..desperately needed.....Basically, we are making a general comment
with regard to all the plays out there. Yes, apparently, other than
FNM/FRE to the downside, it's pretty much an uncertainty for any big
movers to have follow through action to the upside this summer.
There was no shortage of action today and we have to give it to this
market despite some grave concern for two of our largest mortgage
lenders. As we said yesterday in conclusion, it is possible for the
commodities to run with the broad market. We had spurts of this all
day and if it wasn't for this FNM/FRE mess it would have happened!
Here's the thing, with that many movers with 4-10%+ or 5 pts+ gains from our Shadowlisted commodity plays, ...including solar..
......you couldn't help but to feel it's more than just a mere
coincidence. Can a sector rally be in the works? Of course, we've
all been fooled a few times since the correction began weeks ago and
it's probably best leaving the question unanswered at the end of the
day. As traders, even though we act often off our instinct, we still
have to be open-minded for any possibilities. Yes, as many probably
agree, we are sick and tired of playing intraday points because trends
last 5 minutes. Today was just another dizzy day. We'd like to see
some
meaningful follow through whether its' from E&P Shales or Solars or Steels/ Coals or any recent EPS plays.
Earlier
today we had the oil inventory report that was considered very
disappointing for the commodity groups. However, crude oil reversed
early weakness and still ended up with a pretty healthy gain. In
case you haven't noticed, oil price has basically been in the same
price range during the last few trading sessions. With its positive
reaction to a negative inventory report today, you can't help but think
we may have hit a bottom already. Many oil related stocks behaved
really well today and you can certainly feel the same enthusiasm across
all of the commodity sector. We aren't saying there's going to be an
immediate and powerful commodity rally here. We are simply pointing
out that we like what we see the last couple of days from the commodity
area and we have to be prepared to give it a good ride if the action is
confirmed. Speaking of which, we are looking for some follow through
moves from many gainers today. Follow through moves do not
necessarily mean another huge up move the day or two after. We feel
any subsequent firming action from the gainers today would be
considered very healthy and we'd then view it as launch pad for some
potential sustained up moves.
In terms of individual plays, our alert buy of
ENER exploded
and has broken out cleanly today. It is due to report next week and
the entire solar sector is getting a lift lately by various earning
reports and contracts. Again, as with recent plays, if you miss a
first leg up as in AFAM, FSYS or miss a breakout as in ENER yesterday
wait for a decent dip/ pullback.
Thursday, August 21, 2008 at 07:55AM