Gased out..

Guess,  you’d have to say Monday’s ‘hardly clean day’  tape didn’t lie as the 1^st of the month green day streak came to a screeching halt!.  The market tried early (up another 5pts), but you can see same underlying stock/sector discrepancies noted yesterday at work very early on.  All it took was for crude price to stop easing and bounce.   As said to start the week..”belief is this bounce will peter out ….the consequences of this Oily patch are not going to go away overnight”.. ..“Oily hostage' to the price of crude as it will dictate the broad market/SPX moves.”(Friday).   It might have seemed DJIM premise of a November type action was in jeopardy by SPX 1332 this morning, but a close of 1306 puts it right back in focus with the 50ma also creeping higher these past few days to 1292.  This also coincides with last weeks low levels to watch (TRANS broke it already). Considering very good global eco data (US ISM, SAAR) is irrelevant as today showcased, anything more than a bounce into a probable good NFP# shouldn’t be expected.

Shadowlist

Pointless to update , today every equity sector, including the ‘safety’,(ex,precious mets') and even ‘energy’ despite higher crude succumbed to selling and a red finish.

Quiet bunch

Quiet day on the geopolitical front allowed the market to digest previous day’s big losses and start to look forward to NFP# on Friday.   A combination of a big sell off just prior to a NFP# seemingly always allows the market a few days to position back for a bounce of sorts.  A big gain $>2 today allows for some easing tomorrow and thus market could play right into the bounce idea.  Many are citing this divergence today as a victory for the Bulls, but it’s probably nothing more than a breather following a sell off and the jobs# factor ahead.  Maybe the market was saying it could live with $100 crude, but it better be sure it doesn’t go much higher before putting all it’s chips into that belief today.  (A JPM note on semi’s and GS’ on steel provided the market with something else to talk about and trade). ECB commentary in the morning on watch by markets.

Shadowlist

• Commodities –  The steadiest bunch continues to be the coals, the GS steel note helps out fave’ CLF  here as well.
• Momentum/earnings/“winners of ’10-   JPM note generated a bid in semi’s and AAPL launch did more to hurt to NVDA / competitors than help it's stock price for today.  Other than that high growth linked stocks are seeing no conviction buying even though the Nazzy and small caps outperformed the big caps today.  Going to look at Opticals  again as next trading oppy’ (ALU  hit NCH), whilst the momo’s de-momo.
• Consumer-  The post EPS sell off in SODA ~$40 allows for upside here as there is really nothing wrong with the report that came out on a mkt sell off day.

..Prove it

Following the early week slide, we noted…”Considering very good eco data is irrelevant as today showcased, anything more than a bounce into a probable good NFP# can’t be expected”.  Well, we might have to rethink the ‘irrelevant’ part following today’s ‘bounce’ right to this week’s highs,( if ) the whispers of 250k-300k jobs are hit or not!.  Will it bring conviction buying if hit or will we continue sideways trading going forward.  Guess we’ll see soon enough and so take it a step at a time.   Anyways as discussed yesterday again, a ‘bounce’ possibility existed thanks to the combination of a big sell off day w/ the chance crude would ease off following a big >2% day would generate optimism into the jobs #.  Truthfully, it might have generated a little too much optimism putting aside everything (crude >100, Libya, Saudi Arabia etc. ) for the day.

Shadowlist

• Q4 earnings update-  some of the best action was from this DJIM shadowlist sub group. TDSC >10%,OPNT >9%.  On the less volatile’safety’ side, SXCI, TBL  traded in NCH(new closing high) territory.
• Consumer- life coming back here today and maybe a good sign forward…WYNN (nch) and FOSL,UA,TBL 4-5% higher.
• Commodities –  many sources as per Briefingcom/CNBC all over ‘coal’ today. What took you so long?. CLF  tacked another ~4pts climbing back over $100. WLT,ANR  also put in ~4% days
• Momentum/earnings/“winners of ’10-   A few like RVBD  had decent gains, but overall still sloppy considering the huge rally as the NFLX,FFIV,CRM  hardly showed up.   Opticals were mixed, some like OPLK, FNSR, FN  performed ~4%.

DJIM #10 2011

The market got it’s "probable good NFP#", but it couldn’t put ”aside everything (crude>100, Libya, Saudi Arabia etc.)” for another day and sold off across the board.   Despite what was a >20pts SPX /100+ DJIA intraday loss, the important takeaway is it was an ETF trade  all day, including the bounce into the close.  See Shadowlist below.  There was no real selling of individual stocks and if there is no escalation this weekend abroad, the market should recover some and continue to trade sideways.  Heading into the week...sticking to 3 groups discussed last week, Opticals/networking, coals, semi’s off upgrade.

Finally..some volatility

It’s definitely getting a little more volatile this month, a 3^rd consecutive day where the intraday peak to trough is 200pts on the DJIA and ~20pts on the SPX.   Despite a decent open, the market pretty well picked up where it left off last week (selling) , but hitting more sec’s/individual stocks unlike Friday.

The finger pointing is on the Nazzy today courtesy of WFargo downgrade of the semi’s ( down>3% intraday), but in reality this is just more de-risking  in the marketplace taking place.  Firstly, WF didn’t downgrade any individual names (actually raised some names),  secondly, JPM, released a 2^nd positive note in less than a week on the semi’s citing SIA #’s released March 2nd and thirdly, GS raised $ targets on at least 10 Naz stocks incl. high growth FFIV,APKT,RVBD, yet these high growth names were also off 3-4%.  These reco’s should not be responsible for a 70pts intraday loss on the Nazz and so it has to be some other factors at play.(ie. de-risk).

Any further broad market damage was averted by a technical bounce off last week’s lows.  Recall recent notes on 50ma, its crept higher, now at 1297.

Shadowlist

• Consumer-  SODA, last week alerted following sell off on EPS,  exploded 7% early and held on to most gains by close.  Noted last week..”life coming back here today and maybe a good sign forward”, today Euro M&A activity gave high end a lift TIF.  FOSL, had a good afternoon, UA  drifting higher.
• Momentum/ earnings/ winners of ’10-   We’ve talked of the sloppy trading in high growth names, today we saw money flow from the best percentage gainer group since September as well. (SMH).   The Opticals got hit on CIEN  weak guidance.  Likely an overreaction as this could be more of a company specific (intergration issue) than a show of less than robust optical demand ( eyes on FNSR Tues. AMC now)  Networking  JNPR  holding in well,  APKT  may benefit from  BSFT, (+20% AMC rise following earnings).  NVDA, analyst day (Tues.) may bottom the stock.

No Fly Zone 1305-1330

Once again the market indicated it’s in a technical sideways trade as it bounced again off last week’s low’s and found itself in a ‘rally’ of sorts for the day.  A ‘rally’ of sorts because it’s still only a sideways trade until the cap is lifted off around SPX1330.  On a quiet eco data/ earnings week, the market has been focused on Saudi Arabia “Day of Rage”.  The thinking has been if nothing dramatic occurs the contagion will end in the region and the market will respond favourably.  As we get closer to the planned event, the market may have started the pre-run today.  Hopefully, this is the case and/or Shag hitting multi month highs and not BAC investor day that is being called the catalyst today.  Reason is simply the financial group can’t be counted on for more than a few days of leadership!

Shadowlist

• Financials-  We’ll see if buyers step up next few days because today was nothing more than initial short covering.
• Commodities-   Although all noise is around a higher crude, an important development for commodity linked stocks ahead could be the fact Shang is making the highs noted above. If higher crude stymies economic growth, why is the Shang doing what it is? Inflation topping out could be the reason.  -MCP ,  demonstrated strength before EPS tomorrow.
• Consumer-   Retailers act inline with tape. FOSL, UA  tinker with new highs.
• Momentum/ earnings/ winners of ’10-   Only incremental gains today (if any) from ’10 growth stocks (ie. FFIV ) and the mega cap names like AAPL. The momo groups of ’11 in space have exhausted themselves it seems, NVDA disappointed at analyst day and the Opticals  got another shock from FNSR  after CIEN, plummeting all the groups stocks, incl.  JDSU, who got the excitement started with their earnings in early February.  The standout was BSFT hitting $50+,  add here in December in mid $20’s ran another 20% post mornings 20% gain.  Simply the reaction in BSFT and FNSR  are extreme in both directions given the reports. 

..worse on the inside..

If you look only at the final boxscore…DJIA -1,Naz -14, SPX -1.8%, you would think it was a pretty uneventful day. Unfortunately, if you go to the underlying sectors/ stocks you see a whole different picture.  Simply, all the important components of the market lagged quite badly. First and worst was the SOX (-3%) as collateral damage (networking stocks, telecom equip. etc.) occurred from the Opticals as China was blamed in FNSR weak guide.  There was more weakness in cyclicals such as materials, industrials. Here you see weakness in the widely followed steel, coal stocks.  Unfortunately, the financials couldn’t make it back to back ‘good’ days (but still decent), but that’s hardly a shock as expressed yesterday.  There’s some talk of rotation starting from tech to financials, but there needs to be a bigger ‘catalyst’ then BAC it would seem. In all, just another day in the no-fly zone for the broad market with nothing to add as a long trade possibility within the Shadowlist and it's components.

Bleak mood..

Everything written regarding Thursday’s trade is irrelevant now following overnight horrible events. We’ll suspend any analysis of the markets and ramifications until the weekend edition.  Simply, the market needs to defend 1294SPX on a closing basis to avoid January lows in the short term.  The overnight low of 1280ES should hold intraday if Saudi Arabian streets are quite.

DJIM #11 2011

Due to the earthquake Friday, the markets were secondary and if not irrelevant.  As witnessed all weekend the implications and fallout will remain an unknown.  We started early last week talking of the volatility back in the market and it picked up steam in one of the worst days in the markets in months and lead to our early premise in late February of this playing out like out like November instead of another quick snapback… February 24th”..supports  fell quite easily and brings up the possibility of 50MA as buyers are in ‘No Rush’ as titled yesterday.  This dip is looking more like the November one to 50ma eventually instead of the January one.  Short term- Saudi Arabia is the wildcard noisemaker here, if this turmoil doesn't spread there, SPX 1295-1300 cluster of support may hold.”.   Unforunately, the market got a few unexpected wildcards (optical earnings induced slide, china import/export, US trade #’s & Earthquake to lessen the positive developments out of Saudi Arabia (non-event) by Friday.).  Heading into the week a ‘bleak mood’ will likely persist, but the market did defend the SPX 1294 level discussed and the sideways trade may continue if it continues to hold.

Shadowlist

• Commodities-   The fallout from earthquake to start was the ‘rebuilding ’ trade in steel  related names.  Another will likely be solar  due to the nuke issue at hand. (Barron's was positive on our 2 names TSL,FSLR  based on valuation). As far as China trade #’s, it is likely an aberration due to seasonal factors as January was extremely strong and February very weak.  A very possible wash in the end, but market is not drawing this conclusion yet and will likely wait till March’s # come out.
• Consumer-  Retailers in list acted okay and are near highs late last week, RL, FOSL(IBD50 addition) TBL etc.  SODA continues to trade well.
• Momentum/ earnings/ winners of ’10-   some better signs last few days as high growth names bounce ie. NFLX, FFIV.
• Financials-  early in the week talk of rotation into financials was discounted here (needed more than BAC meeting) and this proved right as once again they faltered.

Beware Ides of March..

A soothsayer couldn’t tell you we’d be going from bad to worse in just a few days/hours….  “As witnessed all weekend the implications and fallout are still unknown”.  This is becoming surreal,  it’s not a play or a movie, but trading will go on...So,...

Dip buyers have been on strike..will they come out on ES overnight panic and buy the early selling pressure in individual stocks (not directly related to Japan and events?). Is this the point (SPX 1262 -December high/early Jan low) SPX 1270-1279 Pivot point support.