All geared up...

Basically, there's an equal consensus that we are setting up for either a big down move or a big up move.    The problem here is that nobody is willing to put lots of capital down to bet on either direction.     Not yet, at least!   The way this market has been trading, you realize it wont be a slow grind up or down.  Before the open, we said, "...we may get more of the same and that is consolidation action taking place early in the week." and that is exactly what we got as the major indices traded in a narrow range.

If we want a rally, we have to pay attention to the financials.   We have said often before that this market can not rally without the participation of financials and we saw that last time around.    As you can tell from today, if it wasn't for the financials, we'd probably be up by triple digits.    The ones who are currently on the sideline waiting would probably jump in as well if they see a better behaving financial group.     However, this subprime thing just doesn't seem to get old day in and day out.   For DJIM traders, it's the same.    Until we see financials move up as a group, we wouldn't want to chase anything aggressively.     For now, it's best for us to wait for something to happen before deciding to act.

Of course, if sitting in front of the market and doing nothing doesn't seem to be productive, so there's always the entertaining Solar plays and as well as the Chemical/Agri. group and the new group (coals) we intro'd in DJIM #5.    We are actually astonished by the behaviour of Chemical/Agri. as many of the popular names got some life today and could be setting up to challenge its old high soon.     Again, if this market is in a firm rally mode, we wouldn't hesitate to chase MOS POT MON in sizes but due to the lack of true direction of this market, we'd stay to trading small sizes. 

CMP, a potential fertilizer' play noted in Alerts section xmas time came out with excellent earnings AH's, unfortunately it had a nice pre run today already and so tomorrow may be more difficult to move.

Coals, again this group performed well led by ACI and JRCC in the cheapie category making or being at NCH's.  ARLP, NRP , CNX fared well as well.  MEE and FDG lagged today. One thing you notice about the group is all the stocks don't move in stride.  This could change if this sector becomes more of a momo group as the others did.

Solars had a very decent day today and you can either attribute it to the rise in oil price or the anticipation of a great FSLR eps report.   In either case, we'd only make intraday moves with the solar names because of their inconsistency day to day this earnings season.    The FSLR report carries pretty heavy weight on the overall sector and we surely remember what happened to many solar names when FSLR reported last time.

Bottom line, we want to stay light at this juncture and wait for more clues before jumping into a trading conclusion.    There's quite a few earning reports this week and a key retail sales number to be released mid week to possibly entertain us.

In Da Buff!

Well, at least that's how they call home next door in Buffalo.  In the markets it takes on a whole different twist these days!.   None of us should be surprised by today's market turnover.    You don't have to unwrap this market, you already know what's inside this box of tricks.   We highlighted the primary supports and resistance levels heading into the week, but before we get there we need to bypass a few secondary levels and today we got stomped at a few.   Most noticeable the 12400 on DJIA, we highlighted.  To get more technical you can see the QQQQ and SPY (S&P spdrs) did a u-turn and came up against the gap down highs from last week.   When you see things like this come to a screeching halt on charts and witness it all first hand in your watchlists, you can't help but wonder if we are to resume the downtrend.    Today's action was brutal, the quick move of 220+ up on Buffett was not Warren-ted and it proved so by end of day.    You see all the fixes including rate hikes, gov't lifelines and this news today don't do anything for the markets right here and now.   Buffett's 'guarantees' are for municipal bonds, they are not guarantees to turn this market up and get it roaring for more than a few hours or days before it bends over again..   All these maneuvers will graduallyl help the markets confidence over months, but what we need now is a flush and /or at least a test of lows.   No rally is satisfied knowing those lows need to be tested and we'll never get the rally we want if we don't go there first.    Market is just putting the inevitable on ice and so while on ice, we'll continue to get the melt downs we saw today.    This equals sloppy driving through the trading day.  On to the slop....

Ag's-Chemicals,  this group has had us teeter tottering for the past 3 days or so between trading it long or short.  The action following good earnings last week was quite meager following giving credence to this group possibly topping out.  Yesterdays action which we noted as surprising followed through early today.    What we didn't know is there was a Goldman Sachs Ag conference call for these players up today.  This explained the action yesterday and very early today.   Like a pre earnings run, we think we just had one to the conference and possibly nothing more.  As the conference winded down, we had these fall hard from NCH levels.   MOS and POT most notably.  This may have been a distribution day and so these may be topping out for the immediate future.   We will know better tomorrow following the AGU report.   If the report is very good and these don't react positively this will be a repeat of CF's upbeat disappointment the following day and we'll know its more likely a top here.  

Solars, as we reminded yesterday,  this group can't be trusted day to day now.   You might miss some nice days like Monday, but you may miss some pain like today as well.   FSLR, did a pre earnings day run, except it was a backwards one which saw it sliding $21 from high to low of day. It reports in the morning tomorrow and will probably beat handily.    It will be interesting to see the reaction..How good a  beat is cooked in?.   Be careful premkt if its not a beat of substance,  premkt lies a lot these days. 

The Coals jack-knifed today as if they had a momo group complex as well.  We'd look to pick up pieces on dips to get on this hot story in early '08.  It's definitely getting some attention now.

A few stocks off our recent pages managed to hold on to the green, so let's give them some print....

CMP, noted yesterday, looked finally discovered as a play with an Ag' angle as it rocketed from $47's open to 53 and managed to hold on to the gains on excellent volume.  Will need to digest these gains now, so if you missed it this morning its' probably best to wait on it and the sec' it put its head into today.  Another recent alert FLS touched $100 today and should not be left off any watchlist.  A few of the medical supply co's like BDX and new one we added some of today, ZMH , held on.  We'd throw in ILMN with this medical flavor even if its listed as a biotech.  On the cheap, VLNC painted a nice chart the last few days and has December highs in sight.

..Kiss of death

Okay..it wasn't that bad, but Batman And Robin testifying did enough to rehash slowdown concerns and consequently bring a big red day on Valentines day.  Red..how fitting!.  The duo did not rile up any new concerns, but after being up 4 of 5 last days on Nasd and 3 straight on DJIA/SPX, it was probably inevitable we have a pullback.    Unfortunately,  it doesn't look good when the only real gains came on Wednesday get grinded down almost in full the next day.    Simply... if you've got financials and tech leaning to the downside, your hands are tied and the outcome is predictable.     So...now heading into a 3 day weekend,  we are left with options expiration day to deal with and it's probable volatility and the usual Friday profit taking.  On the hand, maybe we got that out of the way yesterday and the Buls and Bears can just fight the 12400 and the SPX 1351 and let the market go into the weekend in some kind of peace.    Anyways...not to dwell on the big picture as it drives us all bonkers, lets deal with possible trading opp's for Friday considering our emphasis is on EPS trading and we have a few reports to potentially trade...

DRYS,  you gotta love a headline of a .47 beat, it sounds wonderful doesn't it!..One thing never to forget is to put this in balance. What we mean is this is a only a 10% beat and you have to consider what comes up on the CC as this co' doesn't  headline guide.   The company seems optimistic heading forward, but that we get from the report headlines and will let the market decipher early on if we want to play.  One thing we also need to watch is the BDI in the next few days because it has the tendency to go up 3-4 days straight days and then do same thing down.   Now it has been up 6 straight days and is up against the 200sma day.   Unless there is exuberance that you can swing a trade intraday today, we'd probably hold off holding these into the weekend.   One shipper that we have added to our watchlist is GNK after its report.  Many good things in its report and it is probably much better for those that want to avoid the volatility of the 3 main shippers we've traded here..DRYS, TBSI, EXM.

CMG, one of the big momo stocks of '07 became one the biggest short % stocks as well.  This provides a potential squeeze opp' at any time following the beating it took AH.  Look to maybe flip this today.   CLB followed by FTI could be potential early on trades with less volatility.

Amongst the beating yesterday what survived were the coal stocks.  Most strength was in the 2 big names we like FDG and MEE, which closed near high of days.    The cheapie covered here is JRCC and hit a high of 17.80 intraday high.  At this point with the markets the way they are we'd rather play the more liquid names with their institutional money.   A potential pisser today is some tier1 firm has downgraded the group.  If traders takes this seriously, we'd seriously look to add on the dip as earlier in the week

We've had a few nice EPS names going strong the last few days toying with highs.  CMP, ILMN, FLS.  The thing is this market wastes no time in taking away profits and it is very hard to even hold names like these through.  This is something we all deal with and should decide after DD if these plays are worth holding longer term, no matter the daily swings.    If you have the patience than you see this has been rewarding after introduction here.

Triangle....

In case you have been visiting various T/A sites lately or have been paying attention to some of the CNBC commentators, you'd often hear the mention of "breaking out of triangle"!    What they are referring to is the exact same thing we have been talking for the last few days.  Basically, market participants, especially the ones heavily into T/A , are looking for a big move that would take us out of this trading range.  This infatuation has really been led by the Shorts to scare.   This trading range has basically been teasing us with some false moves left and right.     Today's no exception.    What started as a happy camper for bears kind of day only ended up as a "do I need to worry about my short position" at the end of the day.  The rush to cover positions would result in some fast and furious moves once these triangles get busted. 

This market has a particular way to mess with your minds lately.    What may seem like a logical outcome may actually turn out to be something else.   This is what we attempted to say in the Journal leading into today's action as everything pointed to a breakdown.   Today's CPI data was not good, and that's a fact.    The last thing we need at this moment is more inflation worry and that'll definitely hamper any recovery from a potential recession.    Also, the details of the last Fed. meeting was released today and we now have the actually acknowledgement of the Bernanke and company that growth rate will be slowed down this year.     So how are all these news not pushing this market down?    Don't ask why! .   It's just happening as we pointed out the possibility this weekend and that's all we need to know. "...However, we may get some surprises judging from the futures trading at the current moment that coincides nicely with Fridays reversal led by financials after a BBY warning and weaker NY Empire number, Michigan sentiment.  Is the market starting to price in some of the bad Eco data?.  Well, we'll definitely know after this weeks data. "       

Today action was some reinforcement.

Today, the bears seemed to have all the right cards and there was no reason not to think that things won't go their merry way.     However, as we all have known before, market has its own mind when it comes to timing of a break down.     In our opinion, in light of the recent economic news and a seasonal slower trading environment coming up, the market will eventually come down and at least test the recent low.     When will it happen?    We now have a feeling that we may be due for a big upward move before it gets rolled over.      We also have a feeling that many participants who are bearish on this market are actually scared that we'd have a big short term rally.       Then there's this triangle talk.    As the trading range is tightening up, the urgency to have a move has become far greater.    We feel the big move is going to happen very soon and this time around, you may not want to fade this move right away as the move can probably carry a few days worth of momentum at least.

The most efficient trading strategy during the past few weeks is to fade the move.   It means you go the opposite of a strong move and it takes a day or two before you get paid off handsomely.    If we are anticipating a big move that's likely to carry more than a few day's worth of momentum, you may not want to fade it as soon as possible.    Rather, you may simply want to trade with the move.     Of course, we aren't specifically calling for a direction here but merely pointing out the probability is much better now.

If we do start to get a move up, the most obvious sign we are looking for is from the XLF, or the financial sector to join in.     Financials led us to a 1000 point move from 11700 to 12780 and we feel it'll once again be the key to a potential rally.    If we get some nasty deteriorating action from the financials, then you'd know which direction this market is heading.

Commodities, believe it or not, the reason why this market isn't going down as many would suggest is the fact commodity groups are pulling it up.   We have everything from oil, coal, steel, gold, metals, fertilizers, food...and just about everything related to them having a lot of strength last couple of days.    Forget about AAPL RIMM BIDU, we have to expand our trading circle and know better about the MTL CLF(eps tomorrow) and even the PBR FDG POT MOS etc., we've traded before.     If global inflation is as real as analysts suggest, we better replace more of the plays on our watchlist.    Can this be a commodity year?    For many commodities, we are already into the unchartered territory so it's definitely plausible at this moment.

Now some plays....

Agri/Chem.,   love them or hate them!    You have to love them this week because they just don't seem to want to stop, regardless of this market's direction.   We hate them because it hasn't presented us with any good buying opportunity last few days.    POT MOS CF all notched new closing highs today. 

Steels/Iron Ore,  apparently the deal over the weekend was that some Asian companies agreed to iron ore price hike.   This explains a lot of upward movement from this sector.    We are liking many old yet familiar names in this sector including MTL CLF X GGB etc.

Solars,  again, the kind of eps/outlook reported by FSLR does not necessarily get shared by other solar companies.    We again witnessed a mighty miss from STP and it's having a pretty dramatic effect on other plays in the sector.    We were picking up some FSLR earlier today around $205 alert time and are comfortable swinging/ holding some for next couple of days.

Recent EPS winners, we are keeping our eyes on some of the companies that had strong reaction to their recent earning report.   We were buying pieces and/or eyeing FLS CLB JLL MA AXE ILMN CMP... for some good action provided this market breaks out to the upside.  Take the time to review this earnings seasons Journals to see if something is missing from your watchlist.  It's been a tough go this season, but most names here have performed well since being introduced and should continue too after surviving all this.

Bottom line, we aren't leaning too heavily in either direction just yet, but based on the way this market shakes off bad news lately, the momentum seems to be shifting toward up and not down.   It could be this week, if no news bomb comes across.... Just be ready

You have our respect, Mr. Market...

It just feels too easy that we would be starting a strong rally from such an auspicious beginning late Friday.    Sure, news flow has been pretty positive as of late with respect to the bond insurers.    But, they are only positive with respect to themselves really at this point, the bond insurers.    What we have today is definitely a divergence of force going a separate way.    On one hand, every single strong and good play we've talked about on the site for the past few weeks were doing some fancy upside moves, corresponding to the index action.   On the other hand, everything else just didn't seem to catch this 189+ point drift.  Poor AAPL RIMM BIDU, where's the momo in all of these?. Only FSLR continues to provide some fast trading action.

What's good about the unchanged rating of these bond insurers is good for some of the parties involved, namely the financials.  But they had other things weighing on them early and only started to move late after selling off Fridays upward move.   The financials are not done writing down more stuff.    In the morning,  Goldman Sachs noted that all of the major brokerage are in for a writedown of between 1 to 12 billion dollars this quarter with Citi leading the charge.   We definitely have heard this song before roughly three months ago.    Only difference between then and now is that we are in a much more difficult economic situation this time around.

Leadership in this markets rally is still very narrow.    Basically we are only concentrating on a handful of stocks and they are the same names you are probably sick of hearing by now.   Truth is, we'd like to start play some other names without having to chase those names that have become extended today.   New closing highs were always something we used to add pieces to as part of our trading methodology near the close on index action like today.  Now the market is such that you need to take the profits before they evaporate.   Unfortunately, nothing else is really coming up on our scans to turnover into.

Tomorrow, we have some key economic number to be released and they are PPI and Consumer Confidence index.    A disappointing number from those two would definitely cast a shadow over the recent rally and it wouldn't be a surprise if the market gets smacked down hard.   We've pointed out the importance of the Eco data this week and so we all should've been thinking of taking profits off by close to avoid some breakfast spillage.    Technically, you can say this market has broken out of the wedge and we are up from here.     But seriously, we just can't imagine many more positive catalysts down the road once this ABK fever wears off.     We have lightened up most of our long positions today and will be eyeing the economic reports to determine if it's worth to get back in for another round.

Plays that are working....

Agri.-Chemical,   trust us, even we are sick of seeing them POT MOS etc. going up and making new high every other day. lol   The truth is, the higher they go, the smaller the risk/reward and more cautious we get.     Ever since the group's break out on Feb. 12th, the group has not been tested to the downside.    It means that we have not seen any kind of meaningful pullback to warrant much more upside.     Sure, these names can move off a 190+ Dow day, but we all know that those days are still far and few between.     We are trading them still but with a much reduced exposure at this point.

Coal-Steels-Metals-Oil, you can't seem to have an up day without these commodity plays.    The ones on our watchlist FLS CLB FDG MEE and CLF HES are two more we've recently added... all had a good day.  Even our rock salt-potash play, CMP keeps making highs.

Biotechs like ILMN ZMH off here showed some strength as well.   Remember, we try to concentrate on earnings and most making NCH's today from DJIM were selected off their last reports/guidance this Q. 

Bottom line, although this market is rallying off ABK news, you still can't underestimate the power of a near 200 point rally.    Traders could use this as an excuse to chase stuff that was working well, regardless the relevancy.    Tomorrow will be a real test with the economic reports and if this market takes the reports well,  it's likely that this rally will continue a bit longer.

Anyways, today played out to script from our morning intro to the day.  The 'concrete' news came and it turned into a real drama for the shorts.  The financials were the beneficiary, GS and MER moved back up 6 and 3 points respectively and we didn't get the momo stocks participating.  Hopefully you didn't jump in as there was no confirmation of them wanting to play just like on Friday.  Basically, it came down to holding the stocks followed here for the past few weeks to carry the load.   And yes, the futures lied again as they set a negative/flat tone before the open.  They started to pick it up nicely in the morning before the news came rocking down.      Tomorrow is a mystery. 

Halt rally...

Quite fitting we had a Halt Rally to +150 on the DJIA considering we've speculated on Half Ass Rallies more than once the past few weeks off the ABK/MBI turmoil. The last 48 hours played out as we noted intraday with the shorts covering into the last hour on Tuesday to avoid being caught in the news of a ABK rescue and then the quick tick up as soon as ABK was halted followed by the sell off of about 200 points as reality set in.  A 1-2-3 shuffle that is no different than what we see in the markets on individual stocks as they move into an earnings report and then sell off.  Trading is a game of human nature and it is prudent to have some street smarts and try to think how the herd will react in order to be on the frontline and not be followers.   The difference comes in the form of dollars and that is why we are here, to make money and not lose it.   Not to be beat a dead horse without a white knight to bail it out, we are left thinking ahead and wonder what promise lies ahead for the market to move forward now that half ass rallies will stop on the monolines soap opera.   Now the Bulls are left wondering what bailout will come for them without these rallies to save the downticks into the pit!.   The tide has probably turned and if there is news on the monolines it will probably be negative, so we have to be prepared. 

Underlying all the ABK hype was what matters and that was the action in commodities and the stocks involved.   The melt up action rejuvenated overnight after a substantial down day as new highs were made all over the place.    Based on this action and on the decent last 10 minute close, we'd be looking to see which commod' will make the best trade of the day very early.  We wouldn't be afraid to jump in early today unless we get some bad headline in the pre market.   The market may will feel a sigh of relief today and just go after what is working in the commodities, in case it does we'd play the below.  

If its coals, we'd look early to FDG as it did not wilt under a downgrade, AKS, JRCC follow.

If its O & G's, we have BZP, EOG, CLHB and FLS potential 9ema'er rebounder.

If its Agri-chemicals, we'd add early to CMP as it made it back to NCH levels and then deal with usual suspects..POT, MOS

If its metals, we have to look at MTL and CLF

If its none of these, we'd stay away heading into Fridays jobs report and read the Ambac prospectus to kill time...okay maybe not.

...are we there yet, dad?

Honestly..the best lead we could give into tomorrows performance is to get a good nights sleep, brew a big chug of coffee by 830 am and just in case position a mickey of Jack D', Jose or whatever is your fave beverage in your desk drawer for later.     It's gonna be a helluva ride and most likely not just one way intraday and nothing less than triple digits.  We expect violent swings and actually would be disappointed if they do not come.   To predict what may happen would be insane, the possibilities are endless tonight.   The anticipation just got louder today as the Jobs report has collided with the SPX breaking to 1304.  Its amazing how often the ducks line up in the most opportune time.   Well today's flavor of day in TA' was this SPX close, tomorrow it might be 12000 and yesterday it was the wedgies.    It changes everyday as to what is important and is quite tiresome and gets confusing to the casual trader.   If we stick to the most simplistic, its the 12000 to 12800 range we've been keeping here to. 

Coming into the trading day, we said in part ..." Now the Bulls are left wondering what bailout will come for them without these rallies to save the downticks into the pit!."  What we were alluding to is that as more subprime fallout occurs and because the monoline fiasco gets pushed to the side now, where would a rally originate from to help the financials and therefore the market.   Little did we know they would drop so many bricks at once this premarket.   We had foreclosures, disclosures, delinquencies, failed margin calls, distressed selling at UBS, MER amending..blah blah.   They should've just gapped the market to closing levels instead of grinding.   But that's too easy, its the grinding the takes traders money away as itchy fingers make you jump in and then slowly rot you away with another leg down and then another and so on.   Anyways, the point was there is no saving the Gasparino way now.

Despite the day unfolding this way from the open, we had some nice moves from the mornings watch.  Unfortunately, this market continues to be made for ones with big bladders that can capitalize quick the gains in a CMP, BPZ, which got erased fast or the very patient nerves of steel ones who could have stuck with the CMP, FDG, JRCC calls here from its first days.    We also started to like the action in POT/MOS today once again.    So, not a wasted day and we'd stick to names highlighted this morning in case an opportunity to fade a move comes tomorrow or otherwise.  

Will we get there?.   Town of Capitulation?.   The truth is we'll probably not know till we've driven through it and then look back, we'd just settle for a gap down tomorrow and take it from there...or a surprise induced moon shot to just relieve the tension for now ....Good luck and we'll keep in touch during the day...

DJIM #14 2008

As the jobless rate spiked down to 2003 levels, it is almost impossible to argue a recession is in place, but it is also impossible to say that the Bear haven't lost it's grip on the markets as we saw the Bulls pulling the indices up and shrugging off the jobless number.   As we discussed all last week, the ability of the market to hold onto its gain after the 3%+ rally was signalling the selling had cooled down and this time it would be different than what followed the March rallies of the same proportions.   If this is indecision on the sellers than its good sign as they are not sure of things as before, the only argument they may use now is calling the low volume suspicious and that they are just waiting to rattle the rally.   Either way, it's not your problem or ours as our goal is to capitalize when the chance arises and last week we think did just here as DJIM's players, our index you may say outperformed anything in sight.  We had some nice alert leads ahead of the curve on CMP, DRYS, MELI and it's nice to see them getting some headlines right after.     When you're ahead of the curve, you get a chance to sell to the herd!.  That's the game!.  CMP was noted on CNBC as a stealth play behind POT, MOS, we profiled it in December, and it spiked in premkt and was a feature story on IBD this weekend. DRYS was referenced on the front page of Barrons this weekend to a good story inside.    Heading into the week, it's quite simple as there is no reason to change what's working and that's everything off our primary watchlist relating to...." Agri/chem, Steels, high beta Technology to Shippers, Solars and even oil stuff".   What will most likely come to hand this week is an important technical picture to track.  This is where volume comes into play that wasn't there last week, if it comes to the upside it will drive the market through resistance 12800.  If we see the 12800 coming with dry volume, we will most likely take positions down and wait for a clearer picture to emerge.   Right now, the Transports are leading the way and that is a very important positive signal for what possibly lies ahead for the rest of the indices, including the general economy.   Little economic data flow this week should allow an opportunity to potentially trigger some of the resistances and that is what we'd closely track this week. 

We've tweaked the DJIM primary tradelist, shadow list.  We've taken down a few financials as we don't need to monitor, trade 4-5 now and a few others that are just boring now like SAM, HURC.    Still the latter are EPS wins and if we get that trade again as we're starting to see, we'd keep them close to our primary list.  We've added the GU, JST as more on the speculative side, reason speculative you may say is because we'd rather lay our bigger dollars on the expensive stuff that's been working as that is where the volume allowing for easy exit is and where the sideline money from institutions is flowing to.   In the good ole'days when EPS and sector plays from midcaps rolled these would be on top of our list probably.   Times have changed and we need to see the momo game come back to go heavy at this point in these types.   Remember, if the mkt reverses in anything that resembles the past, these lower volume, cheaper plays will slide harder and have bigger spreads going down as buyers will dry up.    Simply, don't become complacent now just because the market is good and you think you're indestructible.   Others are included following mentions in alerts, Journal the past two weeks....MELI, RIG, CSX, SCHN.    WLT is another name we're adding.

Give us a move....

Both the bulls and bears are desperately seeking a move from this market.     Yesterday it looked like bears gained an upper hand through out most of the day but today's action is the complete opposite.    The only similarity between today and yesterday's action is that both days closed well below their intraday peak level respectively.     In either case, we are here to set up for something big down the road.    In terms of the bull/bear case, you can argue for hours straight without coming up with an agreement.     To us, seeing is believing.   Lets' see what GE does and even if its not been the essential measuring stick for the market in years, a disappointing report at this point will be ammunition for the Bears and will be blown out of proportions in our view.   How and if the market bounces from such an event will very telling of where we may be going. Instead of predicting to what may happen, we simply follow the action very closely and react to any sentiment change as we see it.     Basically, you can be a bear and buy up this market or you can be a bull and sell this market.   What we are trying to say is that no matter how you present the case, it's always the action that dictates one's final stand.     As traders, we are in a business of analyzing what people(majority) do, and not what they say.

Most of the sectors acted well on our screen with a couple of plays particularly standing out.    MELI is one of the plays that stands out.    We are simply amazed by not only its resilience to selling pressure last few days but also the strength and the volume kick very late it exhibited today.    This one is definitely high on the momentum end.    The speculative ones like JST and GU also behaved well last couple of days.    JST looks like it wants to challenge recent high soon and GU feels like it's one good day away from starting another leg up.     On the other end of the spectrum, we had MTL giving back to back big days, while others like MOS, POT, AKS, EOG... just inched higher.    Oh yeah, most stocks don't pulls those 10 or 15% move on a day very oftn, so for a $100+ stock, a couple dollar move is the norm and they add up over the time.     Basically, when you look at the close of some of the plays on a weekly basis, you'd know where the direction/trend these plays are pointing.    We try not to day trade plays like MOS, X.. but we'd rather add on slow days and sell on strong days.    In that case, we don't always get the best price on either selling or buying but we make sure we always have full interest in those plays and not to be out of them.

Next week is the real kick off of the earning season and if the reports aren't as bad as people fear, watch out above.    The reason why we are saying this is that the interest rate environment currently just does not favour idling cash or money market accounts.     We believe the lack of interest bearing instrument is forcing lots of accounts to get back into the equity market on any excuse.

Two different market...

Nope, we are not talking about two markets in different geographical locations here.   Lets face it, we have one market here that's been running in total bull mode and the other one that's basically in complete disarray.     The bull market is obviously the commodity market.    This is the market where the sky is the limit it seems.    There's no need to fear to buy on dips or on strength.    Chances are, a week or two later, the price will be much higher than you bought it for.     The other market, which is centred around the credit crisis and is now spiraling out into the rest of the economy.   Everything that's not commodity related, basically belongs to the other market and things are looking just bleaker by the day.     As a trader, there's this thought constantly running through your mind every day.    How much stronger is this commodity market going to get and how much weaker the other market is going to get?    Well, it seems things are definitely running in opposite direction between these two market.     Commodity prices just keep inching higher and the new 52 week high list is dominated by resource stocks on a daily basis.    On the other hand, we have more write downs and guide downs expected from many companies that are set to release their earning report in the next couple of weeks.    As little as a week ago, we were even naive enough to think that we may be able to break out and start another bull trend.     Well, thank god that 90% of our watchlist is made up of commodity related plays.  Other stuff is mostly composed to gauge the market sentiment and trade only when the mood is right, such as the banks, high beta techs lets us know we've been playing the right hand.

Today's big story definitely belongs to PBR in O&G.   The potential discovery of world's biggest oil find in last 30 years has caught everyone's attention.    Remember, we played a big find here with PBR before, well this one is potentially many times that size.   This made traders chase both PBR and HES.    Of course, nothing is proven yet and there's no details of any concrete data.  Nothing is conclusive here so consider this a specualtive trade understanding the herd will go in either direction depending on the noise this story makes from now on.  HES has been mentioned for a while here and PBR has been on and off for a long time.    To see that most if not all the other oil plays finished well, we can only conclude that the oil excitement is far from over, even at this pricey level.  ATLS an early play at DJIM made new highs , FB upgraded with a $81 tgt late last week so it's back here for a trade.

The coals were showing good strength and we added a new name we've been eyeing PCX (Patriot coal). PCX recently aquired one of the largest and lowest coal producers in C. Appalachia and its reserves on a combined basis will be around $2bln.  Since this merger PCX is getting attention and is becoming discovered slowly.   We're not saying this will become a profitable discovery like CMP has been here in the Ag-Chem sec before the herd, but with coal still running we need spread our wings.  FB also raised its tgt to $86 from high 50's.  Also, we'd look to MEE very soon as the chart looks to be setting up. 

Another group which has an astonishing movement lately is the chem/agri.    We absolutely "hate" it when the group gaps higher and strengthens up throughout the day.    As we said before, buy dips or strength, you can do no wrong.      Of course, it is extremely difficult to build up a large position on these sort of plays but as long as you are not being totally left out, it's all that matters.

We have a busy earning week this week with a number of "important" companies releasing reports.   It'll be definitely entertaining to see how this market reacts to their guidance.   A few pre-announcements even if not from any real heavy hitters were announced yesterday CRS-CROX-NVTL and should be in the back of many minds now in respect to the possible pain this EPS season from all sides..big and small.   Even lower expectations should be spreading out to other parts of the market after these lemons.   As far as trading wise, we are currently only sticking to the commodity market which is the most plays on our watchlist.   Bottom line, no matter how much noise and fluff some reports may give us, we have to be totally aware of the fact what's the real bull market out there.

Smell the roses...

Even before the market started trading today, we all knew that this was going to be a good day.   We just didn't know it could be that good!.  Not only did INTC provide us with some assurance that things aren't that "bad", we also got a couple of reports from JPM and WFC that were well received in the pre-market.     Economic data today was also inline and some big news from Potash all set the stage for a very positive open.    Bidding up some technology stocks was easy after Intel's earning, but never in our imagination that the rally today was so broad based.     There's literally hardly any stocks that finished negative on the day and many stocks finished 4%+ with some notable gainers from techs and agri/chem sector.  Our DJIM list lit up like a Christmas tree and it's only spring.

Oil gained again today and gold finished quite a bit higher.     U.S. dollar hit a new low and every commodity play got a bid today.   Yet, equity index held steady and finished near the high of the day as it grinded higher and higher.    Today's is one of the most steady up days we can recall in the last few months.    So what is wrong with this picture?    Nothing!     This is the exact theme we have been playing for months at DJIM.     As we pointed out for weeks, commodity market is basically in a bull market and any strength in equity market will bid up every commodity related plays as well when the time comes.

Here's the dilemma!    We think if it wasn't for the commodity market, which is becoming a bigger chunk of the equity market these days, our overall market might have been at a much lower level now.    Yes, we think that commodity market is the very reason the entire market did not crash lower the last few months.    It is strange but think about it.   Do we get up early every day the last few months knowing the credit crisis is bad and economy heading towards the recession and sulk?   No!    Because we've had plays such as POT, CMP, X, FDG, DRYS..... to look forward to.     Money has to flow somewhere to get some respectable return and it sure isn't going into treasury as you'd expect.

Here are some sector run downs...

Techs, with INTC's not so bad number and IBM's pretty good number out of the way, we'd expect this sector to heat up again.    No it doesn't mean that we'd challenge new highs soon but it just means that sentiment will be changed somewhat.    These days, an inline report will get you a nice price boost given that the "normal" expectation is for you to guide down.     We like beta plays such as RIMM, AAPL, BIDU because they really play into the psychology of "tech is still worth trading up".    Of course, GOOG's report Thursday is also significant and we feel that the combination of a low expectation from Google and the uncertainty of its report can potentially give traders another positive surprise.   Again, we don't play into the earnings, but if the report is half decent, we think GOOG can get back to $500 easy.

Coal, some of the names in the group will release earning soon and we'd continue to keep a close eye on this group.   We feel this group is getting the kind of action that's similar to the agri/chem group couple of months ago.    If this group has some positive things to say in their up coming reports, we'd be very aggressive in chasing some names up.     As far as trading wise, this group has been a champ last couple of weeks.

Agri/Chem, the biggest question right now on most people's mind has to be "is there an end to all this madness"?    Stock action wise, we are not sure at this point if the run-up will end any time soon.    News wise, we think this group will only get more and more good news down the road.   Basically, this group has the kind of pricing power any other industry would kill for.

Solars, maybe once FSLR hit $300, we'd finally get some rest. lol   We think the key in this group is not about their earning power, it's more to do with the oil price these days.    Basically, with the way crude moves, this group has nothing to lose.    We'd buy on any small dips at this point.   We like SOL the most at this point and we'd play very aggressive on dips with it.   SPWR earnings Thursday will be closely watched by solar junkies.

Shippers,  recently we alerted to these guys saying sooner than later they will ride the wave of coal and steels and that idea is paying off big time.    We also don't think the move is over as all the commodity stocks are hitting new highs left and right.    We've added back EXM to our shipper list today.

Steels, just buy the group! lol   Ok,  NUE is set to release report tomorrow and we'd see how others react to it.    This is actually the group which we have the lightest exposure now,  but we are waiting for opportunities to get back in.   Congrats to X hitting the $150+ mark, yep it was around $110-115 when we alerted first.  SCHN, MTL,STLD wow as well!

Oh yeah and MELI busted the move didn't it!.  Yesterday was our exit day pre Ebay report, it's been a good ride since being alerted and now we back up momentarily.

Bottom line, things are getting apparent that not every company is being affected by credit crisis and a slowing economy.     We should not treat every company as if it's the next GE or BSC and be rational about the whole situation.     In addition, we are still enjoying this ever lasting commodity bull market.

Best defense...

In this market,  the best defense right now is to go offensive on things that are hurting this market.   Contradictory?  No!    By following many news headline and comments from the financial web sites lately, you'd come up with a sense that this market is heading lower, much lower.    This indeed is putting a lot of traders into a cautionary stance with respect to this market.     However, when you look at the action from many of our plays on our watchlist, you'd have a different feeling all together.     No, we don't have a secret list or a "Glengarry Glen Ross" list, every play on our Shadowlist is now well known in the trading community.  We just happen to pick those plays out early and compile them into a trading list.     Recent unknown names including PCX, ANR, CMP have become darlings to the trading community.   You have to understand, many of the plays on our list is the reason why the economy is hurting.    The increasing raw cost of goods is driving up inflation and price increase is being passed along at every level, and ultimately at the consumers' end.    If consumers refuse to spend or spend less, then there goes those profit projection of many well known public companies.

How about that block trade of MA at the end eh?   Is that a paint or is that a paint and a half?    In any case, we know now that there's someone willing to chase plays like MA at that level with that kind of money.     The point is that stock market will always exaggerate even our wildest expectation.    Basically, what we mean is that when a stock or a sector has a good story behind it, do not ever underestimate the power of those money chasing it.     As of this moment, we can say that no analyst in this world has a true price projection for any of our coal plays, or steel or most other plays we currently cover.     For analysts from MS or FBR to be bullish on plays like PCX, ANR yesterday is no different than us getting bullish on these plays two months ago.    Frankly, we thought some of these commodity plays would be done by now, price action wise.   Obviously, someone else has different ideas!.  There are dozens of upgrades a day and we don't give the majority a second look, we definitely don't put them in the Journal unless we feel there could be an effect, as we did yesterday with the coals.   Unfortunately, this action might have given these names a toppy feeling.  This was a 3rd big day out of the last 4 trading days. 

We haven't really added any different variety of plays to our list in a while and there's a reason we`re not doing so.  Simple..  Why mess with it?   Many plays on our list are still getting a 10% gain on a weekly basis and if you happen to catch a couple of nice dips, the gains might be even more.     The bottom line, avoid the beaten down stocks!    Although we are watching many index weighing stocks and financial stocks,  we are only monitoring them to gauge the direction of overall market movement.    If index weighing stocks do get more troublesome, you'd be sure that it will spread out to other sectors as well.    In that case, we'd expect to be in full "buy on dip" mode very soon afterwards.     This was the first trading week of June and it's starting out with a pretty lousy day.    For now, index`s such as (NDX, IWM) level held,  but we'd be eyeing the days low on the majors as a potential trigger for further downside follow through.   At the end of the day, we are sitting with large percent of cash on hand, most likely we'll be very nimble for the rest of this week until the Job report.   As we`ve noted recently,...

• There are better things to do this summer than blow it now, so be patient and be selective.     There is also a lot of noise around the Financials now that has an unsettling tone suggesting we may be in for some problematic surprises.    You'd hate to wake up to some surprise at this point.  We've all been through enough of those the past year.

This holds true more now as we started to see noise come out of the U.K system premarket.  Later in the day we got a S& P credit rating downgrade of financials. (LEH MER MS BAC JPM). What`s next, who`s next ....hhhmmm