Torn again?

When we said a few days ago the market awaits GDP, Homebuyers credit resolution for direction,  little did we know it would become seemingly ‘skitzo’.  The GS whisper # ran the market down and the real # pushed it back up.  Oh yeah,  make sure you relax this weekend and get your anxiety levels down if you thought it was October 2008 all over again.   Why?…if you thought these last few days were whacky, wait till next week as we have FOMC meeting tweaking language game and NFP employment report to deal with!.

Simply, the game has changed from earnings reads back to economic data and we actually welcome this change.   Lots of noise of Bears about the GDP 3.5% surprise was the ‘clunker’ aspect to it, well, our Bull noise is remove the ‘clunker’ and the economy paced at 2.5% GDP.  That’s just under GS # 2.7% overall, take out ‘clunker’ and their number would read as 1.7%.  Get it ?  2.5% vs. 1.7% is a surprise and the market reacted.

One thing the GDP/ HB credit tax bill should do till next week’s noise and probably did today was show relief in the market.   It definitely provoked a huge squeeze on those overzealous Bears who became to eager pressing the market lower from 1070 (recall huge volume post here) and another at ~1060.  As we said, any short damage was done by GS whisper # with many TA intertwined  channels/ supports in low 1040’s.  

Once again, the market showed “it’s no different this time“.   But, only to a point so far. meaning the market has the ability to reverse easily.   We don’t think this was much of long only underlying bid coming back, but instead a squeeze.   The sellers this week did not all of a sudden turn to buyers today.  Why?.   Well, it was mostly an ETF led rally as individual stocks of importance really didn’t do much.  Yes, DJIM’s list had some big gains ( mostly stocks under $10-20, eg China stocks and commodity linked stocks moved to the USD game), but after the beating for a few days it’s hardly anything to get excited about here as they are nowhere near the prices from last week.    So, as we noted yesterday, we think a bounce will be more TA related and protecting gains will be the resistance to higher high’s.   Of course, this may change if we get positive catalysts from eco data points in days/ weeks ahead. 

After today's action/ GDP,  we can only say investors remain will be "torn again"  between a desire to take profits and reduce risk into year-end or risk missing potential upside once again off a GDP suggesting positive payrolls early 2010 or even sooner!

Let’s not get ahead or too excited, we are still down quite a bit on the week and face a long week ahead.   One thing we hope for is a few sector plays emerging to takeaway from all the SPX stuff.   AMC, we posted Casino’s, our DJIM list includes..LVS MGM WYNN  (LVS was low 14’s post time and closed in low 16’s after some ‘bottoming’, group business coming back noise) and CLF,  which posted a ‘clean’ eps and gave strong guidance,  bullish outlook  for iron ore volume, which is also a positive for integrated steelmakers.

No conviction..yet

On numerous occasions on pullbacks (corrections), we’ve said Bulls wait for things to settle down before giving the market an underlying bid and buying with conviction.   This is especially true after big down days and today was no different after the market drubbing (Friday).  Despite positive China PMI, Ford earnings Housing and notably an encouraging ISM# in the employment index that hinted at an upside to this weeks NFP#, the early rally was nothing more than short covering.   Even with a weaker USD, the move waned quickly and proceeded to new short term SPX lows before a late afternoon bounce.   Late move had same characteristics, nothing special.  Still, the selling pressure from late last week seemed to have slowed for now, but with volatility back this may not appear as it seems.   

Today,  the lack of buyer / sellers simply showed the market is waiting for the macro eco picture to make any commitments to the market, (FOMC, retail sales NFP report etc).  In the meantime, the market has internal problems, last week the XLF was down 7% and showed no life again.  This time C weakness dragged on the group and TRAN SOX keep underperforming.  

No conviction, no new buying into this market is what we're sticking to for now.  Some downside momentum may have been lost.  Be ready for signs of buyers for a trade on any retests of  ~1029 today's lows / ~1027 low ES tests or next level support ~1021,  buy stops should kick on break of todays high.

..got a 'Hideki?'

What do Phillies fans and Bulls have in common tonight?.  …Answer… They both have a “Hideki”!  Get it?  Head-acheee!.   That was easy getting,  the market action is completely something else.    The surprise isn’t the late sell off,  this was a big FOMC and the whipsaw action is reminiscent of a year or two back after a report.    The thing that doesn’t make sense is the big picture and that is what is the market waiting for?.   The catalysts are all there for more fireworks to the upside…eco data, FOMC green light today, corporate reports etc..  It is not as simple as selling on the news or year end locking gains.   Either the capital markets want something or knows something like a geo-political mess around the corner.   Maybe it’s waiting for an employment report to surprise one day and/ or have 10% unemployment hit finally to blend everything together and have a big day leading to the next leg up.  It’s all pretty confusing now.

There was nothing about the dovish FOMC statement that would cause a sell off unless the market ran up ahead of it and sold the news.  This is simply what happened.  This was the play here since Wednesday morning…“SPX 1038/Market might be shrugging off USD strength, ES lows hit overnight off UK bank stimulus negatives may give bounce chance into FOMC.”    Heading into this alert, we earlier said …‘Be ready for signs of buyers for a trade on any retests of  ~1029 today's lows / ~1027 low ES tests or next level support ~1021,  buy stops should kick on break of todays high".     Simply, what we got was retest of 1027ES Wed. morning and than buy stops kicked in at 1050 premkt and we made a straight line to 1060 heading into FOMC.   That’s about 30 SPX/ ES points in just over a day heading into FOMC statement.   Unfortunately,  1060 hit in morning became resistance after the FOMC and sell off on news began from that point.   This has been a TA bounce and resistance is traders locking in profits, we talked last week about this potentially occurring on any bounce.  

Also for the trading log,  we’ve recently talked about the point of our Shadowlist besides having tradeable plays on it is to look for market signals.   Today, we got a new one of sorts.   After FOMC, we saw something peculiar before the sell off.   Did you notice it?.   The USD weakened, but the commodity linked stocks in all sectors on our list..coals, steels, oils etc were not budging at all!.   Tonight, everyone is talking the USD decoupling from the market.   It’s been USD weak, market strong and vice versa.  This sell off was a shift and therefore surprised many by close.   Today our Shadowlist definitely tipped off the sell off and we’re going to make a note of this in our trading log as should you for the future.

Anyways, we’re not disappointed or should be.   The trade was ‘into’ and it worked, the rest was a crapshoot as to what the market may do.   We expected volatility this week and are getting it big time with a NFP# report still on deck.  The market can easily make another move up ‘into NFP’ and get back some of the sell off back.  If we get some help from IJClaims and retail tomorrow morning, we could make it all back!.  

AMC, we got CSCO  with an excellent report to add to potential fireworks one day soon.  The importance of CSCO and what they said is because this is the first JULY end Q, this means there are even better changes one month after all the other big boys reported.   Also, as the recent notes on TRAN and SOX breakdowns, we have had good news this week for TRANS (BNI) saving the index and now we have CSCO to hopefully spill life into the SOX.

DJIM #45 2009

Some of the words used to describe Friday’s highly anticipated NFP/ Employment rate trade in IBD edition this weekend include…”almost as if market took off early for a phantom holiday…volume slouched..  Market decided to celebrate a silent film actors birthday….near silent…yawn.  

If you waited to do a reactionary trade all week off the NFP on Friday and avoided trading the volatility prior to it,  you were left mumbling the same IBD words and missed plenty of trading opp’ before it.   If you don’t think outside the box in this market, you're left out.   Fortunately, here we try to think ahead, if our ideas don’t work..that’s fine, at least we're all prepared and if the ideas work, you’re a step ahead of the herd.   Last week, this included a potential reversal off 1027, the prospect of the market ‘getting it all back’ on Thursday after the FOMC late sell off and the possibility of a ‘ flat’ trade on Friday where nothing happens and we get an ‘exhaustive’  day.    You may be able to spin Friday’s report to get something good out of it, but, let’s be realistic the numbers were ‘horrible’ and many previously said 10%+ headline would cause a ‘ big sell off’. 

Earlier last week, we were asking what does this market want to move to another leg up. …One thing we thought the market may  need is …“…or have 10% unemployment hit finally to blend everything together and have a big day leading to the next leg up”.    The premise of having a 10% tape finally hit was what the smart money was trading on Thursday prior to release,  the consequence was a flat day as most shorts were already pressed out on Thursday and no conviction buyers were ready on Friday.   Why would any new money come in on Friday after the such a horrible number?   If you were sidelined, you were also just scratching your head and asking what the market was doing not selling off.   This equalled a draw in the boxscore.  Anyways, the question in our mind is if the 2+% Thursday was the "big day" needed for another uptrend without the usual big volume to indicate such a move??.   A close of 1067 or higher is/was crucial for the Bull frame of mind, a push over 1074-1075  puts the ball back in the Bulls court for a 1100+ close into the New Year.  An upside reversal week was completed from 1027.

We have a rather slow eco’ data week,  but this doesn’t mean the volatility will stop.   It might not be as crazy as recently, but the $USD  will continue to provoke moves.  A potential USD correction is a possible ‘roadblock’ and the wake of the employment numbers is still to be determined, eventually the talk may turn to a labour market recovery stall.    Until one or both of these things occur, trading life goes on with what we have to work with day to day. 

In all the broad market excitement, a few names emerged that we like, MELI   following earnings and PEET  after EPS/DDRX combo’

G 'gangsta' 20!

Late last week all the noise was about the NFP#/ employment report, no one was talking about the significance about the G20 meeting in the St. Andrew's hood of Scotland and the communique to be released over the weekend.  Well, global markets proved eyes were on it!.

Thursday.."One possibility not discussed is nothing really happens tomorrow after all the volatility and we get a ’flat’ reaction/ close on Friday.   Why?   Since the FOMC decision eyes may have switched to BEN and his speeches on the 16th to get a better read on the FOMC statement.  Before, we have a G20 meeting/letter this weekend that may play a part next week as it may have USD implications and therefore the markets..."

Today, all we heard was G20..G20..G20 endlessly as it was the catalyst for the market pushing towards recent highs while pushing the USD lower.   The basis of the communique read like another 'green light’ after the FOMC….a pledge to maintain efforts aimed at bolstering the economy until recovery is assured!.   This means ‘continued stimulus’.   No mention of FX didn’t hurt and the IMF gave an accompanying note saying the USD is basically ‘overvalued’ even at these levels.  Thus, Global markets rip and the money that wouldn’t come in on Friday as discussed, slowly entered the market all day as skepticism abated.   This was impressive as buy order flow continued after Europe’s close to US market as often cited here after a big day.

The action was broad based, meaning everything from USD commodity linked stocks to China to Tech to Casinos to  Reits’ were on the run to a 1093 after a surge into Bull territory over 1075 with extraordinary ease (this was the breakdown point/ important retrace level).  No defence from the Bears still shell-shocked after last week's trade.   We pointed out a light eco data week yesterday, so we’ll have little in the way of market catalysts to act upon which is better for the Bulls.   Unfortunately, after a solid 3 day rip, a 5+% rip off 1027 lows and we are technically challenged.   SPX 1000 is not the resistance in our view, SPX 1095  is the level we had problems with recently and so taking everything into effect (3 day rip+ no catalysts seemingly, technical resistance and we should pause.  

As Bulls,  we’ll watch financials for possible signals to direction, we have a Bof A conference and some earnings hitting UK (HSBC/ Barclays).  The financials will probably be the focus as the market digests everything else that has happened in the last 3 days and since SPX1027.   

A few familiar names to the DJIM 'hood to monitor tomorrow/ days to come following strong earning, PCLN GEOY HMIN. 

As we said,  Bulls will have the ball over 1075 for higher 2009 highs.  We don’t think you’ll need your helmets this time as we close in on SPX 1100.  The gap created this morning is first line of defense 1070-1072.  

..nothing to lose sleep over...

Despite a 1% down day with selling picking up late day,  we’re not seeing any conviction on either side. Buyers are simply taking a break / staying put and not chasing further, while shorts are not pressing positions.  

The idea heading into the trading week here was the Bulls had the advantage with no catalysts such as eco‘ data.  They’ve moved the market higher, but sooner than later this wears off and the Bulls need a catalyst of their own for further upside, especially after an almost 3% week heading into day.   The longer you pause as we‘ve done last few days, the more talk of not closing over 1100 circulates and patience runs thin for a few and some selling occurs.   It’s typical and it’s not a concern.  

The focus today is purely technical (eg close over 1100) and $USD.  Today, $USD had it’s biggest move since late Oct. closing at highs and market reacted with nothing else to rely on.  Tomorrow, USD reverses and we’ll still finish >2% SPX on the week, it would be a simple as that!.  In other words, today's action looks insignificant.

..>SPX1100 close...finally

Not only did we finally close over 1100 finally,  we surged to a new intraday high of 1113.   All eyes were on Bernanke and he didn’t disappoint as he was even more ‘dovish’ than at the FOMC.  Unfortunately, eyes set on M. Whitney later and her comments hit stocks.   Still, as the case over and over again, buyers stepped up to buy any weakness and market rebounded by close.   The importance of closing over 1100 is the idea 'finally believing' money will flow into the market.   Volume has been light in this recent rip higher and MF/HF are sitting on their hands after the late October sell off in which many were closing off their fiscal.   How long will this last before they decide to chase or be outperformed once again?.   Maybe some with fiscal end in November, notably HF’s are waiting to sell this November move at the end of the month before doing something in December.   Still,  we’re only in the middle of the month and don’t have to worry about this possible selling scenario yet, the market has room to the upside and it’s next resistance lies in the 1020 2/3’s of March rebound-1022 (oct 07 50% retrace).

What we like particularly today was the small cap action as the R2K was outperforming an already hot market.  The index was up about 3% and we hope this is sign of mid small caps coming to life and potentially giving this market further lift.    We’ve had some nice moves from recent small cap mentions in journal .eg….WYNN $54's to 70, CLF, $37 eps time to 44 today GEOY $27 to 32 in 4 days, WLT, FSYS.   If this isn’t a one day wonder for R2K,  we may see other names come to life from our list (GMCR) or atleast have some pullback in these names to selectively pick at again.   Yes, some of these names can use a pullback soon.   Still, no matter what the small caps may do,  it is the Financials, notably GS  and JPM , we need to see life for more upside this year.

Same story..

Same story in the markets today leading to a flat day.  A dip on more weak eco data (housing) as previous days,  dip weakness sees buyers step in again and support stocks, but not to chase higher.  Seems conviction buyers missing as are sellers and shorts not eager to press new positions as volume continues to be light.   Put this all together and it’s the same trends day after day.  When you have this ‘stall’ it makes any possible surprising catalyst in days to come a potential market mover as it’s all technical now.  Eyes on 1101 support and 1120-1122 resistance.  Near end of day, it seemed the market wants to atleast test the upper resistance as it’s an important level this week, the action has suggested such.  Still, due to narrow trading range this week, a close under 1101 is a threat. 

Unfortunately,  a possible ‘threat’ emerged out of Brazil AMC, (AGAIN).   See..link on site and see when October top occurred!  Let's hope Jobless Claims are a positive or this Brazil story may turn out to be unwelcomed noised short term.

http://www.djimstocks.com/djim-journal-09/2009/10/21/as-sloppy-as-it-gets.html

Last time this led to FX noise globally for a short period as it makes investors skittish due to the idea more countries could take actions. 

Today, the underlying weakness was in the AMC guidance reports from Nasdaq software..CRM ADSK.  It would seem financials are lagging as well ( if you look at GS JPM), but the sub groups..Banks after Paulson headline crossed, regional banks and REITS are actually outperformers.  Is this a sign of rotation or just a blip this week. 

DJIM #47 2009

The most important thing on Friday was to see following a fast sell off, a hold of 1085 and preferably a close above 1093 to avoid a bearish reversal week.   Narrowly, the Bulls lost as we closed 1.5 pts below this pattern, but with a traditionally 'bullish' holiday week ahead,  it may be just enough for the Bulls.   As we've constantly noted, the Bulls wait for a sell off to settle before giving an underlying bid and seemingly a hit to the futures premarket to 1083ES, may have been the test and go ahead as the market got some bid, we especially noted one in beat up NASDAQ (2 days off chip downgrade & Dell), just after noon.   This action off 1083 ES, which is about 1085 cash confirms our belief this level is the support we are going to be monitoring on any weakness ahead (…"..We'd watch 1085 to bring out the underlying bid if it has time to flatline there and not be reached because of a negative catalyst…/  still, we'd preferred to have tested 1085". ).  A break at this level and 1070 will be quick and 1050 will not be far behind.

Heading into the short week, we continue to say the story remains the same and the rally is intact.  JPM boldly raised SPX to a 1160  close on Friday, so we're not the only Bulls looking for a good end to the year.  The strategy remains the same, accumulate some favorites, and buying your favorite stocks on any sell- offs as last week provided.   Despite a holiday week, (Mkt closed Thusday, 1pm Friday), we will have some eco data, including FOMC minutes to watch.  Also, European data (PMI's ) may matter more than usual.   So, we continue to be at the mercy of the USD and volume is indicative of no conviction buyers and no sellers.   This might be advantageous to making a move as the sparse sellers will allow buyers to move stocks quite easily with trading desks emptying more and more as of last Friday.

..nice and quiet day

Just a typical day to torture the Bears and declare another win for the Bulls.  If you saw the Shanghai tape of -3+% day, you’d figure the US markets ES would be down premarket!.   That was the first sign of market just shrugging off things as the ES was pretty tepid.  Other potential poisons were out there as well (home price trends weakened, GDP revisions), but the market just has turkey or is it just Bear meat on it’s mind as a morning sell off was eaten up by the Bulls in a sign of an never ending underlying bid on any shallow pullback.   As trading desks empty, fast money traders lead the market to potential new closing highs on SP this week.   We mentioned a clean breakout might be difficult this week as you need conviction buyers coming and that would seemingly be hard with lots of big money away.   If a breakout happens, the Bears will say it’s a low volume move, we only wonder if any break happens what will ‘holiday’ talk consist of at the table and all weekend as headlines read market at new highs!.  Will they come off the sidelines come next Monday?.  This is probably looking too far ahead, but new highs are a possibility tomorrow if a surprising (notably Initial Jobs claims / but also Durable goods etc. comes in and if Euro data in morning is welcomed as our late alert indicated.  We also noted AIXG again in the alert and hope it pushes to a new closing high.

AMC, JCG  is getting a pop, our fave consumer/ retail store stock TIF  reports in morning and will probably surprise as it has in recent reports.  This may also help the sentiment overall. 

Happy Thanksgiving to all our members and your families!.   Have a great one!

Jitters dissipate..

As the market hovered in and around important support 1088 (20Ma) and 1085 Fridays low our jitters were abating as a downward breakdown was becoming less likely.    Our jitters were not around Dubai as our previous Journal stated, but the back to back to back to back end of month selling we’ve been seeing in the market the last part of the year.   This Nov. month’s end is almost as crucial as last month due to fiscal selling possibilities by HF’s.  Fortunately, they probably don’t have much left to throw away after October as they’ve been sitting on their hands supposedly not participating in new buying and probably because they better hold what they have into year-end or face underperformance anxiety again.  

What we saw today, we haven’t seen in a while and that is Financials  outperforming, especially, it was almost a shock to see GS  and JPM  up, finally!.  This was bullet point #1  as to why we felt this was a good day and we should’ve been up nicely as alerted in afternoon because it showed Dubai fears were diminishing.  The last hour close points to a ’nicely’ open and was not just ‘marking up’ by managers in stocks to close off month according Cramerhead tonight.  This move should extend in morning in our view.

Next, bullet point #2  was not the China overnight gains as US markets rarely follow up or down the last few months (instead Europe), but what they were ‘pledging’ and that was to stick with stimulus efforts into 2010 and so this abates change of policy worries as been the case of worry in world markets, including US.    Part of this was the early morning alert  idea of CAAS , which went from mid 18’s time of alert to $20+ pretty quickly as  ‘passenger vehicle’ tax cut schemes were positive and we thought this was the best play (sub-sector) to jump on. (WATG TXIC may be others if this has life).  A few other DJIM china plays also played along, notably CTRP, TRIT, RINO.   On the speculative side, SEED  on Journal during Thanksgiving week regained momo’ for a big day.

Bullet point #3  was the Semi numbers out over the weekend.  Recall, BOA recently cracked the chip sector with a downgrade well, today JPM boosted '09 sales forecasts following better SIA sales showing sales are tracking or above expectations Q4 with solid demand.   We have AIXG  (ADR), our recent fave here making new closing highs in Germany and in US.  ** Note, there is a CFSB conference this week and companies may provide more positive updates signs for the sector and drive NASD.

In our view,  these bullet points were positives that were overshadowing in the morning any negatives eg. Dubai (positive news in pm) or holiday retail stats (actually improved in afternoon as more data came out /24% to 11% YOY from early am data).    As the news in afternoon on Dubai and Retail improved,  it pushed the market away from the important support levels all the way to 1095 on the back of already positive news flow we’re highlighting. 

...running out of headlines

The story and the trading premise remains as we hit fresh rally highs today!  Part of the premise has been an undeniable underlying bid always present and a part has been no conviction buying or selling.  Therefore, the failure today to accelerate and breakout the November closing high of ~1113 as we still can’t can’t find the conviction buying/volume.  Does it matter?.  Not really to us as we’ve been concentrating on select stocks/ groups that keep on getting a bid…our LED stocks VECO/ CREE  had big days and joined AIXG in making higher highs, CTRP, MELI  keeps rolling on the AMZN theme, CAGC  alert had a sensational day as it tagged the Ferts  group noted yesterday (MOS POT MON) in making new highs.   We've added HEAT  noted in forum yesterday by a member to our trading list (IBD write up today).

Even though the rally seems to keep losing momo’ in this range up to 1120,  we’re not listening!.  Yesterday, we said it will be a selective stock/ sub groups pickers market going into year end and we’ll stick to that!  R2K  big outperformance up >1% of the market maybe a clue of things to come.    Our view as far as groups/ sectors are concerned is China stocks, Casinos and  Shippers  will start to attract interest to close off the year as these are pretty high beta groups/stocks fast money likes.  A few upgrades on these groups or specific stocks and these will get going…that’s all it will take!.  

We had BAC news AMC and this surprise may remove a big overhang and therefore is a positive.  So, before the NFP# on Friday,  we’re hoping this news lights a fire of sorts under the underperforming, lagging Financials..well, maybe for a day as it seems they can’t put up back to back up days for over a month now, specifically GS JPM.

DJIM #49 2009

Despite the ‘big surprise’ from the NFP report and all the noise regarding FX/ interest rate possibilities that caused big intraday swings,  we only know one thing still… (A close between SPX1115 to 1120 is needed badly to even think of a breakout eventually).   Our discussions late in the week concentrated on the 2 failed follow throughs to the rally after hitting new intraday highs with no conviction (volume) buying coming in for a breakout.    So, for the 3rd day  the market lost momentum as it nears 1120.   If you bought and /or chased the morning action,  you’re not with us in believing the importance of seeing a 1115-1120 close before being enticed to buy.   We need to see sustained strength and 30minutes as Friday morning is just not enough!.   Still,  we saw the tape show resiliency again as support was found at 20ma (twice) and allowed the market to finish green.  

Yes, there is disappointment that a big surprise NFP wasn’t able to the job for a breakout, but it doesn’t necessarily signal we have set our 2009 in highs as we have Dec seasonality as a possibility still after all this FX/ interest rate speculation settles down.    Also, we had plenty of potential headwinds to break 20ma last week, this shouldn’t be forgotten, including the strong dollar rally that couldn’t close the market in the RED.

Simply, we’re in a trading range 1120- 20ma, meaning no more adding to holds and no selling of them until one of these levels is breached.   

Shadowlist

 List below.  Previous link on left side of site did not support this many stocks.

Sideways 4 weeks now..

Today’s drop below 20ma and 1095ES was seemingly inevitable when you look back and consider our highlights of the 3 days of failures to hold intraday highs, which indicated a loss of momentum as the market neared 1120 each time.   Only reason bringing this ‘inevitable’ is next time as traders, if we see such action again we will all have a better idea of what may lie ahead and trade it better.   

As to the seriousness of this break of support at this time,  it may not be so great.  We are still seeing better action in small caps (notably China’s today), Semi's (VECO  nch) acting well and we have a 4 week range low support at ~1085-1082.  Also,  the possibility of bullish December sentiment remains.   We are watching once again the 1085-1082 gap as crucial  support, which most likely needs to be tested.

Stocks had as many as 7-8 ‘small’ headline reasons to move lower.   Most notably, the Greek downgrade which played havoc on the Euro and therefore USD.  Also, more Dubai noise played on the USD.  As we've pointed out this trading hint before and it worked, sometimes in the markets when there is no 'ONE' big fundamental reason,  but many headlines the market comes back up very soon.   So, with that in mind and the 1091 close,  the break of the above supports today may not be all that bad.