The RealMoney contributors are in the business of trading and investing all day on the basis of ongoing news flow. Below, we offer the top five ideas that RealMoney contributors posted today and how they played those ideas.
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1. Kohl's Ramping
By Gary Morrow
12:34 p.m. EST
is a top gainer on the
this morning. It's up over 3.5% on
. After a slightly lower open, investors bid up shares aggressively and have kept up the heat despite the overall market weakness.
The buying surge pushed KSS through heavy resistance at its 50-day moving average. The stock had struggled with its declining 50-day at its January and December highs, but easily cut through it this morning. Kohl's has also taken out the upper trendline of the narrow bearish channel it has been working through since the October highs. This is very bullish action, and it will carry the stock higher over the next few weeks.
Strong support is now near the previous February highs and runs down to the $52 area. A light-volume pullback to this area would provide a low-risk buying opportunity. Considering that the stock has already rallied 12% off its early February lows, a short-term consolidation will be needed soon. I am not in the stock but will be a buyer on weakness.
By Tim Melvin
12:32 p.m. EST
just can't catch a break. The stock is off more than 8% so far today, after catching a double whammy of news. Last night the CFO resigned and is heading to
. Then this morning, Piper Jaffray downgraded the stock, saying digital downloads are taking market share from packaged games.
I am interested in this stock, but right now it is pretty much broken. I am standing aside to see how far it falls before taking another look at the company. There is a lot to like here, but there is a major shift going on in the gaming market, and we need to see what response the company comes up to deal with it.
3. Steven Madden: A Bright Spot
By Ken Shreve
10:30 a.m. EST
Another strong quarter for the footwear maker
: EPS +83% from a year ago and sales +17% to $139.5 million. The company also raised its full-year guidance to $3.10 to $3.30 a share, compared with the consensus estimate of $3.06.
This is a well-managed company, and its technical picture continues to look good, but if the broad-market selling continues, I doubt it can make much headway from here.
4. Reader Mail
By Scott Rothbort
9:49 a.m. EST
Subscriber L.M. queried me this morning:
I bought some PowerShares QQQ( QQQQ) yesterday after your post. Would you add on the weakness this morning, or do you have a feel this could be a 1% rule day?
Here are my thoughts. The QQQQ trade was time-dependent, not price- or chart-dependent. I was up a bit going into yesterday's close. Obviously, today the trade will be down. I am sticking with it because it is a time trade. The trade is also binary, so I would not add because of a lower open today.
As to the 1% rule (which states that if the
is up by 1% or more at 10:30 a.m., then you go short the index for an intraday trade, and that if the S&P is down more than 1% at 10:30 a.m. EST, then you should buy the index for an intraday trade), it appears to be setting up today. On a day like this, however, with adverse weather likely limiting volume, liquidity and market participation, I am inclined to pass on the 1% rule. If you play it, keep the trade on a short string.
Position: Long QQQQ
5. Swapping Offense for Defense
By Robert Marcin
9:46 a.m. EST
At the margin, I am selling some deep cyclicals such as auto parts, housing, construction equipment, temporary employment, travel and commodity materials. My purchases are in the defensive space, such as managed care, discount retailers, drugstores, defense, specialty materials, medical devices, staples and high-yielding international oils.
The recent economic data appear more mixed and sloppy than we should expect at this point in the recovery. Something's wrong with this cycle on a fundamental basis, even with corporate-profit margins recovering.
But, if high-quality, non-economically-sensitive shares can be purchased at big valuation discounts, they should make money in a bull run and hold up much better in a cyclical rollover correction. The time to buy the deep cyclicals is when the economy is cratering, not after the biggest government stimulus in history.
This article was written by a staff member of RealMoney.com.