..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.

..cards on the table..

Before the open tomorrow, we'll have many of the cards turned over to indicate where we're going.  The way today went , you'd think the downward bias will continue as the Economic data consisting of the CPI, Housing starts, Retail Redbook is unveiled and digested.   It seems to be too easy, too convenient to assume today's reversal will continue tomorrow as all the charts from the SPX to IWN have a narrowing >>>>> triangle formation looking more like a downward break coinciding with the big Eco' data day.     The trading programs must be ready to go.   In either direction.   To sell the break or will it program buy if a threat comes on the lower channel of the symmetrical triangle?.   Considering this market is so unpredictable, who knows what tomorrow will hold.   Today, we probably had a trap and tomorrow it might be reciprocated.   Who knows!.     As for today, the QQQ's already broke down just after 2pm in fast and furious fashion, only to be pushed back to the lower line of the triangle following HPQ's EPS after hours.   We're not putting too much on the prospects of HPQ rubbing off on the other techs and resuscitating them all by it's lonesome.   Today's gap was erased quickly, the commodities driven market today soon faltered as this only brought on more inflation fears.   With oil kissing $100 those $600 stimuli checks might not last too long. 

Yesterday, we led the Journal off with the Chemical/Agr'si because they were trading near 52 wk highs.  A few got up to those peaks and actually held the gap up opens.   Considering how fast the move was today and with the potential of misery in the market tomorrow, this is the first place we'd look to go short in if you haven't yet during today's reversal.    Yep, you can't pick sides for too long in this environment.  

The Coals also exploded with FDG leading the charge to a multi year high of $50 and change.   We've noted the past few journals of buying the dip, including after GS's downgrade on Friday.    These guys can do some consolidating now as well.  The idea of buying a dip is not in the cards in respect to a potential overall market hit tomorrow.

VLNC had a nice volume day and hit the 50% mark since being alerted to 8 trading days ago.  Too bad the truck wasn't loaded with it, tomorrow would not seem so important... GNK up over 10%, CLB should be watchlisted for a sunny day,  if you haven't done so yet after last weeks note on them. 

A clear head for tomorrow is the only option....we'll update if necessary before the open

A welcomed pullback...

We are glad that the indices pulled back 'some'.   It definitely takes some heat away off the overextended rally we've wanted to avoid.    Oracle's earning tonight isn't too inspiring and coupled with the always potential negative economic reports, we may see some further pullback.  This is all good news in the grand scheme of things.   One thing we may simply see Thursday is a disconnect between the DJIA and NASD off ORCL, if ECO data doesn't hurt the whole market.      The reason we keep saying this 'good' is that the further away we are from 12700 Dow and 1380 SPX, the less pressure it is to buy on the dip.     Market is actually in an interesting juncture here because we think it would take a lot of negative headlines to push this market below last week's low, which is still 700 points away for the Dow and 65 points away for the SPX.     That is a lot of ground to cover which means the chance of it happening within the next little while is slim unless something dramatic happens.  Oracle is not dramatic.

The thesis of DJIM here, is to buy on weakness while trimming some off on strength.    Unfortunately, the trouble we are having lately when it comes to work this thesis out is the fact MOST if not all of our favourite plays just refuse to come down this week.    If you look at today, and from the watchlist which we posted over the weekend, over three quarter of the plays still ended up green!   Takeaway the banks, which is something you can't play every day and the list is looking even better.   This is actually in fact scary because you can't imagine what can possibly happen to these plays if we are up triple digits.

What can we do?   Basically, not having any positions in your account while watching some of these plays like X, CLF, EOG, BZP, RIMM, AAPL... rocketing away in a down day is simply, unsettling.    So, at any time, we'd at least carry 100 or 200 shares of each just in case we have a type of day like today.     Honestly, without looking at the final box score, we really couldn't tell if we had a bad day simply by looking at our primary watchlist.

To review some action here...

Oil, today's surge in crude price not only broke the short term down trend, but it feels it has legs to challenge its recent high.    This is shown in pretty much all of our oil plays here.     We like EOG, BZP and HES the most as they are pure play here.    BZP also has a fresh breakout and notched a new closing high, the technical looks very good on that one.    RIG is another one we are now watching in addition to the above ones.

Steel,  this is the group which we are currently in a love/hate relationship.   We love it because it is the absolutely best performing group out there.    We hate it because we simply don't own enough of their shares and there has been literally no dip opportunity to add in the past few days.     This is really a pity because the higher it goes without any pullback, the more likelihood we wouldn't buy on its first dip.    In the group, we like X, CLF and STLD the best but just about every other name is also kicking in the sector.  This is the one sec you've noticed we've stuck with as the commoditity crunch came last week and our most mentioned X is becoming a darling with CNBC talking heads and last night it was Cramer pet rock.  Hopefully that doesnt ruin the group.

Agri/Chem,  as early as this Monday, we even had the idea of shorting this group as the technical picture just looked downright awful for the group.   However, one pre-announcement from MON changed all that.    The sentiment is again that this whole group will crush the number and guide higher.    We'd be very aggressive in buying any dips in this group including MON MOS CF and POT.    However, as most of you have noticed, there really isn't any dips offered in this group in the past couple of days so in a way we are kind of hoping market pulls back some again tomorrow.

Shippers, this is another area which we are taking some interest lately as the prior downtrend seemed to be over.    We aren't being aggressive in buying up the strengh last couple of days but we are rather taking opportunities to add when they get sold off along side the market.    We like DRYS the most but we also have EXM TBSI on the watchlist.  GNK another we may consider that's been here before if the sector runs and you want to purge.

Solars, this group has take on some very nice gains the last few days and we couldn't help but wonder how much further it can continue up.   The only play in the group that really interests us is FSLR so when it stops going up, we generally just wait and see what happens next with the group.

Techs,  not all technology stocks are the same and it pays to follow what is going on in the market right now.    We are staying away from the internet group in general except for an occasional intraday flip from the likes of BIDU and GOOG.    We'd be playing some RIMM/AAPL but feel the recent surge in price has been too much too fast.    RIMM's eps is only four trading days away so it's best to take it lightly at this point.

Other than the plays above, we also have ISRG, V... FDG JRCC (Coal plays), AEM (gold) that are performing well in this market.     In addition, it's getting closer that we can also give GS MS type a try on any further pullback.    Bottom line, we have some economic reports tomorrow that could give this market some cause to move and if some of our favourite plays pullback (keep our fingers crossed), we'd be there to lineup the bids.   Keep in mind, nothing is for certain in this market so we'd keep our sizes relatively small and spread out the purchase just to be conservative.   Lots of names in bold here, but that's simply because things are working off the list.