Inevitable retreat...

Perhaps your watchlist still showed quite a few greens and it made you wonder if this market can continue last week's performance.     To us, when the major indices pause at the resistance, it's simply either standing on the side or start considering shorting the broken (crappy) names.    Either way, today is clearly not a day to enter or chase any new longs.   Sitting on your hands day as far as pulling the trigger on new trades.   We just continued to do what we did a lot of Friday and that is take positions off the table today in anticipation of further consolidation.

To be honest here, we aren't impressed by this particular earnings period thus far and winners have been far and few in between.    Obviously the chemical/agri. group has been the most consistent in terms of earning but we just can't say the same for others.   It's basically an exercise of finding oversold stocks that can come up with a not so bad report.    In addition, despite the fact many well known names have been beaten down going into the earning, they'd still get hammered after a lousy report.     This week we have the CSCO report to deal with.    Actually, we'd rather not look forward to its report because we still remember what happened after CSCO's last report  in early Nov.   http://www.djimstocks.com/journal/2007/11/8/cscothe-straw-that-broke-the-camels-back.html  

In any case, we are going to be very light on the long positions and only start dipping into names at levels that we are comfortable with. 

Right now, we are due for a pullback and that's the bottom line.    You might be attempted to buy on the first dip but we think it's wise to wait a couple of days and scale in on the purchase.     In the current market condition, there's absolutely no rush to buy anything  because it just doesn't look like this market is going to challenge highs any time soon.

Chemial/Agri.   This group (MOS POT TNH...) is of particular interest because most of them closed at or near the day high when Dow took a triple digit drop.   Had the market closed green or showed strength, we'd have no doubt to chase them.    However, even the best group can succumb to a pullback when the overall market is weak.     It would've been great if we can reenter some of these names at the level a week and half ago, but we think realistically the best entry point is probably just a tad over 50 ema.

Solars, we are actually surprised that some of the most popular names have held on to their gains today.   Again, other than day flipping, this group is still in the beaten down category and there's no need to get excited about them yet.  Coals, continued their move.  Another name we left out is JRCC in the under $20 group.

Bottom line, we might have just finished a bear rally here and the bias for many traders is still a downward market.   We have to be very disciplined here in choosing the plays and decide on an appropriate strategy.    So far what's been working is to buy the dips of strong(good) stocks on selloffs and short the weak(broken)stocks on upticks. 

..dirty 4 letter word..

You gotta like it when CNBC is highlighting DJIM stuff months later as "coal is cool" this morning.   As for yesterday's action, it was really no surprise that coal had a pullback.   It was inevitable after this recent kick up.   The dirty 4 letter word CNBC is using this morning is coal and it ain't going away as long as crude is on the mind this year.    Didn't we just say if you really want to get down and dirty have some coal?.   Actually, it was around these parts months earlier as you know.   Considering, we profiled coal as possibly the next big trading thing in early February, we welcome any pullback after seeing many introduced here double and triple since.   We've been selective in choosing a few, JRCC has gone from $14 to 50's, FDG, MEE have run nicely and we discovered PCX and ANR in the $50's.    Again, don't fret the action Thursday, just get ready to saddle back up one day soon, but don't do it guessing a bottom unless you are a full-time trader and can move around intraday.   We noted yesterday at 10am with $CRX at 976 a stall may occur for profit taking.   Well, it did as the $CRX fell to 961 by close.   Watch 955 as an level of interest noted yesterday to either bounce or exit.   Remember, we can't say sell or buy for that matter for obvious reasons..we can only lead and say what is on mind.    If you're trading these day by day, you may have used the alert to exit a few names in the commodity area and go clean into the weekend.   But,  if you've been holding a few for weeks it's no really big deal as you've generated nice gains.  

Anyways, a lot of noise this morning in the markets and it's time to start the weekend.   We noted a few stocks we're in yesterday. ENER and SCHN because steels held ground yesterday

We will do an in depth write up on the Haynesville Shale play we introduced recently this weekend.   There are more than a few plays and you'll have to decipher which fills your needs best as there ones to trade and some you may want to just tuck under your pillow.   As with coal this play ain't going away and in months they'll be saying Shale is dirty 5 letter word.    

Have a good weekend.... Anybody watching and enjoying Euro Cup soccer?....it's so much better than watching the market take its kicks!

Market train wreck.... still fine with us

Oil Oil Oil!...FED decision....falling dollar....underwhelming Tech forecasts....GS hitting their amigos' when they're down.....all helped lead to a 3% train wreck across the major indices..    No doubt about it, you could smell the doom and gloom before the opening bell!   For many people, the only thing they could do is pray that their holdings don't get hit.   Wishful thinking!    Basically, when mkt is set to open negatively on a very bad tone, you have to be prepared for a potentially nasty day and go defensive.      By going defensive, we don't mean by shorting or buying gold or T-bills.    When we go defensive, we trim any excess position or number positions to a comfortable size.     This is all still assuming that we are holding the best of the best plays before the opening bell.    As the day progresses and the day winds down, it will always become apparent which one of the holdings you trimmed earlier are bucking the market trend and you may add it back later on.     You may ask "what heck is the point of this exercise if you going to end up with a similar position toward the end of day?"     For us, this is just our way of dealing risk.  You never know when and if panic finally sets in and takes everything down.   Everyone has his/her own way of dealing the "monster down day" and this is how we deal with it.

To say this market is in trouble is just blatant ignorance.    Market has been in trouble for a long while and if it wasn't for the fact we have been sticking to the commodity plays, we wouldn't have enjoyed it either.      A series of disappointing reports and downgrades and breakout of crude just pushed this market right over the edge.    Yes, forget about that March low and you are now staring at a new low.     Even as a bystander, we can feel the pain across the board.  The casual newspaper reader must be thinking the world is falling apart, the headlines are scary.

With DJIM plays, story is different but it's eerily familiar.    Deja vu?    Most of the Shale plays actually finished in the green, a few steel plays showed resilience given the market condition.    Coal plays also closed near the high and we are encouraged that this group is showing good strength.    Perhaps, a turn is in place for the Coal group after the recent minor pullback.   The volume was low in these groups, no real sign of selling.   The game plan is exactly the same for DJIM and will continue to buy our favourite commodity plays on dips and ignore pretty much everything else.   

The question remains now is that "how much more bleeding will this market take before a bounce occurs?"    We can potentially bounce tomorrow but again, we are not interested in any beta stocks at this point.     We are also coming to the month end and there's potentially the "window dressing" action that can take place.    Just keep in mind, any "window dressing" will not come to the beaten down sector.  It realistically should come to where we've been.  

• The market, majority of sectors have no positive catalysts, the Shales (exploration & production), the Steels, the Coals....DO!.  It's simple you do want to be where bearishness is contagious or do you want to be where bullishness is contagious?