Good Thursday to all. We are going to open the day with a punch in the stomach with Marriott Inc. (MAR). We played Marriott yesterday as our Overnight Trade of the Day, but it did not work out to our success at all. The company met EPS estimates and revenue estimates and missed guidance. My analysis was a little too over excited about MAR I assume, and we are going to be hit with a 4% loss this morning. If you are holding it, I would try to sell within the first ten minutes.
Additionally, yesterday, we opened a position in Domino’s Pizza (DPZ) at 13.21. We are looking for a 4-6% gain through next Tuesday on this one. You can view my analysis on this one here.
Two new plays for today…
Buy Pick of the Day: Nordstrom Inc. (JWN)
Analysis: Retail sales in September were outstanding, coming in well above expectations for many companies. Teen retailers, led by Abercrombie and Fitch (ANF) led the way. Department stores were not nearly as exciting across the board, but Nordstrom stood out among the pack with a 7.5% increase in same-store sales from one year ago. This killed estimates of 4.3% from analysts from the company.
Despite the big move, the company is trading up only 1% this morning in pre-market. All teen retailers are bouncing up 5%+. This discrepancy is attractive to me. A lot of traders are quickly moving into these stocks and overlooking JWN. This is okay with us because it means we can get into Nordstrom for a cheaper price and ride it up all day. The entire sector is flying, and the market is looking steady this morning after a strong jobless claims report.
To make things even better, Nordstrom is not heavily overvalued compared to its competitors. The stock has over 3% upside to its upper bollinger band. The stock is relatively overvalued on RSI, but it is not overbought. In fact, stocashtics show the stock as very neutral with a lot of buyers recently selling their positions. Well, today’s news and movement should help to put a lot of them right back into JWN.
We should get into Nordstrom right away to start the morning before it hits a big move.
Entry: We are looking to enter between 37.90 – 38.10
Exit: We are looking to exit for a 2-3% gain.
Stop Loss: 3% on bottom.
Short Sale of the Day: MEMC Electronic Materials (WFR)
Analysis: Its tough to say any stock is a short sale on a day that is looking extremely promising, but I do think that MEMC Electronic Materials (WFR) is most likely going to top out today. It may become a two-day trade, but this stock is due for a pullback. WFR has moved just under 20% in two weeks. The stock, for the second time this week, is about to pop over its upper bollinger band. Today, it is due to a Wunderlich upgrade from Sell to Neutral.
The company’s upgrade comes after WFR announced at the beginning of the week that it would be selling the world’s largest solar power park in Italy. The stock raced up throughout the week, and it is poised to add another 5% with today’s upgrade. The question though becomes where is the top. When does the momentum stop for WFR. I am calling it today. The stock was up 4.5% at around 7:30AM. The market was looking at pre-market gains around 10 on the Dow. In 45 minutes, that has increased to 60 on the Dow. WFR has not budged.
The stock is running out of buyers, and I think many of those buyers are going to become sellers today. I look for a quick pop to start the day and a drop from there. WFR has become too overvalued near 70 on RSI. Its upgrade was from a less important company, and it was not even an upgrade to buy.
Get into WFR early but watch out for the quick pop.
Entry: We are looking to enter between 12.95 – 13.10.
Exit: We are looking to cover for a 2-3% gain.
Stop Buy: 3% on top.
Good Investing,
David RIstau
