Both the bulls and bears are desperately seeking a move from this market. Yesterday it looked like bears gained an upper hand through out most of the day but today's action is the complete opposite. The only similarity between today and yesterday's action is that both days closed well below their intraday peak level respectively. In either case, we are here to set up for something big down the road. In terms of the bull/bear case, you can argue for hours straight without coming up with an agreement. To us, seeing is believing. Lets' see what GE does and even if its not been the essential measuring stick for the market in years, a disappointing report at this point will be ammunition for the Bears and will be blown out of proportions in our view. How and if the market bounces from such an event will very telling of where we may be going. Instead of predicting to what may happen, we simply follow the action very closely and react to any sentiment change as we see it. Basically, you can be a bear and buy up this market or you can be a bull and sell this market. What we are trying to say is that no matter how you present the case, it's always the action that dictates one's final stand. As traders, we are in a business of analyzing what people(majority) do, and not what they say.
Most of the sectors acted well on our screen with a couple of plays particularly standing out. MELI is one of the plays that stands out. We are simply amazed by not only its resilience to selling pressure last few days but also the strength and the volume kick very late it exhibited today. This one is definitely high on the momentum end. The speculative ones like JST and GU also behaved well last couple of days. JST looks like it wants to challenge recent high soon and GU feels like it's one good day away from starting another leg up. On the other end of the spectrum, we had MTL giving back to back big days, while others like MOS, POT, AKS, EOG... just inched higher. Oh yeah, most stocks don't pulls those 10 or 15% move on a day very oftn, so for a $100+ stock, a couple dollar move is the norm and they add up over the time. Basically, when you look at the close of some of the plays on a weekly basis, you'd know where the direction/trend these plays are pointing. We try not to day trade plays like MOS, X.. but we'd rather add on slow days and sell on strong days. In that case, we don't always get the best price on either selling or buying but we make sure we always have full interest in those plays and not to be out of them.
Next week is the real kick off of the earning season and if the reports aren't as bad as people fear, watch out above. The reason why we are saying this is that the interest rate environment currently just does not favour idling cash or money market accounts. We believe the lack of interest bearing instrument is forcing lots of accounts to get back into the equity market on any excuse.