A Sarcastic Pullback...

Maybe the market is disappointed that Microsoft was not able to pull through a deal with Yahoo, index traded down most of the day and ended near the low of the day.    So, market had a pullback, right?    Well, only if you aren't trading the DJIM stuff!    To all of us playing the DJIM market, today might as well be a triple digit gainer day.     From the beginning of the day, we were actually hoping and looking forward to some dip buying opportunity when we saw the softness of the index action.    However, it doesn't take long for us to realized that we better chase some action or else we'd be sorry for our inaction.  Are you following the $CRX we noted, support of 907 was regained late last week and today it gap opened 930!.  To put it simply, today's a superb day for majority of plays on DJIM watchlist.    We were very busy buying high and selling even higher.  Yesterday, we said the commods' will still offer the best bang for the buck on any given day....did it ever this day!   It is really hard to imagine what some of our plays would do had this market been in positive territory.

Still, we are glad that this market has this much needed "pullback" occurring!.    To be honest, this market does have a little over heated feel going into the week.    One day worth of pullback isn't probably going to alleviate this overbought feel but it's a start.   It relieves much needed pressure for this market to pullback.     Our original plan was to use any market weakness to get in on some of our favourite plays but this isn't the case today.    Basically we know how this goes, when a sector is hot, there's nothing to stop it from going up.

MVL, we also added this play and consider it a story stock due to the Iron Man flick that made 100mln over the weekend.  Its first self produced film release.  This opening guarantees a sequel to go along with Thor, Captain America, Avengers flicks in the next few years. We've traded this years ago on the same sort of hype and recall it being a nice story mover.   It also reported EPS and all is swell, so it fits here.  Anyways, it doesn't hurt to look beyond the obvious plays and play something outside the box once in awhile.

Today's strength comes from pretty much all of the plays on DJIM watchlist.   Ok, there's really no need to point out the gainers one by one because one just needs to only look at the watchlist.     Coal group had a boost from of course the CRX, but also the multiple price tgts increases for WLT and a EPS report from the alerted ANR (yesterday alert) that popped in the afternoon nicely to almost $58.  This is the group we liked the most from commodity sector from late last week if you remember.    Oil stocks also had a big day because we had another strong showing from the spot market.    Basically, it pays to buy oil stocks on weakness.

Today's the day which proves what happens when you trade the "right" kind of group.    Tuesday we have the CSCO report to watch for but we think Cisco hasn't been a factor in a long time.    But as we see with MSFT/YHOO, the market will use any excuse to either sell or buy up a day.   In any case, we are sticking to "buy weakness on a slow performing day and chase strength on strong performing day" with respect to our plays.  

..What can we say?

Things are just peachy, you can't say it any other way if we're all on the same DJIM page!.   As the trading day kicked off, the indices gapped lower and so we got more of the pullback we were pulling for here.  On the other side, our side, the $CRX was gapping higher signalling our commodity laced list was going to be just fine for possibly another day.    Slowly, but surely the list was getting crowded with green in the morning and we were getting 2 for the price of 1 special.    A pullback to ease the effect of the recent rally, an opportunity to test supports and eventually give us more plays than just the commods' in the days ahead.    In the meantime, we're riding the commods' to what can be a test of recent highs in the $CRX 970's and eventually possibly switch over to the rest of the market when/if the commods' are running on fumes with cash in hand.    But, we're not waiting for fumes, we're taking profits on strength as this carries on.     It could be the best of two worlds if the $CRX stalls ...out of one area and into the another to catch another move up somewhere else.    Maybe the stock planets will line up this way, maybe not...   The SPX ran a successful test of the recent break point of around 1397 and end of day was knocking close to last weeks highs.  So, technically its all fine and dandy.    We already knew CSCO would be somewhat irrelevant this Q,  MSFT proved the mkt was only concerned by what some still consider wrongly MSFT peers...IBM, GOOG, RIMM.    The only thing that mattered is that CSCO report would be clean and on the surface it seems that way, judging this book by its cover might be enough to get through this and the fact CSCO isn't the holy grail,  but if you look under the hood every primary driver of this company is experiencing slower order growth.    Oh well, not our problem to decipher, we're just going to react to the markets voice and take it from there.

Let's not forget the importance of any trading day and that is take your gains, slice and dice, do whatever you need to pad the accounts.    Not everyday is gonna be a SuNHY day!.. The good thing is no matter how extended some of our listed puppies feel, we've had new plays to toss out that are giving potential points galore quickly the past few days....ANR up to 5 (ANR, likely to become #1 coal here...alert section)( SNHY 5, MVL 2+ in just hours.   There's nothing like a hit and run when you beat the herd and get in early, you then sell to the herd and regroup and get ready to buy a pullback...recycle

a few blurbs this am ......strong eps from a few of our recent O&G plays...RIG, XCO and CLHB.  CLHB on the surface looks best opp', but remember being the first in a stock following eps could leave you stranded on top if you buy the gap.  We're just reading the shiny surface (headline) here, not whats in the report or 9am cc.     The shippers could be worth a strong look today.  SOHU cut at Deutche to hold.  Funeral reception for good ole buddy, SNCR is at 930am.

DJIM #19 2008

It is what it is!   Some market participants have chosen to cash out going into the summer.  You can blame AIG for the pressure on Friday, but what you really felt is that things will start to get slower from this point with volume marking one of the years lowest days.   In other words, we're not really worried about the market's performance/ declines last week, we think this is all the normal course after a significant breakout.   For those of us that love the market action more than any other gig, we are going to stick around low volume summer or not.    Simply put, this is where we belong!

Now that the earning season is over for big caps, what do we expect going forward?   Of course, we'll have quite a few small to mid cap companies reporting and we'll definitely keep an eye on any new opportunities.    Last week, we had some good reports from ANR, SNHY, MVL, PCLN, all should continue to provide nice tradable opportunities going forward.    As well, you can add ENER, MR to the DJIM shadowlist to go with the ANR SNHY MVL new entries.  As far as the big picture is concerned,  we are continuing to stick to the same theme.     This might sound boring that every week if not every day we have basically been talking about the same theme.    However, until the day this theme no longer works, this is the way it's going to be.    Right now, these commodity plays are just invincible.    Despite the fact that many of these commodity plays have ran up so much, there still seems to be more to come.

Coal, not only are most companies we follow are beating the current quarter handily, they all have indicated in one form or another that the demand for coal is only going to increase substantially for the next couple of years.   Some of the companies have already increased the pricing for their product and the pricing pressure is only going to get better.   If you compare this sector to other commodity sector, coal plays have ran up the least so we think this is the group with the safest upside potential.

Oil, nowadays, the talk is not if we will get to $150 Oi, l but when we'll get there.    You can't help thinking that if we have really entered a new inflationary era due to the ever increasing commodity prices.    Generally, consumers are wealthier now than 5, 10 years ago and this is especially true for those developing countries.    The demand for oil is definitely off balance these days because most of the crude was consumed by industrial countries a few years ago.    Nowadays, even the developing nations are fighting hard to secure new oil source.   We simply have to accept this as a fact and deal with it.   We like some of the oil plays especially when they were being sold off on minor pullback.  An exploration  play like BZP is in a perfect position and we'd expect in the weeks ahead for it to increase its reserves numbers which will push the stock higher.

Steel, have you noticed that despite the so so earning reports of some steel companies, they continue to make new highs on a weekly basis?    This is almost as if every commodity sector is tied together.   Raw material prices are going higher thanks to the recent years of global economic boom.    For those who have never been to the China or India or Dubai.. you'd have no idea how fast things change over there.   Steel companies have pricing power, period.    Again, same as the oil plays, a lot of the steel plays are prune to quick pullbacks and we'd love to do dip buying in this area.

Shippers, we believe it's entirely possible that these plays can eventually try for last year's high.   TBSI kicked off with a very good report and it was rewarded with some good reaction.    We feel the difference between trading the shippers this year compared to last year is that we are not afraid to buy on pullbacks this time around.

Solars, it is hard to believe,  but some of the solar plays have made new highs recently.    Not all solar plays are equal though, plays like SOL, CSIQ, FSLR, ENER are getting more momentum than others.    In the coming week, we have CSIQ and SOL reporting, so we'd keep an eye on these two's reaction.

Bottom line, besides the obvious commodity plays, this market still rewards those companies that achieve great earnings.    We have a handful of companies to work with on our watchlist and we have quite a few choices to work with on a daily basis.   If this market is going to behave the way we think it's going to behave this summer, this might just become one hot summer for all of us.