Running out the clock

Today’s final box score of  +68 Dow/+7 NAZ/+6 SPX looks like the biggest lie ever!.  This had to be the most unproductive and tortuous day in recent trading memory as nothing, absolutely 'nada' in small cap land was getting a bid even with Dow up around 3 digits.   No momentum, no follow through in GS (surprise!!) or AAPL, no leadership anywhere unless you trade Media sectors.   You’d figure traders would jump on this pre holiday period and start to move stocks that are easier to move such as mid-small caps.   Instead to put the day in perspective…DISney  was the highlight stock of the day.   If in the wasn’t for the holiday season ahead,  we’d say this market is in trouble judging by today’s lagging action in the RUT and similarly in the DJIM shadow list from past experiences.   We’ll give the market the benefit of the doubt today, purely and only due the fact it seems everyone is just running out the clock  on the trading year and preparing for 2010.   The idea that traders/ investors are going to all of a sudden get back in the market next week as we get closer to XMAS and end of year is running on fumes.   This just may be the quietest holiday trading season we’re ever going to witness.

The theme is simple and that is traders/investor are reducing risk in the world markets into year end, while still maintaining a hold exposure strategy with stocks.   This means no chasing rallies, no follow through, yet no heavy selling.   This is not conducive to how we trade or any other traders.   This is good for the small  Buffets of the world.   To make matters worse, we are stuck in a trading range and it will take something extraordinary to create a volume breakout over 1115-1120 or breakdown 1085.   We’re watching for transports >4100 and >340 SOX as a necessity for any potential start to a move.    As we all realize,  it’s easier to sell than buy in this environment and this makes the market vulnerable if we get back down to 1085 levels.   A market with no bids now will be a market with sellers and no bids if we can’t hold 1085 as bid/ask spreads widen.   Not to sound negative, just to keep in the back of our minds if we get down to range low's again after seeing today’s brutal thin trade.  

So yeah, today was frustrating!

Christmas trading week schedule:

DJIM Christmas trading week schedule:  Markets close 1pm on the 24th/ closed 25th.

DJIM #51 weekend edition for Monday 21st will be the last journal till the following  DJIM #52.

No Journals will be posted for Dec. 22nd & 23rd and shortened Dec 24th trading days as we will be on holidays.   No Alerts will be available during the week.  Site will be available for Forum member trading ideas/ comments.   If market conditions warrant a comment during the week, we will try our best to update.

Thank you.

..getting close

The bullet points to tonight’s Journal relate solely to what we alerted in the afternoon as they are the most important trends visible.  It is also what we were crying for in the late week’s trade when nothing moved in our trading universe, yet stocks like DIS were making new highs and creeping the DOW 30 higher.  Today a wide range of mid-small caps from our shadow list performed very well….from China (HEAT UTA CAGC etc. to Casino’s ..LVS WYNN  (thanks to Dubai 10bln resolution) to commods’, notably steel..X..

First and most important is the small cap index was outperforming, thus DJIM shadowlist and finished the day to multi week highs (+1.5%).   Second, the economy sensitive sectors, notably the transports  up 1.7% and a break to new 52wk high and through >4100.  The SOX  closed right at 340 and is not just yet conclusive of the daily double we are looking for further upside.   Still, we closed at 1114, another new closing high on SPX, yet off 1119 intraday high.   C ’s larger than anticipated capital issue made the financials lag as this left some overhang,  still other important names made a nice recovery later in the day as DB  made positive comments that helped improve the tone and morning’s weakness was bought up.

Close, but no cigar just yet to break north of 1115/1120, setting up for FOMC 16th to settle the score or just the anticipation of not much change to break north before the decision.  At this point, you cannot trade on your heels in anticipation if the FOMC statement language will change,  even after the recent strong jobs report.  Minutes down the road may play a bigger role.   We think Bernanke gave enough clues recently that no big changes will be present (sorry Bears),  yet some tweaks/adjustments should be inevitable after the strong jobs. 

We just can't picture the FOMC in grinch mode and pissing off vacationing important trading players/ desks.

No B'uyers/S'ellers..just a lot more B.S

Despite all the positives since the first time 1115-1120SPX was visited,  the market is still hostage to the same thing we’ve discussed constantly and just last week in ‘Running out the clock‘……“The theme is simple and that is traders/investor are reducing risk in the world markets into year end, while still maintaining a hold exposure strategy with stocks.  This means no chasing rallies, no follow through, yet no heavy selling….. To make matters worse, we are stuck in a trading range and it will take something extraordinary to create a volume breakout over 1115-1120 or breakdown 1085.   We’re watching for transports >4100 and >340 SOX as a necessity for any potential start to a move“.

The positives above include the accumulation of very good eco’ data points, plus, we’ve also have the breakout of transports earlier in the week and the SOX (~344) today to be encouraged about.   Also,  the market has been decoupling from the USD (until late in the day after FOMC statement).   Still, despite these ‘new’ encouraging positives,  we had another failure to hold a close of ~1115-1120 area and/or breakout from this 5 week range due to the lack of conviction buying (no follow through).  The FOMC couldn’t settle the score, still most likely the reminder of expiring facilities brought out some sellers even though this is a known inevitable. 

Unfortunately, AMC, C’s secondary offering will weigh on the market some more.  Reason is simple and that is they priced ‘much lower’ at almost a 20% discount to last Friday’s price and gov’t won’t sell stake at these prices.   So, this is will add to the late day pressure and most likely we will test the recent gap 1097-1099.   We’d look for underlying bid to come here first if tested as we expect any sell- off to be shallow.


DJIM #51 2009

Heading into Friday’s trading day, our opening lines surrounded the idea of ignoring the hourly, day fluctuations as we head into the last 9 trading days of the year.  On Friday, the market was all over the place, the ES was up 4-5 pts early premarket than was red or flat by the open.  This whipsaw pattern continued throughout the day.  If you tensed up or panicked as the market penetrated the 1097-1099 by a few pts before noon, you missed a ramp up to 1102 by close.   Point is, this is not the time of the year to throw away stock, but to be long into year-end.   If you see strength all day in NASD (on the heels of RIMM ORCL earnings,) you don’t fret over DOW 40 or SPX being down and think the sell off will continue from the previous 2 days.  Add , banks-brokers having a decent morning and further downside is limited as we had 2 of the most important sec’s performing quite well.  

Only 2 ½ trading days ahead this week,  some window dressing Q end may begin with some recent beat up mega  stocks AAPL AMZN getting a bid .  We think it’s a stock pickers market now and will be in 2010 as lower volatility and the search away from zero returns brings money into risk assets (equities).   Recently, it’s been  more of an ETF type trade, SPY etc with individual stocks not moving in tandem.  Due to this we will continue to seek set up trades, like CAGC recently that popped 10pts or so and than CLW , alerted a few days ago moved from $54 (9ema) on Thursday to 59+ by Friday’s close.  Also trading some AONE, (GMCR OVTI ) off recent low possible turns).

Most importantly, we wish our readers and your families a very Merry Xmas and a great holiday week ahead.  We recently posted our schedule for the week ahead,  we will still try to provide a few bullet points on the markets during the week.

..no storms here...

Last week,  we said the USD / stock market direction trade is decoupling…“Also,  the market has been decoupling from the USD (until late in the day after FOMC statement)”.  

This is most important to today’s bullish trade... USD, 5th straight up day, but stock market rallies nicely, TSY 2-10 steepening curve hits all time high.  Possible allocation shift into equity.

• This is important because the recent trend is done for now.   More importantly, a very steep Treasury curve spelling eco' strength and possible favorable banks- brokers earnings  is the noise today.   This why our JPM GS  black sheep were good kids on the block today.(+2% banks)

• excellent M&A activity, v.good EPS guidance from tech, broad based action, SOX  adding to 340 break (+2%). 

• good to see consistent positive action ALL  day.
• still can`t close over 1115-1120 (aargh!)

• Despite USD strength and commodity linked stocks mostly weak,  the steels trade idea with X  is still going strong. X hit another new recent high +6% with AKS …“As far as commodity sector is concerned,  we have finally seen some positive action today despite an early higher USD and crude slide.   This action was led by the steels after another AKS  price raise yesterday, this is a positive for our fave steel X  more than other steel names.” Dec 10

So a few bullet points, all good, all long into 2010.