You have our respect, Mr. Market...

It just feels too easy that we would be starting a strong rally from such an auspicious beginning late Friday.    Sure, news flow has been pretty positive as of late with respect to the bond insurers.    But, they are only positive with respect to themselves really at this point, the bond insurers.    What we have today is definitely a divergence of force going a separate way.    On one hand, every single strong and good play we've talked about on the site for the past few weeks were doing some fancy upside moves, corresponding to the index action.   On the other hand, everything else just didn't seem to catch this 189+ point drift.  Poor AAPL RIMM BIDU, where's the momo in all of these?. Only FSLR continues to provide some fast trading action.

What's good about the unchanged rating of these bond insurers is good for some of the parties involved, namely the financials.  But they had other things weighing on them early and only started to move late after selling off Fridays upward move.   The financials are not done writing down more stuff.    In the morning,  Goldman Sachs noted that all of the major brokerage are in for a writedown of between 1 to 12 billion dollars this quarter with Citi leading the charge.   We definitely have heard this song before roughly three months ago.    Only difference between then and now is that we are in a much more difficult economic situation this time around.

Leadership in this markets rally is still very narrow.    Basically we are only concentrating on a handful of stocks and they are the same names you are probably sick of hearing by now.   Truth is, we'd like to start play some other names without having to chase those names that have become extended today.   New closing highs were always something we used to add pieces to as part of our trading methodology near the close on index action like today.  Now the market is such that you need to take the profits before they evaporate.   Unfortunately, nothing else is really coming up on our scans to turnover into.

Tomorrow, we have some key economic number to be released and they are PPI and Consumer Confidence index.    A disappointing number from those two would definitely cast a shadow over the recent rally and it wouldn't be a surprise if the market gets smacked down hard.   We've pointed out the importance of the Eco data this week and so we all should've been thinking of taking profits off by close to avoid some breakfast spillage.    Technically, you can say this market has broken out of the wedge and we are up from here.     But seriously, we just can't imagine many more positive catalysts down the road once this ABK fever wears off.     We have lightened up most of our long positions today and will be eyeing the economic reports to determine if it's worth to get back in for another round.

Plays that are working....

Agri.-Chemical,   trust us, even we are sick of seeing them POT MOS etc. going up and making new high every other day. lol   The truth is, the higher they go, the smaller the risk/reward and more cautious we get.     Ever since the group's break out on Feb. 12th, the group has not been tested to the downside.    It means that we have not seen any kind of meaningful pullback to warrant much more upside.     Sure, these names can move off a 190+ Dow day, but we all know that those days are still far and few between.     We are trading them still but with a much reduced exposure at this point.

Coal-Steels-Metals-Oil, you can't seem to have an up day without these commodity plays.    The ones on our watchlist FLS CLB FDG MEE and CLF HES are two more we've recently added... all had a good day.  Even our rock salt-potash play, CMP keeps making highs.

Biotechs like ILMN ZMH off here showed some strength as well.   Remember, we try to concentrate on earnings and most making NCH's today from DJIM were selected off their last reports/guidance this Q. 

Bottom line, although this market is rallying off ABK news, you still can't underestimate the power of a near 200 point rally.    Traders could use this as an excuse to chase stuff that was working well, regardless the relevancy.    Tomorrow will be a real test with the economic reports and if this market takes the reports well,  it's likely that this rally will continue a bit longer.

Anyways, today played out to script from our morning intro to the day.  The 'concrete' news came and it turned into a real drama for the shorts.  The financials were the beneficiary, GS and MER moved back up 6 and 3 points respectively and we didn't get the momo stocks participating.  Hopefully you didn't jump in as there was no confirmation of them wanting to play just like on Friday.  Basically, it came down to holding the stocks followed here for the past few weeks to carry the load.   And yes, the futures lied again as they set a negative/flat tone before the open.  They started to pick it up nicely in the morning before the news came rocking down.      Tomorrow is a mystery.