Let's Save Some Time..

8am EST I am going to save you a ton of time. I will make this real easy. Ed Liddy is going to come to Washington today and "answer questions" about AIG's situation. Of course most of the questions will be about the "retention" bonuses paid recently. Here is a list of the talking points he will assuredly use:

-I didn't approve the bonuses, they were in employment contracts before I became CEO.
-There was nothing I could do to stop paying them out.
-We desperately need these people so AIG will not blow up the global economy.
-I have no solutions as to how we get the money back.
-I can't tell you who got the bonuses.

That's about it. They will go in circles all day. Every government official will grandstand and point fingers and "express outrage". At the end of the day, nothing will happen and everyone will go home. Nothing will get done. Gotta love government.

Let's make some money. One stock I am looking at closely is Nucor (NUE). They were down dramatically on a strong up day. They made a statement that basically said they will lose money for the forseeable future, gave no guidance, and said they will do what it takes to conserve cash.

(NUE) traded almost 20 million shares yesterday. It's recent average volume was a little over 8 million shares per day. It hadn't traded 20 million shares since Oct 16th. It was down dramatically on an up market day.

So there you have it. Expectations are about as low as they are going to get. Just about any announcement from the company or the economy will be better than the expectations now out there. Things can only get better. You had a wash out of the weak longs. You have an easy trade with an easy stop. Buy some (NUE) in small chunks to allow for some downside. Keep a stop a little below the $28.28 Nov 20th low. Your target resistance level is at the 50 day moving average, currently around $40. If you can buy the shares at an average of $31-33, your downside risk is 3-5 dollars and the upside is 7-9 dollars. On average you are looking at about a 2:1 risk/reward ratio. If you get a strong move to the upside and the stock breaks the 50 day, you can take a part of the position off and let the rest run. That puts the trade dramatically in your favor. Pretty easy money.

Stay alert for opportunities in this market and watch out for the next leg down. Until next time, stay low risk..