Ahead of the open, (09-03)

A little bit of excitement this week, but as of Thursday’s close, the market is pretty well at where it started …SP down ~35 and a rebound of ~25 handles….”All in, unfortunately we probably have to sit through 3-4 days of possible churning as there is little in the way of anything fundamental coming out ahead of NFP#..

Unfortunately, the NFP# is now unlikely to help settle the debate of (QE vs. growth) for the market and it’s investors.  Unless the number surprises dramatically in either direction, the event may be a muted one as the market has probably had its share of excitement for the week.  All the 'noise'  this week has either created a selling opportunity back near highs now (if ‘damage’ has been done) or we’ve seen the necessary 2-3% ‘healthy’ pullback before an eventual move to SP 1400.  

In all, SP holding 20MA by Friday’s close might go a long way in answering that question.

Into the trading week, (Mar.12- )

For a few hours last week, a tired feeling market finally looked ready for a correction off foreshadowed ‘technical’ and underlying market faults that had become prevalent over the past few weeks.  But that didn’t really occur, what happened was only a repeat (shallow pullback) of January’s 3 day/~35 SP handle drop, including a 200+DJIA decline day followed by a complete reversal to within 4pts of February highs.

Mid -week it was about "Jobs, Jobs" and not about the so -called Greek 'massive' event risk propaganda into end of week. 

The late Tuesday, ‘Ahead of the open’with the market at weeks low of SP1340 with NFP just 2 trading days away, asked, “Question now, is it better to wait on NFP#’s now or buy the dip now below broken support???.   And concluded with, ...“Still, if you believe in the recovery, it's hard not get in on a ~35SP move off highs in front of the NFP# sooner than later”, which followed previous days,”  The NFP# hype should bring in some buying soon.   All in, if excuses and not true market drivers are cited for falls, it usually is reversed quite quickly.   As has been speculated since late February, we’ve been looking for market to hold with window dressing end of Feb.month followed by a LTRO end induced pullback and,…”Last Thursday before reversal day…“In all, the expectation was for limited upside >1370SP if reached and today is likely enough for a short term 'healthy' pullback.  Let’s get it over with as the market has been fatigued, divergences playing a hand….build back up to an NFP# on 03/09”.  

The reasoning and importance put on the 03/09 NFP# was while all the ‘better than expected’ economic data had stalled (we use consolidating) recently, the NFP# still had a chance to be ‘ better than expected’ due to the ‘Initial claims’ hitting new cycle lows(4 wk avg.) to show recovery is still in place. Friday’s number didn’t disappoint coming in at 227k vs. 210k consensus and prior revised to 284K from 243k. The case here has been that there is sufficient accommodative actions globally and that an economic recovery is still in place. Here the belief is simply there is sufficient doses of both at this point for the market and after last week’s pullback and reversal, many more will likely believe this off the latest jobs#'s.  Can the market stand on its own two feet (economic #') without massive QE ahead is the question/ debate for the longer term?

The only headwind to SP1400 is ‘technical’, which includes recent poor price performance of (ie. RUT needed to get back into 812-833 range, closed 817, >833 break leads to SP 1400.  An eye on emerging markets is needed after early March declines, while European worries subside.  A pretty quiet week on the economic (retail #'s Tues and a few regional surveys late in the week is all) calendar ahead should benefit the market.

Ahead of the open, (13-03)

As is usually the case in the marketplace, as one concern falters (as Greece swap gets a rubber stamp), a new one needs to be rehashed to keep investors honest and ‘Bears’ tweetin’ and in business.  

This week kicked off with Global growth concerns overnight following China’s lacklustre trade numbers (decelerating Jan/Feb combined).  Is it really any surprise at this point that the European crisis put a dent in demand for China goods?.  Of course, there was/will be some internal bleeding, but at this stage it should be discounted to a degree by the market unless complacency is rampant and naiveté abound.  The China data pulled the CRB down .8% by the open, .5% by close (has fallen >1% for each of last 2 weeks), yet equities sloshed around on extremely low volume to a flat finish anyway.  So far equities are showing their usual resiliency, even in the face of commodity weakness once again.  On 01/03 noted the possibility  ...”A commodity led correction, but not necessarily one that will take equities down very much!”.  Even after last Tuesday’s market ‘commodity’ swoon pushing SP to 1340, equities are back near 2012 highs, while commodities still exhibit weakness.

In all, a very thin and uneventful day as market continues the routine to pause after climbing every ~20-25 SP handles before moving on higher since SP ~1300 was hit. Tuesday is another round of FOMC, maybe the waiting game was in effect today.  Even if Bernanke & co' become more ‘ hawkish’ and consequently commodities feel the wrath, it would be interesting to see if single stocks/groups continue to decouple and hold up. 

Ahead of the open, (14-03)

No matter how one wants to decipher today’s market surge, it all comes back to something as simple as getting in front of last week’s NFP#.  Of course, this only worked if you are optimistic on the economy and used the ‘initial claims’ to foreshadow another robust NFP# and thus getting in front of it.  Nothing that occurred today post FOMC/ JPM would’ve happened unless sentiment was just right.  Probably, it’s very hard for many to imagine that SP was ~55 handles lower only 5 trading days ago/ pre NFP#!..”Still, if you believe in the recovery, it's hard not get in on a ~35SP move off highs in front of the NFP# sooner than later”. (SP at 1340 last Tuesday)

If one believes today’s ‘close to expectations’ FOMC (a tad hawkish, yet slightly more upbeat on economy) and J.Dimon shooting off an early bird dividend special ahead of the scheduled stress tests results,(15/03) would’ve caused SP to close at 1395 without last week’s ‘better than expected’ NFP, is simply dreaming.  An improved labor market does wonders!.

A solid Retail # helped the day start on the right foot. The BKX (>4 %) was having a solid day and it was fueled further by JPM.  Financials already had a good dose of things going for it as it benefits from the brighter labour market/ economy.  Add a better Europe, which equals a better fixed income environment and those financials connected to the capital markets benefit as well. FOMC forced to release ST results did so AH’s and overall it seems favorable to the sector as well.  The dividends/buybacks that followed JPM were the expectation following results,  it’s just the timing and JPM front running the announcement that got the market excited.

Noted into FOMC ..”Even if Bernanke become more ‘ hawkish’ and commodities feel the wrath, it would be interesting to see if single stocks/groups continue to decouple and hold up”.  Precious Metals fell as the commodity got smashed, yet equities held onto the gains right after FOMC , which was just the action we were hoping for above. The FOMC leaned slightly  ‘hawkishly’ as far as prospects of further QE launches.

Ahead of last Friday’s open,….. “All the 'noise'  this week has either created a selling opportunity back near highs now (if ‘damage’ has been done) or we’ve seen the necessary 2-3% ‘healthy’ pullback before an eventual move to SP 1400.  In all, SP holding 20MA by Friday’s close might go a long way in answering that question.”.  SP closed well above the 20MA benchmark at the close of the week, so you can say it answered the question with vigor.

Into the trading week,..” Here the belief is simply there is sufficient doses of both at this point for the market and after last week’s pullback and reversal, many more will likely believe this off the latest jobs#'s.  Can the market stand on its own two feet (economic #') without massive QE ahead is the question/ debate for the longer term? …The only headwind to SP1400 is ‘technical’, which includes recent poor price performance of (ie. RUT needed to get back into 812-833 range, closed 817, >833 break leads to SP 1400.”.  You can’t get any closer than RUT close of 831 coinciding with SP’s 1395 close.

Wednesday be will interesting to see how market digested the FOMC/ Stress results overnight. A Gold/ TSY sell off continuing will answer the question, so watch these in the morning.  A reversal in these 2 would indicate the market got ahead of itself.

Ahead of the open, (15-03)

In the lead up to the trading day, concluded with, .”Wednesday will interesting to see how market digested the FOMC/ Stress results overnight. A  Gold/ TSY sell off continuing will answer the question, so watch these in the morning. A reversal in these 2 would indicate the market got ahead of itself”.    

As of market close, those in the safe haven’s of Gold/ TSY’s are licking their wounds together for another night. A dramatic commodity (gold) crumble to multi month lows was upped one by an even larger 10yr TSY sell off, which broke key technical levels (200dma) after staying sub 2% for months.  This is all the chatter today, thus leaving equities to quietly digest the previous day’s stock market surge.  Once the morning cliff diving resumed in Gold/TSY’s, the expectation for equities to hold (as above) for the day was in place.   Any shorts getting the Tuesday ‘rally’ news late, covered quickly in the morning pushing SP to 1339.42 (day high) and that’s literally all there was for the day as equities traded sideways till close.   Still, a fast move like we’ve seen in TSY over the last few days has the potential to put fear in the equity market, hopefully it quiet down rest of week and signifies growing optimism on growth and realization of less QE.  QE possibilities have kept a bid to TSY and helped out stocks, as we all know.

If there is anything the Global markets have become complacent about it is ‘everything’ being in sync with different asset classes.  The FOMC changed all that in Gold/TSY’s at 2:15pm yesterday. The SP has left many sidelined week after week as it climbs and climbs, one reason is the Bond and Gold markets were not supporting the risk appetite shown by equities.  What has seemingly occurred hastily is a price removal of QE3 additives that is showing up in Treasuries(bonds) in U.S and even in Europe’s safe places (Germany/UK).

All in, don't forget at these lofty levels, we will start to think about month end/ Q end soon enough to keep equities in further demand.  A lack of relevant eco’ data till April should also keep stocks in check as the debate between ‘economic growth optimism’ vs. ‘QE’  seems to playing out since FOMC in favor of positive growth expectations in the U.S..   Hopefully, any tier 2 data hiccups before April data will be looked at as just a bump and further consolidation of better than expected data we've seen for months.

Ahead of the open, (16-03)

Takeaways from today’s first SP >1400 close in over 4 years is all the ‘good’ little things that took place from the technicals in equities to economic data to asset classes.   For good measure, throw in all the fact all the right equity groups led the way.

Firstly, the small caps outperformed with the RUT closing at potential break out levels ~832/833 coinciding with the SP 1400.  More importantly, the Dow Transports that had Dow ’sell’ theorists all excited since early February due to IYT not confirming DJIA bull market highs had a 3.3% burst on top of already breaking through the Feb down trendline earlier in the week.  As of close, it was back at Feb. resistance 6 weeks later!  Amazingly, last time RUT/IYT shared these highs together, SP was ~70 or so handles lower.

Secondly, tier2 eco’ data noted yesterday didn’t disappoint at all as Jobless claims came in with another cycle low and the first March data of regional FED manufacturing was better than expectations keeping the economic dream intact.  Inside the surveys was less exciting, so call it a wash as ‘better than expected’ really wasn’t expected after months of gains.

Thirdly, the fear factor of the explosive 2- day run in 10yr Treasury took a break as the TSY finished pretty flat. Also, less important, but Gold seemed to stabilize as well after the 2- day sell off as well.

If it wasn’t for the fact the market is so extended, the above would be plenty of reasons for Bears to tell it’s cubs they won’t be eating for a while longer.

Into the trading week, (March 19- )

If the repetitive question here (economic recovery vs. QE) throughout March was getting tiresome, you missed what transpired and led to the largest weekly '12 gain (SP> 2.3%) and a 14% move in TSY’s (caused by ‘growth’ aspirations and not inflation), as the question was being answered.  The SP move is even more impressive considering there has been only been one negative week so far in '12.  

Simply, we saw seismic activity between asset classes as investors began showing belief in an economy sustaining recovery/growth path without a need for further QE additives.   It's also 'falling fears'/ reduced risk of economic downside that is just as important.  It’s hard to believe an investor can live with sub 2% GDP with QE expectations diminished, but for now that’s the signal as long as NFP# and other tier 1 data keep showing momentum.  You won’t need QE’s, if NFP#’s roll into 300K is the layman way to explain what has likely taken hold in the market mindset.  In this view, it could be a tricky game as volatility may loom ahead if hiccups in data over April begin to emerge.  Still, rather trade a market dependant on economic data than any (ie), European debt crisis to deal with over the coming months.  Also, consider this is likely not a full blown asset relocation, just an initial position not be left behind you could say.  There is no evidence (volumes) all those now gun shy investors coming out in droves to put money back into equities.

A few earnings of note this week in ORCL TIF FDX  ACN  will cover a broad look at how things were shaping up in February, notably for next season earnings ahead in April, (which are March Q end.) *Recall the first 2 names disappointed last Q.  Some reports from last week added to trading list include MIDD  BTH  JVA (back and crazy as ever, only if you can watch all day) and GWRE, which has the best potential to hang around through '12.

A whole lot of FED member chatter will garner attention due to QE.  On the US economic front it will be daily ‘Housing’ data.   Globally, it’s ‘flash” PMI’s later in the week.  All in, as noted last week… “…we will start to think about month end/ Q end soon enough to keep equities in further demand”

Ahead of the open, (20-03)

Despite, SP hitting a fresh high of 1414, the trading day was quite uninspiring in full as some profit taking ensued by close.  In all, it’s good investors didn’t start with some profit by the open following Barron’s positive housing cover story and the ‘Economist’ running another possible contrarian front page story on the economy. (Weekend was void of anything material to give market any direction.)  If anything a FT article on earnings season should have provoked some selling as it talked of SP forecasts earnings to fall .5% Q1Y/Y.  Yes, a decline for first time since late ’09 with margins falling for the first time in 2 years.  Considering, the market is going to be driven by the economy, this is something for shorts to chew on it and spit at the Bulls as nothing is assured as far as growth is concerned.

We just came off a big week of gains in BKX (financials), builders, industrials, steels all up 4%-8%, so it’s really not surprising the market started to take some profits with the financials leading the way, which have had hit the 30% gains mark.  At this point, the late profit taking may continue, but it’s for the right reasons as it will give those underperforming a chance to get in before Q end/month end.  A revolving door you can say with some exiting and some entering.

Ahead of the open, (21-03)

Last week, noted the lack of notable eco’/corporate data until April (maybe some from flash PMI’s late this week) to give market any visibility or direction.  Yesterday, cited a weekend void of catalysts of any sort. Today, a market grappling with nothing to go on decided to move on one particular rehashed China macro story from BHP …”China iron ore demand is “flattening out” …growth in China iron ore demand would drop to “single digits, if it isn’t already there. The big infrastructure build clearly will come to some end…steel growth rates will flatten…”.   In this view, BHP said nothing that the market already doesn’t know about China.  It’s old news on growth in another form, that’s all!.   Let’s see what the flash PMI’s from China say. This macro concern allowed Monday’s late profit taking to continue into the morning bell, however, the premise yesterday of ..“A revolving door you can say with some exiting and some entering”…took place as the SP retraced back to 1405 by the close.

Here, TIF earnings overshadowed the market ‘BHP’ story premarket giving the retail sec’ a boost.  Considering, so many stocks closely followed here are retail, growth stories, it was good see TIF reverse course from last Q report. AH’s, ORCL, did the same showcasing both are back on track.

Ahead of the open, (22-03)

Just over a week into a market poised on growth/recovery over QE, but still grappling over the issue as seen by the conviction-less and directionless market moves this week, we’ve stepped on a ‘flash’ mine.  As noted, …”the lack of notable eco’/ corporate data until April (maybe some from flash PMI’s late this week) to give market any visibility or direction”.

Overnight, China manufacturing index compiled by HSBC declined to 48.4 from 49.6.  At the start of March, we discussed the slumping emerging markets falling 3-4% in a few days.  This carried on mid -month…” This week kicked off with Global growth concerns overnight following China’s lacklustre trade numbers (decelerating Jan/Feb combined).  Is it really any surprise at this point that the European crisis put a dent in demand for China goods?.”.  Since, we’ve had lots of noise about 7.5% GDP and BHP news yesterday.  Is it really a shocker at this point?.  It's (flash PMI) consistent with all the noise this month.  Maybe the Shang down a tad will be a better indicator than the ES before US markets open. 

________________________________________________________________________________________________________

Update; European PMI’s have come in weaker as well this morning with core countries (Germany/France) worse than peripherals.  The European market reaction is worse than in Asian markets, but this likely stems from Italian/ Spanish yields inching up yesterday and this morning.

All in, if risk off mentality is picked up once again, is it really all that bad as QE’s chatter will be the market back-up plan.  Also, more oppy ’if anything for dip buyers to pad books into Q end and let’s not forget earnings around the corner and markets rarely correct prior to.  In this view, just a reason to consolidate March gains some more.  Don’t think the ‘mine’ explodes….needs more mines to be triggered for any real damage.

Ahead of the open, (23-03)

Is this time going to be any different?.  Do the markets do a 3-peat in Q1?   

As the market (SP) closes lower for a third straight day, (~26 SP handles from ’12 intraday highs to today’s low), we ask if it will turn out like the 2 other shallow pullbacks this year?.  The last pullback and reversal is still pretty vivid here,  “…what happened was only a repeat (shallow pullback) of January’s 3 day/~35 SP handle drop, including a 200+DJIA decline day followed by a complete reversal to within 4pts of February highs."

The premise in early March,..” ..'Ahead of the open’ with the market at weeks low of SP1340 with NFP just 2 trading days away, asked, “Question now, is it better to wait on NFP#’s now or buy the dip now below broken support???.   And concluded with, ...“Still, if you believe in the recovery, it's hard not to get in on a ~35SP move off highs in front of the NFP# sooner than later”.  If an investor missed the ~65 SP point ride that followed in March, how long can you stay away this time?.   Some of the old culprits in the last pullback have returned with China, leading ‘a commodity swoon’ once again today.  Did they ever go away?  Basically, the same concerns discussed all month here are ringing through the marketplace today with the ‘risk off’ trade paying the price…sometimes it’s the Precious metals etc, today it was crude, base metals, but all in, it’s still a commodity demand worry linked sell-off. 

But, one thing that remains constant is the idea, “On 01/03 noted the possibility  ...”A commodity led correction, but not necessarily one that will take equities down very much!”.   Despite the selling in materials, steels, coals etc. today, the IBM type mega tech caps, internets, consumer stocks performed very well indicating equities are hard to take down as money flows through equity groups.  Although RUT gapped down and underperformed, listed names here covering a broad range all finished green with many others only marginally in the red. (ie. ULTA FOSL LVS  LULU  PCLN  N FFIV  V  PMTC BIDU  SXCI  LQDT)

All in, the market got something to talk about, but in the end the same trends remain until/unless more concrete data hits.  Example,(same trend), Initial claims was another robust # bringing in another fresh cycle low. (4wk avg.). 

The market ‘headlines’ and it’s gurus did their best to alarm the ‘Bull’ with the remix of the old hit..Hard ' China' landing and Eurozone recession fears.  It seems a .5 to .7% drop on the major indices is really a big deal today.  It’s almost comical.  Starting the "Ahead of the open' with “Do the markets do a 3-peat”  is even comical as the market is not even through stage 1 of a true 3-peat play(of ~35 handles).  It’s only been hit~26 SP pts. (H to L), so far!.   Incidentally, a trip of 10 more pts would take it to February highs and mark another ~35 ‘shallow’ pullback.  A few other supports are in the 1370’s.  It would’ve been ideal spot for dip buyers to pounce for month/Q end window dressing, but no such luck today!.

Into the trading week, (Mar.26- )

Despite Friday’s early morning commodity led reversal of 10SP intraday handles to close at SP1397, this weekend will likely still be dominated by, ‘Worst week for Stocks’  type headlines.  

This on the back of each major zones own headline noise: US...‘5 days of housing data adds to global growth concerns’, ‘China demand fears weigh on recovery’(Shang' off >2%), ‘Europe slides 4 days on sovereign concerns as yields rise’ (Europe off >3%).   You’d think the, ‘Hunger Games’  hoopla was stock market related this weekend until you check previous week’s closing prices and see only a 5 handle drop since.  Imagine just the basic Ma & Pa investor going through the deluge of information and data to make sense of anything in the marketplace.  At times, it's easy for experienced traders to get caught up in the market noise, especially on quiet days where you find yourself surfing to a place like Zerohedge or actually finding yourself paying attention to what the latest talking head is saying on Financial TV.  Luckily, ‘I’  have this forum. 

Part of the exercise in writing the Journals is a form of trading discipline.  For oneself and hopefully for readers, it's importance is not to lose sight of your current market premise/stategy.   That is the point behind bolding past Journal excerpts into current ones is to embed the strategy you’ve been on and not losing sight of it.   It would be too time consuming to read past days and weeks Journals, so the effort is to regurgitate the past essentials in a cut and paste form.  This week was a plethora of what could be construed as real negatives: disappointing PMI’s, TSY ‘s rise, negative earning season projections, but not deviating from the premise of a week ago of this being month/Q end on the heels of substantial gains, plus approaching earnings and the (early March) belief that equities will not necessarily follow any commodity pullback/correction muted out all the negativity.  The ‘window dressing’ premise goes into next week and will likely be picked up as a theme now, but being a week ahead here allowed this week to be ‘comical’ you could say again as recent breakouts in many indicies held up.

Yes, the Global data last week raises concerns and could be foreshadowing things, but for now it’s just a shadow over the market that can just as easily fall away.  Not to belittle it, but why fret over it at this juncture.

Ahead of the open, (27-03)

Today’s big rally of DJIA 160+,NASD +55 and SP +19 handles had all the markings of performance chasing as soon as investors caught on their heels were forced into covering and/or joining the buying melt up.  Fortunately, there was no being on your heels here, even prior to flash PMI’s taking the market down 3 trading days before,"All in, if risk off mentality is picked up once again, is it really all that bad as QE’s chatter will be the market back-up plan.  Also, more oppy ’if anything for dip buyers to pad books into Q end".  QE related chatter from Bernanke (basically reaffirming ZIP thru ’14), but nothing too clear on further QE, a positive Draghi all played a role, but with or without the CB’s words, the market still had Q end in a dip buying / resilient marketplace.

Unfortunately, the oversized move took all of one day and there is nothing left to say in this (‘Ahead of the open’) that wasn’t said since last Thursday for the week ahead.  If anything the move reaffirms the need to play catch up for some a little longer this week.  It's very likely market worries of last week pushed to April.

Even the one EPS stock (GWRE) initiated last week as one that may have legs through ’12 popped nearly 15% at days highs /or 5-6pts.

Ahead of the open, (28-03)

Following a big rally day, it’s not surprising the market chopped around and seemed just to be playing out the minutes left in the Q.  Today and probably rest of week will be like watching a blowout Basketball game that has 5 minutes remaining. S&P has a 3.4% gain just in March and despite what may look like exhaustion at times as with today’s close, it will likely just be range bound trading as it ends the Q.

A lack of macro/micro catalytic headlines (most of the mixed U.S eco’ data was of second tier nature) didn’t help the situation and most the day was beating to death what Bernanke meant.  It seems what was noted here yesterday is the growing consensus.

A market with little to go on rest of week may look for ‘excuses’ to dip here and there by exaggerating news flow out of Europe or get back on China’s growth question marks for the umpteenth time this month.  We know how this has story turns out. ( SP>3% in March)

Ahead of the open, (29-03)

A concerted selling effort overnight (-2.6%) in China and an ugly European close forced US equities to give back majority of Monday’s 19 SP handle move by mid-day.  And, 'forced’ it was as no material market mover was present.  Interestingly, Global markets were having a muted reaction to Shang’ nearly giving back nearly half of its YTD gains overnight on no specific news. ES futures were up a few points premarket and most European market were up nearly .5 -1% during their lunch hour before the basic resource sector took on the chin late.  The ES markets were probably right in the early morning and purely succumbed to do what the Global market pack was doing.

Unfortunately, it looks like the last, ‘Ahead of the open’,  foreshadowed the eventual sell off in Europe/ US…. ....“A market with little to go on rest of week may look for ‘excuses’ to dip by exaggerating news flow out of Europe or get back on China’s growth question marks for the umpteenth time this month.”  Seems China worries took over again and Europe (Spain, Greece) got back into the spotlight.  Spanish yields were flattish, so not getting into whatever the fear factor story was today.

A possibility here in March has been a commodity led correction/pullback and not a general equity one(so far, China, Australia ‘commodity’ markets lagging in world performance YTD).  Today’s beatings of underlying commodities / linked stocks was hardly felt here as Financials (BKX up on day) and mega cap Tech outperformed keeping that premise alive. 

In all, let’s not lose sight the market cut it’s losses in half today and is less than a 1% off '12 highs.