Despite the aggressive late day broad market buying, we remain motionless and can only 'wait and see' for this market to prove itself. As far as we're concerned this is just a short covering bounce from those lingering oversold conditions and not a reversal of any significance until we see some follow through. If this move falters today there will be quite a few disappointed players who got back in the game yesterday. This would come in the way of selling end of day as the bottom feeders flee for another try later on. Our strategy here is to let the market come to us and not come to it at a potential bottom.
A few things of our widely followed to possibly trade or not today...
Ag's-Chems, this pack led by POT, MOS was the best looking group out of the all the commodities. If the early commodity massacre yesterday was the short term bottom, it is highly possible this group will lead.
Steels, this bunch looked frail late in the day and only CLF price hike news after the close can give it some shine. Despite the exuberance this may show early, we feel all this news has already been priced into the stock and sector. Simply, this type of news is why the steel stocks ran to their lofty heights recently, it's nothing new or unexpected. Best early and fast trade might be on those in its group, but for a trade and that's it for now.
Shales, quite frankly the offering by CHK is very disappointing. This giant has done everything to make analysts, investors believe this wouldn't happen. Most recently they sold a big stake to PXP in the HSP for 1.65bln, plus another 1.65bln to fund drilling and completion costs. So yeah a 25mln share offering is a surprise here and we'd wait to see how this group handles the news.
We'll monitor the market closer today and if we get the itch to buy, we'll alert. Until, we just look at the big oil drop the past 2 days and think the market had to do what it did late yesterday...finally, or be a complete dud!.