednesday. Durable goods orders will be reported on Wednesday, as well. Thursday will be the reporting of GDP and jobless claims, and finally, on Friday, personal spending and the Michigan Consumer Index will be reported.
The Oxen Report had some definite winners and losers and nuetral plays:
Winners:
Aeropostale Inc. (ARO) – Aeropostale was our Play of the Week that I sent out on Monday through an Oxen Alert, and it was
good for a nice 4.5% gain for us. We got involved on Monday at a price of 28.00 and liked the stock for the fact that the stock was undervalued but looked suited for a rise based on what was expected to be record profits. The company delivered on Friday, and we were finally able to exit the stock after an up and down week for a solid 4.5% gain at 29.26.
MF Global Inc. (MF) – MF was a great Short Sale we made on Thursday. The company had some detrimental earnings reported on Thursday morning with another quarterly loss. Further, the derivative clearinghouse said they would cut another 10-15% of their workforce on top of cuts that had already been made. The stock bounced up in the morning above our entry range, so we changed our entry range after seeing where it settled, getting in at 8.30. We then exited at 8.13 for the 2% gain.
Neutral Plays:
One of the issues with our week was we had some missed opportunites, which was my fault, but we had some very close plays with a few of our plays. We start with two plays from Wednesday.
Citi Trends Inc. (CTRN) – Seeing the market faltering on Wednesday, I thought it was a day to make some short sells to take advantage of the declining market. CTRN had reported some excellent earnings on Wednesday morning and was up over 8% in the pre-market trading, so CTRN became our first Short Sale of the day. The problem was that the market was declining and CTRN was extremely overvalued. I put an entry range 15 cents above the peak of the stock, and we were not able to enter. It was unfortunate because the stock declined some 15% intraday.
Direxion Oil and Gas ETF (ERX/ERY) – I wanted to continue short selling by getting involved in one of the Direxion oil ETFs with our second Short Sale of Wednesday. The plan was to watch for the crude inventories, and if they had declined or 
increased by a significant amount, we would short sale the opposite ETF. The problem was that inventories came out very neutral and did not make a market movement. Therefore, we passed on the opportunity to get involved.
Williams-Sonoma Inc. (WSM) – Williams Sonoma was a loser and winner for us. On Thursday, the market was down over 150 points on the Dow in pre-market, and it took away from my typical rational, consistent thinking. I went away from my bread and butter and recommended a short sale on WSM that was much too low considering some excellent earnings from the company. We quickly got stopped out for a 3% loss. Based on the bollinger bands, I recommended reentering at 30.30 for another short sale. We got involved at 30.30 and watched WSM move back down to 29.40 for a great 3% gain. It ended up basically neutral for us.
Losers:
Direxion Daily Bear Euro ETF (EUO) – On Monday, I recommended a Short Sale on this Euro ETF EUO. I was under the impression that the Euro was bottoming, which it actually did. I thought the bottom on the Euro would mean that the overvalued EUO ETF would decline. The problem was the American market did not follow suit with Europe’s movement up as the Euro gained strength and EUO continued up. We held overnight on Monday, but it was never able to make 2-3% and continued down for a 3% loss from our involvement at 24.65.
Chico’s FAS Inc. (CHS) – Chico’s was another stock that did not work out for us. On one of our only buy selections of the week was CHS. Unfortunately, buying except for on Friday was a mistake. Chico’s was a stock that I wanted to buy because I saw that the stock was undervalued moving into earnings on Wednesday morning. We bought into it on Tuesday at 14.65 believing the stock would get some great buzz after back-to-back 75% suprise earnings reports and some good news on housing starts. It was not meant to be as the market tanked, and we lost 3%.
A neutral week for us with some great missed opportunities, and neutral on a tough week is something we will take. Hoping for some better market conditions next week, and we can take advantage.
Let me know if you have any questions or comments. I am always open to any improvements, questions about how I do things, etc.
Thanks and Good Investing,
David Ristau
Loser – EUO, CHS
