Chemical reaction...

The trigger earlier was a nice report from MON, a report we noted to watch in the previous Journal with secondary plays in tow. Unfortunately, the market was just not able to gather any momentum outside of the oil, chemical and mining area.    Semi stocks also got hammered today but fortunately we haven't had a semi stock on our watchlist lately.     For what it's worth, most of the stocks on our watchlist had a decent day.    So what can we conclude from the action today?   You want to be trading the stuff that is still working.

Tomorrow's job report, assuming it's decent, should provide some relief to this market in our opinion.    Market is really in need of a bounce and it wouldn't surprise us if it shoots up because of a bullish job report.    Basically, this is what we meant by  "more of the same"  trading environment starting the year.    Just when you think we should test the November low, we may just get a hard rally over the next week or two if we don't break Nov. lows.

Regardless, lets look at some of the stuff that are working today and recently....

Chemical biz, as long as the earnings are exceeding the expectation, there's no reason to believe  this run-up is over.    The group (MON, AGU, CF, MOS, SYT, TNH...) had a big year in 07, it's looking probable that the group can carry the same momentum into at least the early period of 08. SYT, is a new name we tossed out into the mix and it didn't disappoint closing at highs.

Solars, the one thing we have to remember is that we shouldn't get too greedy with some of the volatile and speculative names.   It doesn't hurt to take some off the table and reload when things are calmer.  Thursday was definitely a day for the cheaper alternative energy plays as AKNS HOKU DSTI etc.

GU, this is a play we are putting on our active watchlist and started a position earlier today.  Briefing mentioned it after our note by throwing it into a mix of the names above.   We think this area may deserve some more attention now that the oil price is hovering around $100.    Based on its action today, we think it has caught some traders attention and we are hoping that the momentum will pick up from this point on.

SDTH, this one can trade in a volatile fashion but it does feel that its trading path is going higher.    You can take advantage of its swings to trade around a core position.   Friday is the day that will determine if it'd be added to IBD100 or not.    In our opinion, you'd want to buy dips regardless what happens tomorrow and remember this is not a one trick pony as in being a pure IBD play only as it is in the AG/Chem mix of names.

China plays, it seems some of the Chinese plays like CMED HRBN  have been doing really well recently. Throw in the IPO name VISN as well now. We are also keeping an eye on some of the older favourites WX, EJ, STV, EDU just in case they get a bid too.

Friday is likely going to be a very busy day and we'll be looking forward to it.  Today was a day you wished the market closes at 1-2pm, hopefully, today we're not wishing it never opened after the report comes out.

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.

DJIM #7 2008

It's just simply getting very technical out there.   Although headline news may dominate the movement of a particular trading day,  the overall movement of this market is becoming more range bound with the underlying downward bias still holding.    Things are tightening up on the technical side and we feel a move is coming sooner or later to break the latest range.   The more likely scenario recently has been a break to the downside and a test of last week's low just under 12100.   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. http://www.nasdaq.com/econoday/calendar/US/EN/New_York/year/2008/month/02/day/18/daily/index.html

Quite a few earning reports and some economic news dominated the pace of trading last week.   Even in this recession fearing trading environment, we still have market participants speculating on earnings reports/guidance to the long side.  BIDU FSLR PCLN and even the CMG, we noted before the Friday open as a possible trade after the initial sell off.   This goes to show that speculation money is still out there.    This is definitely good news if your trading time horizon is no more than a couple of days at a time and you don't swing with huge bets.   After all, this market is only rewarding those with a quick trigger and a neutral mentality.

At DJIM, we are sticking with our recent theme of "long the good eps winner on weakness and short the crappy plays on strength".    Fading the strong market move in either direction until a major trendline gets broken should remain the theme.    Basically, this market has been trading between 12200 and 12700 over the last three and half weeks and we feel one of those level will get broken eventually.  The SPX is about mid point in a narrowing range for the last 17 trading days since Jan lows. 

For now, we are trading both sides of the market so we don't get completely left out when a strong move occurs in either direction .    What we aren't willing to do at this moment, is to commit large amount of capital to bet on any one direction.    If you want to minimize risk in this kind of environment, you just have to accept the fact that you have to churn to make a living at this point.

Chemical/Agri.  the reason we keep mentioning this group on a daily basis the last while is the fact this is one of the few sectors that is still trading near its 52 week high range.    With some names trading at a very decent P/E and a majority forecast of strong growth the next couple of years, we'd still be pounding on the long side of this group when opportunity presents itself.    You really don't have to trade every single name of the group, but to trade the ones that represent the sector best like POT MOS MON CF etc.

Solars, we'd remain very selective in this sector and pretty much stick to the saying "what's good for FSLR is only good for FSLR".    Trading a solar play that has a great outlook is less risky than trading those that don't.    If you are long those solar names that were being dumped on their earnings report, you'd likely suffer more pain once the sector pulls back meaningfully.  Citgroup upped a German solar to BUY giving a favourable outlook on the sector today.

Coals , just like we said the GS downgrade could play havoc and also produce more opp's to buy the dip.  Some like ACI, MEE took it on the chin, well actually it was a low blow. We all know most stocks in a particular sector, even if not included by name in a downgrade suffer. One that did not is FDG.  After trading it here now for a few weeks, we'd have to say there is more involved here, as in strategic possibilities.  We'd stick to FDG , MEE and JRCC for a more volatile cheaper play.

Shippers, the recent surge in DBI index, as well as earning anticipation have caused many popular names in the group to move a substantial amount off their recent lows.   After a couple of key name's reports late last week, we noted to be careful with the exuberance especially off DRYS big sounding beat.  We feel the run-up may need to consolidate for a while, especially after the fade witnessed.

ILMN, CMP continue to show strength. FSL is coming back to be picked up again.

If the Footsie(FTSE) can use todays strength which evolved from the banking stocks prospects later in the week and carry it over 6000 by the time we get started tomorrow, we could see a nice follow through on top of the futures we see now.  Qatar also said it has $15 bln it wants to put into Euro/US banks over the next year.  Some financials would not be a bad idea to trade. GS, MER etc. 

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...

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.

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.

No biggie...

As brief as it was, market today did break through 12700 Dow and 1380 SPX.    We know from a while ago how powerful and how meaningful  these resistance levels are to traders and their psychology.     The fact traders were not seeing a significant follow through after we broke through caused a wave of profit taking.    In the big picture, this is ok and it's not a big deal that we didn't close near the high today.   In our opinion, there will be more attempts to break those levels in the coming days and one of those attempts will break it cleanly with a rush of buying.      Also, the first half hour of trading action from the resource based plays was just too crazy and difficult to hold onto thanks to a flurry of upgrades.  The gaps were gifts to take down positions.     

Lets take a look at a few sectors here...

Coals,  we have FDG, JRCC, a rejuvenated MEE, and WLT now as our main coal plays and all of them exhibited a similar trading pattern today.   They all broke to new high earlier before retreating later in the day.    The catalyst for profit taking was ACI's mid day guidance call and we think this one is nothing more than an excuse for profit taking.    In fact, we'd be ready the next day or two to pick up some shares back if opportunity comes.    Again, we like this sector very much as pricing power and demand is extremely favourable for the group.

Steels, even though most of them did not close anywhere near the high, the common theme is that most of them notched a new high intraday.   X, STLD,AKS, CLF (coal as well),  all hit new highs.   This is one powerful group and expectation is very high from the group.    We are still trading them aggressively but we reduced our position sizes quite a bit.    Basically, trading X at $140+ just isn't nearly as comfortable to us as trading it at around 115 when first introduced on DJIM.    There hasn't been any pullback for 6 or 7 trading days and from our past experience, we have to be cautious at this point.

Agri/Chem, this group also is trading near the high on the back of MON and MOS earning.   POT earning is toward the end of the month and we think there's still room left to trade.   We'd go aggressive on dips and light when chasing strength.  This has worked very well recently and we'd go back to this strategy.

Shippers, even though earnings is still quite some times away but we feel with the recent activity in resource sector, this group is getting more attractive by the day.    We still like DRYS (thanks Barrons for 4 point gap) the most with TBSI closely behind.    In this sector, it is not necessary to play all of the names, you just have to stick with the best one.  Also, as the steels, coals get upgraded, we think it is a matter of time before they start doing the same to the shippers.

Solars, today's the first day where the group is showing some weakness.   We'd be patient and will be looking to add little bits at a time over the next couple of days.   We are eyeing 9 ema as a possible point to rebound.  

Time after time, as much as we like to move away from the resource plays and into some more technology oriented and other eps related plays to take full advantage of this rally, we still can't help but notice that we end up going back into the resource plays as our biggest trades.     Seeing is believing, whatever gets the most attention these days also gets our biggest attention.    At the beginning of the year, we had a feeling that this might be the year of commodity for DJIM.   So far, it is turning exactly into that.