Thursday, September 25, 2008


TOP SHIPS Inc. (TOPS) jumped 35.7% today on news that the company entered into an agreement with George Economou, a Greek shipowner, for a possible sale of TOPS at $6 per share. The news created a breakaway gap and I expect come consolidation. Unless someone cancels the agreement, this stock looks highly likely to drift higher.

TOPS isn’t the only one looking for a sale. Transmeta Corp. (TMTA) announced that they are looking to sell and are looking for a buyer. They previously turned down a takeover offer in February. That news formed a breakaway gap that entirely brought the stock out of its trading range. This particular stock is suitable for swing traders.

Fuel systems Solutions (FSYS) did not breakout, but it looks like it may. I’m adding FSYS to my watchlist for tomorrow’s trading. If FSYS breaks the 50-day on volume of 2 million and on a 15% down move, then it’s over and it will be considered as a short candidate.

Yesterday, I mentioned that Dollar Thrifty Auto (DTG) and Pilgrim’s Pride (PPC) dropped after mentioning them two days ago. Today, DTG dropped another 14% and PPC dropped 39.6% after dropping 38% yesterday! Breakdowns are a very clear warning to investors holding a stock – it’s time to get out on that day. What are you waiting for…A nice 50% rebound? Good luck!

Ameron International (AMN) reported earnings of $1.63 per share, but missed estimates by $0.28 per share, dropping the stock 33% today. The next support level should be around here at $70, which marks March 2007’s support level. After a break there, AMN is going to $50.

Looks like WaMu (WM) is shopping itself to Blackrock and Carlyle Group about a possible buyout. The stock dropped 25% today, breaking a recent low. You’d have to look all the way back to 1986 for a support level. It took about 22 years for WM to get to $46 and it also took WM only 2 years to erase all of those gains. What a waste.

Red Hat (RHT) reported earnings yesterday (after the close) of $0.10 per share vs. $0.09 per share a year ago. RHT also revised their outlook lower to $0.16 - $10.17 per share vs. analyst estimates of $0.18 per share. This dropped the stock 8.5% today. Cross Research also downgraded RHT to “Sell” which didn’t help any. There is some support at $15, but if it breaks, RHT is going to $10.

Cummins Inc. (CMI) took a 8.3% hit today. Some people might want to blame it on “shorts”. Whatever the reason, CMI will have to test $46 and I do expect a small bounce.

Visteon Corp. (VC) will most likely hit $2 so if your long, today would have been a great day to get out before taking a 40% hit.

The winner of today’s big earnings misses: CRA International (CRAI). CRAI reported earnings of $0.39 per share, missing by $0.49 per share! The stock had every right to drop 27% and I’m not surprised it didn’t fall further. Next support is at $23. I don’t suggest anyone going long or short at this time. Wait until the dust clears.

No comments: