Tuesday evening

Tuesday Afternoon

The market is holding up fairly well as it digests recent gains.  We did have some surprisingly strong numbers this morning on durable goods and Greece got its next stipend to get by into next year.  Don't do anything wild and crazy here.

Tuesday Morning

Gator's Chart of the Day: GNRC

Generac has been in the news even before hurricane Sandy took aim at the northeast coast.  Checking the chart you'll note the gap up on 10/31 as the company reported great earnings before the market opened.  That was followed up with news that demand for home generators is outstripping supply.  Although the stock still trades at a P/E under 11 it dropped like a rock on Monday as the company announced a secondary offering of 11.5 million shares.  (It should be noted that these are existing shares.)  That equals over 17 days trading and the stock price is likely to sag some more.

The Trade
The stock slipped into the gap at the close on Monday.  I think it can be shorted (or take some puts) at this level or even if the stock bounces back to 32.50.  If the stock falls below 31 I would load the boat and look for a meeting with the 50 day sma somewhere around 29.  If the price moves above 32.50 on volume I would close the trade for a small loss.


Edit: The secondary was withdrawn last night.  This trade may not set up.  If it doesn't then don't force it.