Despite the DJIA falling as much as 100+ points off it's highs intra-day, we can't be disappointed in such action after last week's technical breakouts. We've topped July's peak and think the best thing the market can do is consolidate in the near term before another push higher, yesterdays reversals may be the start.
In the meantime, our Shadowlist is slowly going through a transformation this month, a rotation as noted yesterday.." it's definitely worth looking at those small cap earnings and away from our commodity plays". Our strategy is not about quantity, but quality, we don't need a whole group or two such as \Ag's-coals etc to play now through August. All we need is a few plays, here and there. If you go look at the alerts this month so far, you can see you don't need much when you're selective!. We've had ROCK, RIMM, ICLR, EBIX go about 10-20% in days, we hit a nice quick gap short in IPHS and an open alert for an early morning trade in GDP, ANSS for traders. Nobody needs to catch'em all, just a few of them with the right lots to make a nice return. Hell, we've been picking our nose 5 days watching our old family member AFAM go from $36-44 off earnings in days without touching it sweetly. Also, we've pointed out to keep stocks on a short leash, this definitely applies when you get points like those from the above trades. A short leash is not purely for cutting a bad trade, it's for pocketing your earned cash. Simply, we're not waiting to pocket too long, we pocket and than look for re-entry at this stage.
We're not really concerned about what the indicies do here, we can't control what is going on in the ' real world' with geo-political stuff, the Oil picture, the potential Financial surprises that can make this recent upside crumble in minutes. But, as long as this rotation away from commodity plays on the strength of the dollar and oil slide continues, we actually welcome it as we go back to many of the DJIM basics as far as trading strategy goes. This involves a good enough stock discovery, eyeing and/or getting in early enough to book some cash and than look for a healthy pullback to re-enter or enter for the first time, if you missed the first leg as in AFAM.