When the market quietly reverses the day after a somewhat nasty late Wednesday charge, you begin to understand the big drop was caused by pure May complacency setting in. Luckily, we've had some nice plays earlier in ANR, SNHY, MVL to get us through the week and can deal with doing little now. There was no outstanding reason for that drop, nothing that seemed too matter much yesterday and that is why played in the green on the indices most of the day. There was probably more reason to go down yesterday as the financials were under pressure and oil was gushing to $124. Instead, we got an up day as the technicals took took over. Right now, the SPX is within striking distance of many support lines 1385,1386, 1387, 1389 all have something behind them like last weeks lows etc.. Considering, we have no economic data of significance this week, it is no surprise we drift along with no catalysts to trade off. As we've said, we are very light in positions at this stage, mostly from profit taking and not wanting to buy these commod' rockets as the $CRX comes to recent highs. This is one way and probably the best way not to become complacent. We rather wait it out and see if the CRX can breakout as it sits with a NCH and just off new highs as of close before we decide to chase anything. We may have no option , even though we really want a dip on our favorite names. The way things are going, we maybe eating coal cakes for days as this group keeps on rolling. We look at ANR and keep thinking this stock is so capable of pulling of a 3 day move like WLT, PCX have done recently. This is one stock we don't a commod' dip because we think its potential is here and now.
PCLN, one of the few internet stocks we list showed it belongs there as it produced one of the best reports this Q due to global strength. Raising of expectations is likely to come from firms in days ahead and we expect to trade this for another Q. Gapping to 140+ will produce buying opp's on dips indays to come, we'd probably avoid chasing today unless we see more exuberance in volume than we currently expect. We also have a market that will try to use any excuse to move and will probably overreact to AIG`s report. It will be interesting to see where we stand end of day with this credit stuff once again a backdrop to the market. The Armageddon cometh boys will probably begin to emerge from the sidelines and try to scare the pants off. We`ll see, we`re in no hurry with weekend almost here....
Have a good one...