..Rollover

If you came home last night and saw +42/+28 indices day, you'd think it was a ho-hum day.    What you missed was a head scratching +117 move to the upside and then a big rollover reminiscent of all the subprime intraday volatility as the market gave it all back and more before regrouping.    The reason it was head scratching was we really thought there was no major catalyst for such a move.     As it often happens, the herd jumps in and then asks questions, this time it was what are we doing at 12837 today?.     What comes next is a reason for profit taking as the market realizes it really shouldn't have made such a move.    A big rollover ensues while the market searches for reasons, yesterday it came up with some ABK and more writedown noise.    Any excuse is the markets motto.    To us it was not the noise that caused the big dipper, it was pure profit taking because you have a chance after an unrealistic move to the upside.      At the end , we held the 1372 area on the SPX and we remain in a position to move towards last weeks highs and that is all that matters.

We've been noting of how we are looking for a pullback in our commodity stocks and yesterday we had one of sorts, especially in the Ag-Chem's before a tide of earnings the next morning.. from POT, TNH, TRA, BG.     Was this enough?.     In our books the answer is simply NO.    We are not itching to get back in off a sell off into what is expected to be excellent earnings, it's the reaction following earnings that is important to watch.       What we mean is if a stock like POT falls 10-15 pts off profit taking before what will be a no brainer stellar report, we need to see what it will do next before making a move.     As of this morning what you see is so much of this groups move is being priced in following MOS, MON's reports earlier.     The problem now is the possibility all the optimistic shares see no short term upside and decide to sell and not be stalled.  If this happens,   we will be in a real pullback and that is what we'd probably wait for and only use todays bounce possibility for an intraday trade.     On the other hand, if this market wants to make a move higher, you know all these commodity sectors-stocks will be in the mix and we'd be buying back and forgetting the idea of any imminent pullback. 

Despite the barrage of earnings, there is nothing emerging this week of anything we'd want to chase.  Primarily this is not because earnings are disappointing, it is just because the recent rally is caking in any upside that earnings may bring to a stock. 

Considering AAPL did not give ammunition to the Bears overnight, we remain in a very opportunistic level on the indices heading into the final days of the week.