"Defying Gravity"

Well, this market has stunned us again!    Going into today, no one, absolutely no one, expected to finish the day in the green, let alone up 135 points.    Frankly, we are more puzzled than concerned about this market.    Given another hour, perhaps all of the companies that were down big in AH last night might have had a chance to finish in the green.    The only logical explanation to this is that people think all of the bad news has already been cooked into the current price and things will not get worse.    This is where we get puzzled.   When a company guides its future quarter down, it always leaves room for potentially more downside.    This is understood by everyone and most of us tend to trade on this assumption.     Maybe, an irrational explanation is that people are just so sick of bad news and they actually buy things instead of dumping for a change.    Is this just messed up thinking or just lame?   You be the judge!

On the other side of the spectrum, all commodity plays got rocked again!   This is undoubtedly due to the weak oil and natural gas price.  The reason for the decline in energy prices is that apparently a hurricane which is suppose to hit and disrupt the supply of oil/gas just won't happen anymore.    Of course, we have to respect mother nature and the trading action associated with it

So right at this moment, we pretty much have no plays at our hands.    Commodity won't do much unless energy prices stabilize and we don't mean stabilize for a day.    The trend has to stabilize or otherwise any attempted rally will be squashed quickly, as we have seen from recent coal, shale, steel action.    Agri plays are at an interesting juncture here as POT will be releasing eps on 24th and both MOS, CF releasing their earnings next week.    We will be following their action very closely.

For those that are just dying for plays, there are FSYS and RBN, both made a new closing high today.    These are couple of plays we played in the past, in an on and off fashion.    We are simply pointing out the fact that they made a nch and you may want to keep an eye on them in case they gain continued momentum from the nch. ILMN AXYS had pretty good EPS and may be a consideration at some point,maybe today
We are still waiting for a shining eps winner to come out and we are being patient for just that. The smaller caps will be coming soon.   We aren't going to step into the "regional financial rally" crowd as that's something we'd still want to avoid.

...bring on the small cap earnings...

Again, money continued the shift into financials from energy.   There are undeniable spurts of heavy distribution days since early July in anything energy related,  you definitely have to be careful and not do much, only trade the intraday moves if you want go into these groups.  The flip side is upward momentum in financials.  The bad news continues, but seemingly everybody sees a flower in the weeds.   Yesterdays, late day was ignited by an influential Deutche bank analyst who said his bearishness on the banking was reduced over the past week.    "Bad results are good when expectations are so low", he said.  This is not our trading strategy and we'll just wait and let this dry, we'd love to short a few of these puppies and probably will very soon.  It seems very unbelievable that all of a sudden every mom and pop investor sees it the same way as the analyst.  This seems too orchestrated and bigger funny money is involved in this move.  It's all a bit strange. 

Ag's, it's a big day ahead as POT reports and no doubt will beat and raise.  The question is how much has been baked into the stock price, on the other hand below $ 200 should allow for upside on good numbers.  We gambled a bit at the close for an early morning trade.   The problem with this commodity sector is how much emphasis the price of oil/gas has on it.    A looming strike at some plants has a cloud over it as well, any agreement will positively affect POT.    Potash makes potassium-rich fertilizer and improves the taste, nutritional value of many crops and with many parts of the world having their 2nd meal of the day finally,  while we have as many as we want.   Instead , natural gas prices is used in potash production affects this groups stock price more than it should.    It's not exactly coal or shales is it, these two don't exactly have anything to do with rice and corn do they?.  Anyways, we'll have a good look at Potash and its neighbour stocks.  A good report to go with a rising oil price could be a good - great combination to work with.

A few small cap earnings plays emerged...

AXYS,  we' ve had this one on DJIM before, unfortunately this eps winner doesn't hang around for an entire quarter.   AXYS, reported another strong Q as sales grew 40% y/y to 60.3mln, EPs .54c beating the street estimates of $56mln/.48. Backlog was also a record from DOD programs and is same arena as FLIR. Traded from $66 to $72 and now on our shadowlist.

ILMN,  she's back!,  it seems every Q we jump on this ones back.  Yesterday, we bought the morning pullback, $88's and watched it climb to over $92, a nch.  Remember don't chase so fast, let it come to you.   This was another great Q with .04 eps upside and a 30mln increase over the mid range estimate and improved guidance.  Everything is on track at ILMN and being in the healthcare tech sector, growing genetic anaysis market its not a bad place to be in.

..bankroll'over'

Every sector returned to it's true colors and we actually enjoyed it as reality had to sink in sooner than later.  The amazing bank run of irrational exuberance exhibited the dangers of holding this junk overnight as the sector fell almost 7%.  If you look at a bunch of charts you'll see our alert note of a possible top Wednesday morning could have yielded a nice return so far no matter where you turned in the group.  Unfortunately, we're not big on shorting and prefer to have patiance and wait things out,  still we hope this has more leak as we've shorted a few banks for a quick flip.   This may be the easiest, safest trade in a difficult market ..opportunities are minimal and/or dangerous as we close out the month.   The only loop hole available is to trade what we've always preached and that is earnings winners at or near NCH's.  These are the only things we'd be comfortable holding overnight  in size.     AXYS, ILMN noted before Wednesday's open have provided such the last two days.   Simply, we/you have to be very selective in your picks now until leadership shows up in something other financials.   Only other option available to find an intraday play such as EQIX,  too bad though you won't find many that go up $4 in a few hours as it did. 

Staying cool, calm is money in the bank,  trading out of boredom is the demise of many a trader. 

.."cooked in"

......" baked in",  whatever we call it,  it's the main reason we traded these stocks in the first place in 2007-2008.   We're not disappointed or surprised by the lukewarm response to excellent earnings by the WLT, MOS, CF and probably more in the morning.    These stocks were not only hot because they just happened to be in the bubbling commodity space,  they were hot because they were going to produce excellent earnings in the Q`s ahead.    Basically,  our intentions, as always is to get in ahead of the herd and we've done it with the PCX, ANR, CMP etc..  We took advantage of the numbers we are seeing now from the commodity stocks in the weeks before!.   The point is to get to the party early enough.  We can`t be surprised to the reaction now,  we just need a catalyst such as a weaker dollar, higher oil to go with these stellar earnings now.    Simply, earnings won`t make these go by themselves as the playing field has shifted.    You now need to writedown a few billion less than expected as the banks/investment firms have to get upside off a report.   What a wonderful world eh!.lol.  Anyways,  the sentiment has changed and you can't hop on these earning plays just because of the headline.    You will most likely be holding a white flag after you buy too high, too early.   Beating well above consensus means diddly-squat initially,  just look at the numbers below.   At this point, we'd wait for the 'late to the party' to exit and for the CC's to be over with before even having a thought of re-entering.    This could be an excellent opportunity to get a piece at these prices or lower in the days ahead,  but we need an extra catalyst to hitch a ride.

Mosaic beats by $0.24, beats on revs ,Reports Q4 (May) earnings of $1.88 per share, excluding non $0.05 gain, $0.24 better than the First Call consensus of $1.64; revenues rose 105.8% year/year to $3.47 bln vs the $2.85 bln consensus

CF Industries beats by $1.42, misses on revs, Reports Q2 (Jun) earnings of $5.02 per share, includes as $0.92 mark-to-market gain, $1.42 better than the First Call consensus of $3.60; revenues rose 36.8% year/year to $1.16 bln vs the $1.21 bln consensus.

Walter Inds beats by $0.37, beats on revs Reports Q2 (Jun) earnings of $0.94 per share, $0.37 better than the First Call consensus of $0.57; revenues rose 24.8% year/year to $370 mln vs the $304.7 mln consensus.

As for the market, the easiest and safest trade discussed late last week is happening.  This stuff is radioactive and we're not swimming (buying this market) into the dirty bath water all around you.  Thank you, MER!,  you may dilute (shares) yourself by 45%, but now you're so transparent

...come to papa!

Welcome home, Commods'...We missed you, life was not the same without you!.  We don't know how long you'll stay, but it sure felt good to have you guys come along and give this market the broader action it so sorely needs.   It feels like you might stick around a little longer, you have the great earnings to go with another catalyst or two, now.    We've concentrated the last 2 Journals on the spectacular numbers produced by the X, CF, WLT, MOS, so hopefully, we were all on the same page as soon as we saw the oil trend quickly change..a 6-7 dollar swing is nothing to sneeze at!.. Today, we also had MT confirm things are quite rosy looking ahead.    If we issue 3 alerts, 2 commodity related by 11am,  it's a clear indication we're not sitting on our hands.    The expectation for the Ag's-coals-steels and of course the energy shales to move to the upside is undeniable on days like this.  The Shadowlist is in tact, we haven't switched it to the banks or techs and so all it took was one look at the list if need be to decide what fits your account.  By this time, we all have a favorite or two coal, Ag, steel stock(s) to go to.  Simply, if we want a PCX, a JRCC might be more fitting to you.

Head-fake or not, we'll know soon enough if it was after the all the Economic data hits Friday.    But, one thing we saw today was there is such a thing as broad action.    Yes, the bad and ugly financials can move with the bad and ugly Oil in the same direction and take everything we traded in 2008 with it.   Broad based buying hit and it could be a clear sign of sentiment change.   We doubt this was a coincidence with all the Economic data due the next day, sometimes these things just have rhyme and reason.     If we get some serious bad news, we're going to know the last 2 days were nothing but a head-fake induced by 'big money' to bail on us on higher prices. 

DJIM #31 2008

The last five sessions, no matter how seemingly exciting if just looking at the daily numbers, Monday through Thursday specifically, proved to be nothing more than a glance into summer trading.   The wild fluctuations up and down are just a symbol of the low volume.    A possible positive was the up days were on bigger volume.   As we head into August,  this action will continue until there are signs of either institutional buying or selling.    Maybe we should just be happy we don't feel the YTD figures of the DJIA/ NASDAQ/ S&P, -14.6%, -12.4%, -14.2%,  respectively and the 463,000 job losses YTD so far affecting our accounts.   Of course,  we all know why and that is simply because of the commodity trade we've been tracking all year.    A potential upturn from early in the week was thwarted on Thursday/ Friday as economic data took over.   Maybe this was the head- fake possibility we discussed coming to fruition, but the action is probably nothing but hesitation before we go higher.   It could have been worse considering all the blows from eco data,  this could also be a positive.   At least, this week, we have little to worry about in the form of data and the sentiment shift witnessed early last week may have a chance to take over again.  

Our trading strategy is the same heading into the week,.." Simply, stick to the stocks you know/ traded or look for a set up elsewhere for a quick trade...". Keep trades on a short leash and don't have too many to manage.  One potential trade in MEE noted for Friday is truly indicative of short leashing as it ran from $75 in premkt to $82 quickly before slipping back to $75, end of day.    Anyways,  something has to give this week and it wouldn't be a surprise to see the only worthy groups lead.    Be patient.    Last week, the coals, ag's, steels proved this is the only place money should be flowing if basing your decisions on who's making money and will continue to in the quarters ahead.

..another head-fake?

Early last week,  we were wondering if the nice move to the upside was just another head-fake, today we are wondering the same thing.   Why shouldn't we, every triple digit day up seems to be followed by another one down.  The only difference today is that the market posted it's largest percentage gain in 4 months and it's going to take some horrible news to give up 300 points fast.   Has the sentiment changed after the Fed signaled a hike is not imminent?.   Hardly, this market is too paranoid to decipher something on a dime, besides the fact is half of it is at beach.   Dovish or Hawkish, who cares, better yet who definitely knows.  The market was already up quite before the decision and statement from the FOMC,  this was primarily short covering into the usual 2:15 spectacle before more headed off to the beach.   Simply, what this market feels though is a lot of pressure taken of it by Oil hovering and than sliding below $120,  it doesn't feel less pressure because the FED directive was either dovish or hawkish.   It's just relieved at this point and if the oil price consolidates here without some geo-political garbage in the near term, we may actually continue higher.   But, before we do we need to get some follow through and this may not be so easy as the major indicies are coming into resistance and it's not only the July recovery highs, but the dreaded 50MA monster.   This won't be an easy task and considering we're not too far away from these obstacles, we'd remain patient here and continue to look for individual trades hoping they all work out like the alerted IPHS gap short from 37 to low 32's.  Yeah, right!..lol.  

Speaking of IPHS and the commodity wreckage...opportunity maybe near to trade these again!.   The fact we know these are capable of doing big daily moves, we won't need to hold these overnight and risk.   The opportunity aspect comes from the fact the $CRX is toying with a multi year trend-line and a bounce becomes a strong possibility.   On the other hand, if oil continues this fast slide,  it will be a massacre for this index and its components and friends.  One and only way to avoid a beating is to intraday trade until we see a clear direction for the participants.

..Recycling...

Despite a weak report from Freddie, market held on strong on the heels of a 300 point gainer day ignoring the Freddie usual seen backlash.  Unfortunately, AIG's AH's report might be an excuse for some backlash.  As we said yesterday, now that we are back to the area where previous breakout attempt has failed, are we simply witnessing another head fake move?    It's possible that we stall right around here as we come to the resistance noted, but it's also possible that we make some noise and perform some unthinkable action, and that is rally to the upside for some late summer fun.  Hey, if Favre can end up a Jet, anything is possible!

One thing we have noticed or witnessed in the past few months, is that market cannot rally without the participation of the financials.    In fact, every big move in the past few months has been led by the financials.   Judging by this pattern, unless the financials, as a group, move 5 or 10% higher,  it is unlikely we'd get some meaningful action after this recent 300+ day.  It is hard to picture large cap techs act like a catalyst as they did today for an extended period.   However, we are noticing some of the popular names are being recycled right now and are being played potentially on a daily basis.   Stocks like RIMM alerted today and BIDU are some of the stronger names with an interesting setup.   Yes, it is boring to trade stocks on just the technicals,  but it does provide traders some incentives to sit through the day.

As far as commodity goes, whenever the storm finishes, you always seem to get a couple of sunny days.   We are not calling an upturn of the commodity sector here just yet, but $CRX bounced nicely and many of our shadowlisted stocks had a good day, especially in the morning.   We are simply pointing out here that whenever the oil is stabilizing, we'd have a pretty good probability of running up a few points from some of our favorite commodity plays.    One day at a time,  this is the mentality we have to remind ourselves to stick with.

EBIX, one of the best earning reports from a mid cap came from this thinly traded stock.  It's unfortunate it's so thin, but if you picked up even a few shares after our 'eye' alert August 1st, today was pay day.  It never hurts to get a some shares off a great report and just wait it out and sell into a substantial move or just hold on for an investment.

ICLR,  this stock was an original DJIM play, it manages clinical trials for drug and biotechs and is therefore in a pretty safe place for this market.  If you invest and than not just play fast stocks, than this stock like EBIX may fit into your book.  ICLR was $35 back when we went online, with no hiccups since, so you can see this has investment value besides a nice chart to possibly trade now.

.."citius..altius...fortius" ?...not around here!

..one alert this morning...is let go of this market and watch the opening ceremonies of the Olympics!.   Trust us,  you're not going to miss much, even if you're trading full-time.   The values that motivate this tradition are not here on the street,  you will not get a medal for being a brave soul because you attempt to trade this market.    If you're not a full-time trader,  you are definitely not going to miss the start of something big, you might as well start thinking of a beach blanket weekend!.    Spending your time wisely and preciously does not involve this thing,  so-called a marketplace.     It's simply, brutal..there is no pursuit of excellence or a fair balance, or a joy in effort that make up some of the values of the Olympics.    It would not be surprising to see Wall Street and of course CNBC make of more of a superhero out of Brett Favre coming to New York than giving kudos to those that fight for excellence to get to and participate in Beijing..." Citius- Altius -Fortius meaning faster- higher- stronger is not this markets motto!.    Dumb and Dumber,  is more like it and it's bloody boring and has no core values left whatsoever.    Actually,  the market is like a money driven athlete, coming back time and time again only to figure out after a year you should have stayed at home.   Too many knocks on the head,  it is what every investor feels every time they put themselves back into play.    You do need a helmet,  if you step off the sidelines this summer.... this year to trade.     It's really not the markets fault,  it's the fault of all those CEO's  that had no core values that has doped this market to where it's at.    There is no friendship, no respect on this street.    There is no movement as in the Olympics,  there is only days like Thursday, over and over again...as in another triple digit decline to curb any enthusiasm garnered by recent upside.    We never consider ourselves daytraders, but when you're done trading by 10:50 am,  we'd might as well be considered such.   If you had the opportunity to play our open alert and enjoy the spike in GDP to $53+ or the ANSS to $49's in the first hour,  we'll give you a medal,  maybe even a Gold one!.   Unfortunately,  few here have the resources or enough hands to handle these quick situations.    We don't want to trade this fast and ferocious way,  but this is the hand we are dealt now.    It's definitely the old adage, "buy low, sell high",  except this summer it's done in less than an hour, rather than days or weeks.  

...good enough..

Despite the DJIA falling as much as 100+ points off it's highs intra-day, we can't be disappointed in such action after last week's technical breakouts.  We've topped July's peak and think the best thing the market can do is consolidate in the near term before another push higher,  yesterdays reversals may be the start. 

In the meantime, our Shadowlist is slowly going through a transformation this month, a rotation as noted yesterday.." it's definitely worth looking at those small cap earnings and away from our commodity plays".  Our strategy is not about quantity, but quality,  we don't need a whole group or two such as \Ag's-coals etc to play now through August.   All we need is a few plays, here and there.   If you go look at the alerts this month so far, you can see you don't need much when you're selective!.   We've had ROCK, RIMM, ICLR, EBIX go about 10-20% in days, we hit a nice quick gap short in IPHS and an open alert for an early morning trade in GDP, ANSS for traders.   Nobody needs to catch'em all,  just a few of them with the right lots to make a nice return.   Hell, we've been picking our nose 5 days watching our old family member AFAM go from $36-44 off earnings in days without touching it sweetly.   Also, we've pointed out to keep stocks on a short leash,  this definitely applies when you get points like those from the above trades.  A short leash is not  purely for cutting a bad trade, it's for pocketing your earned cash.  Simply, we're not waiting to pocket too long, we pocket and than look for re-entry at this stage. 

We're not really concerned about what the indicies do here,  we can't control what is going on in the ' real world' with geo-political stuff, the Oil picture, the potential Financial surprises that can make this recent upside crumble in minutes.  But, as long as this rotation away from commodity plays on the strength of the dollar and oil slide continues, we actually welcome it as we go back to many of the DJIM basics as far as trading strategy goes.  This involves a good enough stock discovery, eyeing and/or getting in early enough to book some cash and than look for a healthy pullback to re-enter or enter for the first time, if you missed the first leg as in AFAM. 

Skeptical..

Besides the carry over induced Financial index fall today, the most notable action was in the commodity trade catching fire!.  The fire caught on to the point that even Curly, Moe and Larry on Fast Money were calling for a bottom reversal for the groups mid-day.    Maybe, here at DJIM, we're just Dumb & Dumber because we're highly skeptical of calling such a turn, so quickly.   Just yesterday the commodity GSCI index declared a 'bear market', it was off more than 20% off it's early July highs.  As, we said yesterday and before,  we're continuing to carry the best of breed in our commodity stocks on the Shadowlist because on any day they can produce fast upside points, unfortunately, until ... "something big and dramatic happens in the commodity, we are most likely to stay away from the sector for a while".   Of course, this does not mean you cannot play these intraday on days like today or probably tomorrow,  it's just we'd not be accumulating positions overnight and in every group.    Why else are we holding them on the shadowlist/ trading list day to day, if not to possibly trade them?.  It's the day to day list that shows the trading tone, individually and for group rotations.

We feel the commodity unravelled too quickly and it will take time to repair the lost momentum,  it won't happen overnight.    We are most skeptical because economic headwinds are starting in our home, the resource (not in the Olympics!!) rich Canada and spreading quickly overseas.   Downshift in growth is broadening and intensifying!!. This is going to be the next 'buzz' we'll be hearing over and over again and it will dampen any enthusiasm in our markets here, sooner than later.  The inflation shock trade  ballooned this year because demand was seemingly endless,  the USD was weakening and US credit crunch made many chase the commodity trade.    We don't need to mention the effect of oil on this.   All this has evaporated to a certain degree in each factor and this is why we are skeptical of the inflation shock trade coming back overnight.  It doesn't mean these groups can't bounce...anything on the market has the potential to bounce, it doesn't mean the inflation trade is back. 

Most importantly, we have other things to trade now and therefore don't really need to worry about missing something in the commodity plays early on. 

DJIM #33 2008

A flat week on the indexes' , yet many volatile periods in equities throughout last week, ranging from a battering of Financials lead by analyst downgrades,  a commodity one day head-fake before the resumption of it's beating as the inflation trade ends.   All this underscores the sensitivity of the markets to all the issues on it's back..the weak housing, slowing growth in Eurozone and Emerging markets, a weakening oil,  a strengthening dollar,  weak housing,  tightness in credit availabiltiy.  Despite all these conflicts the market is facing, the volatility led to nothing more than a flat week , a par week as the indexes' show by it's meager gains/ losses.  The NASD advanced 1.6%,  SPX 0.01%, while the DJIA lost 0.6%.  As some indexes' peaked July highs,  we noted early last week the best thing the market may do is consolidate.   Maybe this is just what we got before a push higher after looking back over last weeks action.   Just in case, this isn't consolidation the best strategy in our view is to continue to play one or two stocks at a time,  primarily the earnings winners we've been highlighting.    If playing one stock at a time it is not worthwhile accumulating slowly as the play will only last a few days before profit taking takes over.  Breakouts from any base, set up have a tendency to fail now because all traders want to pocket whatever they can,  including us.    It is almost a 'go big or go home' trade, meaning to make a nice profit you have to go in with size from the beginning.    If you take this route,  you have to be very disciplined and cut losses, if the trade goes against you after you enter.  The positive is you are concentrating on selective play(s) where all your attention is on a particular stock and you should see and feel it's trading pattern,  therefore cutting losses shouldn't be a problem.

At this point,  any expectations we may have from a stock and /or group making upside is easily broken as reality sets in. The reality is from any of the conflicts above the market comes up against on a daily basis, sometimes hourly.  The uncertainty, the confusion brings the volatility we are witnessing over and over again.   The risk/ reward trade is not favorable now, we can only hope the market finds it's footing as desks start filling end of summer.   Be careful and patient, a leader stock/ group today is not necessarily tomorrow.

..finger on...on/off switch

The Financial rattling continued predominately in the FNM/FRE/LEH, this led to the uptrend from July lows was busted up in the SPX, most notably.  So you'd think we're in deep trouble!.  Fortunately, this isn't necessarily the case in the immediate term as sometimes it's all about timing.  The time is late August and the dry volume allows for quick rallies especially at oversold levels we find the market in now and late August doesn't allow for gigantic drops (unless some horrible news slips in) as the big money is sidelined waiting to return in a few weeks.   Also, the great thing about trading day to day is you can sometimes find a silver lining or two.   Recently, it's been focusing on a few selective stocks and the case for this continued as our Journal morning notes on FSYS, AFAM led just nicely.  The other silver lining is we have an OFF/ON switch always ready to go at all times.  No matter how close the $CRX looks for a tumble as it plays with 800 again, we must give it the benefit of the doubt and appreciate it's move off 800 today.  The timing may be just right for the hard metals to make a move with the USD/Oil stabilizing after big moves.  We're not calling a bottom/top in anything, only that we should look for an opportunity to make some money off the coals, steels, E&P energy plays off our list.   Speaking of timing,  it's also seasonally/history right for things such as coal.  An important role of the daily Journal is a view into the next  trading day,  simply our eyes are back on the commods' for the next few trading days and we're ready to turn on the switch for a trade.   If the $CRX behaves right early Wednesday,  we won't waste too much time entering some positions spreading them around the 3 groups above.  Still, we are in a strict trading mode and we won't be blowing a fuse as in not taking profits generated/ or cutting a lagging/losing trade.   No fat fingers here with a broken uptrend. 

As we all know the stocks off our shadowlist can make big daily moves and this is what we are anticipating shortly.   The oil inventory number in the morning may just be the right catalyst for the $CRX and it's best to wait for it to come out.   It is possible we see strength in the commods' and the overall market at the same time.  This something we don't see often. 

Follow through...

..desperately needed.....Basically, we are making a general comment with regard to all the plays out there.    Yes, apparently, other than FNM/FRE to the downside,  it's pretty much an uncertainty for any big movers to have follow through action to the upside this summer.     There was no shortage of action today and we have to give it to this market despite some grave concern for two of our largest mortgage lenders.   As we said yesterday in conclusion,  it is possible for the commodities to run with the broad market.  We had spurts of this all day and if it wasn't for this FNM/FRE mess it would have happened!

Here's the thing, with that many movers with 4-10%+ or 5 pts+ gains from our Shadowlisted commodity plays, ...including solar..

ENER +10.28% MON +4.63% RIMM +3.44% POT +1.27% AFAM -2.07%

SOL +9.26% X +4.62% ANR +3.39% FLS +0.80% FSYS -6.78%

HK +8.43% CRK +4.62% MOS +3.29% PRXL +0.03%

CLR +7.28% CMP +4.36% MT +2.87% ICLR 0.00%

JRCC +6.76% BIDU +4.01% RIG +2.86% DRYS -0.03%

PCX +6.22% SCHN +3.96% WLT +2.06% CEDC -0.08%

GDP +5.97% PVA +3.96% ROCK +1.58% USPH -0.15%

FSLR +5.51% EBIX +3.82% ILMN +1.57% AXYS -0.44%

IPHS +5.40% CF +3.69% MEE +1.39% CRL -0.54%

CLF +5.31% AKS +3.62% AAPL +1.33% ANSS -0.76%

......you couldn't help but to feel it's more than just a mere coincidence.   Can a sector rally be in the works?    Of course, we've all been fooled a few times since the correction began weeks ago and it's probably best leaving the question unanswered at the end of the day.    As traders, even though we act often off our instinct, we still have to be open-minded for any possibilities.     Yes, as many probably agree, we are sick and tired of playing intraday points because trends last 5 minutes.   Today was just another dizzy day.   We'd like to see some meaningful follow through whether its' from E&P Shales or Solars or Steels/ Coals or any recent EPS plays.

Earlier today we had the oil inventory report that was considered very disappointing for the commodity groups.   However, crude oil reversed early weakness and still ended up with a pretty healthy gain.     In case you haven't noticed, oil price has basically been in the same price range during the last few trading sessions.    With its positive reaction to a negative inventory report today, you can't help but think we may have hit a bottom already.     Many oil related stocks behaved really well today and you can certainly feel the same enthusiasm across all of the commodity sector.    We aren't saying there's going to be an immediate and powerful commodity rally here.     We are simply pointing out that we like what we see the last couple of days from the commodity area and we have to be prepared to give it a good ride if the action is confirmed.    Speaking of which, we are looking for some follow through moves from many gainers today.    Follow through moves do not necessarily mean another huge up move the day or two after.    We feel any subsequent firming action from the gainers today would be considered very healthy and we'd then view it as launch pad for some potential sustained up moves.

In terms of individual plays,  our alert buy of ENER exploded and has broken out cleanly today.   It is due to report next week and the entire solar sector is getting a lift lately by various earning reports and contracts.  Again, as with recent plays, if you miss a first leg up as in AFAM, FSYS or miss a breakout as in ENER yesterday wait for a decent dip/ pullback.

DJIM# 34 2008

Let's just say Friday's USD+/ Oil steep slide led to a big upside day on the broad markets.  Still, despite the huge slide in Oil, excluding the E&P energy Shaes,  the damage was minimal to the rest of our commodity stocks we either monitor for direction and /or trade.  This was a surprise following the commodity run of more than 5-6% mid week.  A pullback possibility was noted before Friday's trading, the non-severity of the pullback was an opportunity to pocket gains as losses to any profits would have been minimal heading into a weekend.

ROCK +1.88% AKS -1.76% JRCC -3.91%

ANR +1.37% IPHS -1.78% GDP -5.75%

SCHN +0.29% POT -2.12% CLR -6.37%

CLF -0.48% CMP -2.19%

MOS -0.71% PCX -2.71%

CF -0.74% CRK -2.95%

WLT -0.98% GMXR -3.20%

MON -1.04% MT -3.23%

HK -1.42% MEE -3.33%

RIG -1.50% PVA -3.43%

Thanks to this 1-2 USD/ OIL punch,  the brutal intra-week volatility/ pullback during the week would have been the topic of conversation coming into this trading week,  instead the DJIA ended down a measly 32, SPX -6, NASD -38pts for the week.   Volume continues to be extremely light and yr/yr comparisons are almost unbelievable, down at least 30%.   As the usual course,  we are not focusing on the technical which on the DJIA is one of a retracement back to an ascending wedge and it's potential resistance with an army of technical shorts possibly lining up.   Instead,  we continue to focus on individual groups and stocks.  If we weren't open-minded and looking for new opportunities, we wouldn't have been ready for the mid-week commodity run or a solar opportunity, specifically in the ENER, SPWR alerts.   Simply, the reality is it's a mess out there,  but we're not giving up looking for a flower or two amongst the weeds.  In regards to Solar, we are sticking to the core and that means SPWR ENER as our favorites and avoiding a spree into many of the cheaper ones that we followed before when there was a wild run on anything solar.   Also note,  we are avoiding the Steels as stock action, notably in X, is responding to continued weaker international spot pricing.   Copper is showing better stability and FCX is getting some eyes on it as the best play on the group.