DJIM #18 2008

Despite the undeniable strength of the indices, the market,  some Bears are clinging on almost new daily interpretation of why this can't be happening.   The latest was evoked by what some, even some Bulls, may not have liked and that is how the markets pared their gains on Friday.  A shooting star on the SPZ seems to have given some Bears a glimmer of hope once again.   Oh, Please!.  How about the confirmed the DOW signal as the SPZ broke 1400 confirming the reversal in the DOW?.    Sure, the Payrolls shrank to 20k against the streets 75k consensus and indicates the recession is not really an imploding economic recession.   But, come on.   Lets' be realistic after Thursday's march up, are you not surprised profit taking would come in early even if this number was excellent for the Bulls.   We noted before Fridays open our view on the Payroll number, even if we got a bad number.    The shaving of gains Friday is irrelevant to us and if we get a further retracement Monday, we'd still be approaching this market with the same strategy and that is buy the dips.    So, after shaving the final tallies to +.4% DJIA, .3% SPZ and a small loss on NASD on Friday, the market still delivered an excellent week and that is all that matters!.    The FED has done everything, everything possible including getting into the act Friday by announcing further steps to stomp out the global credit crunch with more dollars and co-operation from the ECB/Swiss National Bank.    Simply, the FED is showing they are on the ball and even as the market goes up and fear is diminished, they are still showing they are right there to watch our backs!.     At this point the Bears could only be pulling at straws as too many things have gone against them and there is all the rate cutting consequences, the tax rebate checks looking them in the face in the coming months.    It's not a pretty picture.    Oh yeah and in the short term, it's good ole May trading time where it will be hard to draw up any volume to do any real damage heading into the summer.

Okay so onto this week.....last week notably, we had the techs lead the NASD to the market's leading index and the emerging markets in China and Brazil show some spunk.    One is showing signs of recovery , while the other is making new highs!.     As much as we have loved the Commodity trade in '08, we are enthusiastic to have the above 3 markets giving us more to play with!!.   As this plays out, our shadowlist will be generating a nice turnover or just grow into a shadowlist #2.   To keep your list tuned, follow the Alert-comments and Journal mentions to add and deleting should be obvious as you remove stale plays or sectors.    We don't need to constantly update, it should be obvious when you should remove themes like Gold/ stocks from the list as in the past few weeks to make room for new plays.   A few things regarding those emerging markets, we are not gonna go overboard now and think every stock in its sector will be going up as other times have allowed..eg last years China run.    Until, we have confirmation, we'll only know when we see it, we will be either very selective or just play the EWZ and FXI.   On a daily basis, we still expect the commodity plays here to give best bang for the buck from day to day.   You'd have to really wait a while on some individual Brazil/China stocks to get the % gains we all witness on either a shipper..coal on any given day.   With this mind and not to take away from what we know works, keeping to the ETF's in emerging markets is probably best at this point.

Anyways...the shadowlist is updated, a few notable charts and a list of potential earnings calls to watch this week.  Let's get it on!

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.

Not worried...

Of course, when you cash out most of your holdings earlier today, you shouldn't be worried today, tomorrow...etc..    Yes, market got sold down today and breadth looked quite bad.    Asian stocks tanked and that wasn't helping the mood either.     However, if you look closely, most of the commodity stocks held up really well...till the last trading hour that is.    Well, when you have a down day like today, all of the market commentators will jump out and give us the speech why this is only the beginning and why we are that many points off from lows.     The fact of matter is that taking some profit in the month of May has been a normal practice for as long as we remember trading.    Those traders from old school are almost trained to believe the "sell in May and go away" theory and any potential selling can exaggerate the effect.     This also happens in conjunction with the Cisco report, which tells us that the earning season is coming to an end.    So, are we doomed for the next couple of months?    Hardly!

Before we start talking about market collapsing and nasty down moves, we have to be really rational on the whole "what if scenario"!    Technically, we aren't in horrible shape and as far as we can tell, we are still a bit off the support at Dow 12700 and SPX 1370.    In our opinion, even if those two levels get broken one day, it is still not enough to cause any real panic as we think the seasonality factor will slow things down dramatically.     What do we really hope to see the next couple of months?   We like to see lots of drifting.    This may very well happen as we may be stuck in a pretty wide(1000 pt) or so range without making a substantial move.     Of course, we are referring the drift to the overall market only.     On the other hand, the commodity market, is still the profit generating market for most traders.     In a way, we are glad that market is being sold off today as we are really uncomfortable chasing X at $170+ or POT at $200+ these days.     The collateral damage from this market will bring down the commodity plays and that's just inevitable.    To us, we view it as an opportunity.

The plan is simple for DJIM!    Since we haven't had a down 200 point day in a while, people will get some reality check the next couple of days and come back to their "senses".   We feel this market may remain under pressure for at least the next couple of days.    Hopefully, this can create some buying opportunity from the commodity sector.    We are in absolutely no rush to get back into any play in a hurry.    We just want to get back into plays in a comfortable fashion.     At this point, there's no advantage of deciding one commodity sector over another as they all seem to be very strong  with coal, oil, steel, shipper etc.

Bottom line, there's no need to be shocked by today's decline as it is just normal volatility.     Today's action may seem extreme, but if you just go back a couple of months, today would seem like "business as usual"!     If you haven't been doing enough to protect the profit, today may be a good day to act as a reminder.     Just remember, we can always buy stuff back if market proves us wrong.

...making plans for the weekend...

When the market quietly reverses the day after a somewhat nasty late Wednesday charge, you begin to understand the big drop was caused by pure May complacency setting in.     Luckily, we've had some nice plays earlier in ANR, SNHY, MVL to get us through the week and can deal with doing little now.   There was no outstanding reason for that drop, nothing that seemed too matter much yesterday and that is why played in the green on the indices most of the day.   There was probably more reason to go down yesterday as the financials were under pressure and oil was gushing to $124.   Instead, we got an up day as the technicals took took over.   Right now, the SPX is within striking distance of many support lines 1385,1386, 1387, 1389 all have something behind them like last weeks lows etc..  Considering, we have no economic data of significance this week,  it is no surprise we drift along with no catalysts to trade off.     As we've said, we are very light in positions at this stage, mostly from profit taking and not wanting to buy these commod' rockets as the $CRX comes to recent highs.    This is one way and probably the best way not to become complacent.    We rather wait it out and see if the CRX can breakout as it sits with a NCH and just off new highs as of close before we decide to chase anything.   We may have no option , even though we really want a dip on our favorite names.    The way things are going, we maybe eating coal cakes for days as this group keeps on rolling.   We look at ANR and keep thinking this stock is so capable of pulling of a 3 day move like WLT, PCX have done recently.  This is one stock we don't a commod' dip because we think its potential is here and now.

PCLN, one of the few internet stocks we list showed it belongs there as it produced one of the best reports this Q due to global strength.  Raising of expectations is likely to come from firms in days ahead and we expect to trade this for another Q.   Gapping to 140+ will produce buying opp's on dips indays to come, we'd probably avoid chasing today unless we see more exuberance in volume than we currently expect.   We also have a market that will try to use any excuse to move and will probably overreact to AIG`s report.   It will be interesting to see where we stand end of day with this credit stuff once again a backdrop to the market.   The Armageddon cometh boys will probably begin to emerge from the sidelines and try to scare the pants off.    We`ll see, we`re in no hurry with weekend almost here....

Have a good one... 

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. 

Solid..

Anyway, you look at it....The trading day was solid and it doesn't include a disclaimer as in little volume!.  We've been alluding to the fact volume is and will deteriorate heading into the summer and so we can't put much emphasis into the volume day to day now.    In other words, a +130, +42, +15 is a nice rally, nothing less!.   Last week as the indices declined, we headlined, "Not worried" and heading into this weeks trading..."In other words, we're not really worried about the markets performance/ declines last week, we think this is all the normal course after a significant breakout".    Today's performance did nothing to squelch that belief with the IWM/RUT back at resistance with the potential to create a significant breakout.  The SPX back at the psychological mark of 1400+ is where we want to be while the NDX leads the market.  At these closing levels on the IWM NDX is where you want to see volume kick up to create a talked about breakout.     If we don't get the volume breakout the Bears will do their best to diminish the move.   Considering the way we've been grinding up, we just may continue to do so even on a breakout.  lol.  A slow burial for the Bears is just fine.  Maybe a few put a gun to their heads already as FDX, MBIA stories rebounded.

Nothing extraordinary to add today as all the recent alerted new plays continued to make new highs.  We are speaking of the SOHU ANR, SNHY, MVL, and even the BZP which we nudged a few times last week.    In the meantime if this isn't enough points pocketed, we have other tradeable opportunities stepping up as in RIMM and ENER.    As we said yesterday RIMM is long term again in our view.    It wasn't just the intro of the Bold device, it's the RIMM plan at analysts day that sparked a lot of interest.      If you were around AH's, you may have caught FLR with us for what is already a nice trade.   Management raised guidance to 6.25-6.55 from 5.10-5.50 on strength from all segments.  You don't have be a genius to understand this headline.     One sector though was priming up (Shipping plays) as shipping rate noise and as to why they are this high hit a few publications like FT.    Wow, what a shocker, we've only been writing about this scenario since DRYS was in the high 50's in March-April. 

Oh yeah, doesn't it feel like the sleeping giants are about to roar once again! .  Maybe its just withdrawal we are feeling from the Chemicals-Ag, steels, but with $CRX keeping its head up...who knows, we could be playing hard again very soon.

The premise behind DJIM has always been based on earnings and even in what is the worst of eco times supposedly, we are full of plays riding this methodology.

A Defiant Market....

Even as bulls, we sometimes can't help but be amazed by the resilience of this market lately.     Just when you think the market is showing weakness and a potential rollover is in the works, you get this incredible support that simply pushes away any further declines.    The final score for the plays on our watchlist has been eerily similar the last little while.    No matter how volatile they trade intraday, the majority of them seem to turn green before the day is up.   Is this getting old?   We hope not!

We had a couple of reports which really set the tone today.    FLR, which was alerted last night, gave a total of 24 points, of which 17 or 18 points can be had if you bought some in AH last night.  Buying at the open would not have hurt either.   Keep in mind, FLR isn't exactly a small cap so by getting this kind of gain on a day is very noticeable.     On the small cap side wise, we have CSIQ , which had a very good report and stock is instantly rewarded with a gap up and strong intraday gain.    This is the one we noted to watch for earnings along with SOL (reports tomorrow AM).   Remember, SOL guided recently and that's why we played in the first place.  Will they raise '08 again?  Technically, CSIQ is probably the best solar stock out there among the smaller ones.    Even though today's finish isn't exactly grand, we still think there's definitely more to come from this one.    ENER, the recent solar addition had another great day.    At this point, we aren't sure at what price level this one is willing to settle and so letting it ride may be the best strategy.   To top off the solar sector, the big brother FSLR had a new closing high above $300.    This move is about as stealthy as it gets because most solar traders were probably dealing with CSIQ, SOL or ENER all day.

As far as commodity plays go, coal sector had a group move and many of our favourite notched new highs today,  ANR continues to blossom.  In terms of other plays, we bought some V toward the end for a rebound play here.    There's good odds that the low from two days ago will be held before we see a rebound.     MR also looks like it's ready to move higher after three days of consolidation from its initial earning pop.   So be ready to get this early DJIM gem back in your book.    If you recall, many of these earning plays don't finish after their initial pop.      Just about every earning play we encountered the last while moved significantly higher after the initial move so we are inclined to buy on dips right after the initial pop.    It worked great with V, SOHU, FSLR.. and pretty much every commodity play out there recently.

Bottom line, it is ok that the indices don't make weekly highs because as long as the sectors on your watchlist are in play, that's all we can ask for

CPI at 830am. 

...cooling off

If investors were sitting on their hands the past few weeks waiting for a breakout and proceeded to attack yesterday, they were sadly trapped as those not sitting on their hands rightfully took their profits after being players for weeks.    Any other day, we'd consider such a reversal with a negative tone, but with the market really having no economic, no bad news yesterday..we simply look at it as a technical selling reversal.  The eco data was actually a pleasant surprise with the CPI coming in below consensus and putting a hush of sorts on the word recession.  The report coincides with the FED's eyes that there should be moderation in inflation coming,  but at this point during the uptrend in the markets you realize the market was expecting this sooner or later.     In Tuesday's Journal,  we noted we'd like to see volume to create a significant breakout and clearly we weren't getting that or the DJIA/SPX confirming the move in the NASD.     This was enough for the NASD giants..GOOG, RIMM, BIDU, AAPL say we can't lead anymore and their holders said screw this for today and created a spiral of selling interest that gained speed across the market indices, including the $CRX which was also breaking out.   The failure of the $CRX to hold or continue started to make the commodity plays we follow look toppy. 

The perfect storm scenario of breakouts everywhere was halted for the day, but what may have arrived is a reason to start buying the pullback at some point before we close off the week.    We don't think this pullback made the Bears overly excited, but we may give them some hope if we break Tuesday lows.   That's still about 120 and 25 points off on the DJIA/NASD respectively.  Simply, we don't wanna go there and without bad news it may be hard to reach this week.    At this point, we'd be looking at this as an opportunity to buy the dip in the next few days as many good plays started to look attractive again, this is especially true on any further downticks that look to be nothing more than some follow through action from Wednesday. 

Perfect storm?

As we tried to point out going into Thursdays trade following the rude reversal.....Don't sweat it, don't fret!.  We were quite content with the early action as their was no downtick follow through and instead a slow uptick.   But that all turned as oil was showing volatility and we got a big uptick!.    Why?.. oil traded close to record highs over126 early on, before sliding below $121 and boosting the indices.    It's been quite simple as the belief is if we get falling oil,  it will spark the indices as they play around breakout levels.   This is the oil pill the market wants, we're not relying on it or believe a substantial drop in oil will occur as the weather warms up.   Therefore, we were more impressed with the fact oil climbed back to 124 and the market continued its drive to break over Wednesday highs confirming our belief for the time being that oil does not need to be the driving force to go higher.  The NASD, SPX, $CRX and the still trailing DJIA that will confirm a nice break all gained steam as shorties covered at technical levels.    We've been alluding to the perfect storm, to us its $CRX and the indices breaking out at the same time.   Of course , we want volume, we got it in the commods', but know that will be hard to find elsewhere.   Oh wait, its option expiration!.  There's the volume as artificial as it might be, it will still counts.  We hope with further short covering happening as soon as we toy with breakout levels and the fact we're heading into a weekend will fuel even more of it to make the charts pretty with a volume bar!

If you still wonder why we bring up the $CRX so much, all you have to do is see yesterdays action as it leads our DJIM plays.  A precursor to action spreading in our plays.    Anyways,  how do you cool off the commodity action these days?    You chase them higher with volume!   No, this logic doesn't make sense but it is what's happening out there.    We call it euphoric action.       This is the kind of action where you get seemingly unlimited amount of bids in sizes and stock just keep on racing higher in the incredible amount of short time.    The average volume for this euphoric action period is way higher than the normal period and its no coincidence the $CRX is breaking out.    What it does to you is that it puts pressure on a trader to become a day flipper.     When action from some of the coal, , shipper, solar, or steel names get into such a wild and hot fashion, we basically take it one day if not one hour at a time.    We already know, we'll be buying pullbacks all summer in these plays, but for the time being thats the way it is as there is a different big gainer(s) every day.     Yes, it seems you can get some insane percentage return just by sticking to a few hot plays, you have to remember that this is all going back to the same "commodity theme" we've been preaching all year.

Once again, our watchlist is filled with green lights today and it continues to almost  feel to"too easy" these days.  That's what happens in a giddy market looking for the next stage.    We were a little bit cautious yesterday and we continue to be cautious today in spite the great performance of many of our favourites.    Remember, euphoric action usually does not last long and we find that it's better to trade intraday opportunities rather than holding onto big positions and hoping for big gains on daily basis at this point.   We're only cautious as to loading up positions and thinking we can relax this summer and just let stuff ride.   We're not cautious to trade. 

Option expiry day is here and we are looking for some more tradable intraday opportunities today until the day we get a confirmed move to the next stage as we turn these levels into support, not resistance.  Come on DJIA catch up!

Holiday weekend -DJIM#20 tonight

We have a holiday today here in Canada and some of us are just getting back from a weekend up in the country.  We'll do an in-depth journal tonight.  We'll be around during the day to trade with you.   Quite a few EPS from ships and solars to watch this week...take your time if a few are seemingly worthy of entry..selling on news a possibility.

DJIM #20 2008

Unreal, unbelievable run....  Just to think that we were actually dealing with a Bear Stearn crisis as little as two months ago simply makes any trader speechless these days.     We just couldn't think of any other working environment that gives you this kind of dynamics in such a short time.   Sure, we can't compare apples to potatoes but we are sure most of you can understand what we go through doing this gig.     So market goes from hell to paradise in 3 months?  You better believe it!     Ok, it isn't exactly like that!    When we look at the market these days, we are still seeing a lot of troubling sector and believe us,  many stocks are still in the "avoid at all cost" category.     So why is this market so rosy all of a sudden?    One reason we felt that's legitimate is that many market participants are still very bearish about this market.    There's simply too much money on the sideline for those who have a bearish view.    However, when you see the market going up every week and refuse to come down, even the most dedicated bears or cash neutral players would be tempted to get back in on the long side, perhaps with just one foot!     This is enough!   When market data is showing that we are NOT going into a full blown recession mode, everything that has been discounted to that effect earlier is no longer valid.    It's true that we may still see economy worsening and roll into recession, but the market participants don't care at this moment.     With the way the market behaves these days, you can literally be up 10% in a very short time even for a huge fund!  So why not buy up this market, eh?    The other reason for this unstoppable bull move is commodity!    Yes, this has been a money making, profit grinding sector for DJIM and probably all of the DJIM readers.    We were very adamant on this sector a couple of months ago and we are still pounding on all of the plays today.     As we recall, a couple of months ago we said this is gonna be the year of commodity.    As of now, we think this is gonna be a year of commodity that most of us will remember for a long long time!      Perhaps, someone will call this a bubble year for all commodities.    However, we think unlike the bubble years of technology and housing, commodities are very different in nature.     Many of us have never experienced a prolonged inflationary period but maybe we are at the beginning of one?    Of course, we can't jump into that kind of a conclusion yet but believe us, anything is possible when it comes to this market.

Now some sectors in review...

Shippers,  with EXM earning out of the way and DRYS set to report AH, we feel this sector is desperately in need of a pullback.    The further it moves up without a healthy pause, the more likely the group can take some beating on the next pullback.     We'd love to get back into some with sizes on dips though.    At the moment, the risk/reward is only good if we do intraday flips.

Solars, enough is enough, already! Lol    Ok, it seems it's never enough for these solars!   Our favorites have changed recently SOL CSIQ ENER... are just behaving like wild animals and we'd concentrate on these names.    At this point, there's no technical setup and the only spirit out there when comes to the solar sector is buy as many as you can!   Ok, again, we like pullbacks in this group and otherwise we'd only resort to day trades.

Coals, it seems this is the only commodity group that actually trades in a proper manner.   Also, this is the most under hyped commodity group out there. Our most recent add-ons to the group have been incredible led by PCX and ANR   We like its steady pace and this is the group which we don't mind adding on strength for a longer term hold.

Oil, any dip is a buy until the thing hits $145, which is cloe to Goldman's new target price.    As much as we hate this fact, it seems "cheap oil" is going to be nothing but a pipe dream from now on.

Steel, this is the same story as other commodity and price power is the main driving force here.    We like X, , MTL, SCHN the most but we also like the

Bottom line here, stick with the plays that work and don't wander off to other area.   This is still very much a commodity story.

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We've had a major reversal since preparing this mid-day as aggressive profit taking took place.  Many here were probably oblivious or didn't care what the market did in the afternoon as our consecutive alerts on CPSL from last Friday saw it not only gap, but explode further, up to 40%.  We'd look for an aggressive pullback to buy back.   As far as the market pullback, we all saw a similiar one last Wednesday, but considering this one is now the second one is the last 4 trading days, we'd be a little more cautious  and think maybe the market needs more than a day cool down like last week.   Jumping back in as quickly as last week may have to wait a little longer.   Still..everything holds as to what we'd concentrate on and unless we get break say 1415 on the SPX/ 12893 DJIA, we wouldn't worry too much.  Consider all these spirals an opportunity to get back some names you like sooner than later.

..what's the fuss, we were fuzzy on CPSL, CLR

Sure, the major market indices from highs to lows have dropped 430/ 73/ 31, DJIA/NASD/SPX respectively, in a 1.5 days, but we've had some of the easiest gains back to back thanks to alerts on CPSL and CLR yesterday.  Not only were they easy gains, they were continous throughout the day and excessively high giving plenty of potential to all of us at DJIM to get in on.  Oh yeah as in CPSL, we will wait to get back in on CLR.    The same can be said from the excellent Forum discovery of PDO from last week.    When things run like these, our greed does not get as excessive as the action does.     As far as we're concerned their moves couldn't have happened at a better time as the market rests and digests the move from March.    Rest doesn't always mean sideways action, it means pullback off a lot of profit taking when the run is excessive in a short period of time as it was now.   We noted before the trading day the market may rest more than a day it needed last week due to the fact Monday's reversal was the 2nd big one in the last 4 days.  It surely did as it fell at least 240/40 on the DJIA/NASD by 2pm.  The fall was precipitated by a break of the 12893 DJIA pointed out day before.  This was a technical retracement level and it had no bounce in it.   When this fails as in any support, you know you are going lower and should pack your bags and head for the bunker in the hills for the short term.   But, this wasn't even the case if you had your DJIM list up and saw very minimal damage at 2pm.   Basically what we were seeing was a disconnect between what we trade and follow and what the market indices were doing.    Maybe it would have been better if our commods' took a nice hit and they still may, so we could recycle back into our favorites.    If this occurs today..tomorrow, that's fine with us as we liked the action in stocks like RIMM and a few other techs on our list, even things like V that were hardly bothered yesterday and showed resilience while the market was dumped out.  We think if a bounce is in the cards very soon these types may offer the best short term upside trade as they would climb with the indices.  The commods' may not.  We'll see....

The market has clearly succumb not only to a beautiful move from March, but to record oil and a dead dollar rally in the last few days.  A lethal combination if you are in the wrong places with your trading book.   Fortunately, if your on the same page with us, the DJIM page, you should be well ahead of the game and use this action to start to look for a potential bounce coming.   The SPZ held up so far a few points off the 1415 noted yesterday, but it does not necessarily spell the end of this corrective trade as it sits near a lower trendline possible break.    No time to be a hero, just wait for a confirmation of a trend change.    The other thing to remember... is be selective always in your choices as we try to be on new stocks alerted. 

..already shaky

Yesterdays late afternoon developments should serve as a reminder to all of us that this game is full of surprises.  Being complacent and thinking this market will continue to run to the moon is just a trap.   We usually mention at least a blurb on some economic data to be released that can play a role, but who'd thunk it we all need to be around and set up on our trading platforms for the FOMC minutes yesterday.  We weren't and were quite surprised what we saw once onboard.   Maybe, we should have considered that a shaky market from oil might plunge the market if something of a surprise appeared in the FOMC minutes,  but clearly that would just be too much analysis for traders !.    The release of the minutes included that the last cut was a close call, inflation outlook was increased and several FOMC members said it was 'unlikely..appropriate' to ease monetary policy in the near future.   This sent the markets tumbling down, but it surely wouldn't have been this furious if we did not have an already shaky market due to soaring oil!.   Oil was the push as the market was standing on one leg the past few days.  It was getting quite wobbly in the morning and the FOMC minutes was the shove to spiral the markets downward.     We really want to say this is the pullback we've  wanted.  Unfortunately, this pullback has occurred on a fast spike in crude and Fed's economic outlook.   Basically, the playing field has changed once again and we need to be on our toes if we ain't gonna live by the "go away in May...." and continue trading.    Yesterday, we said don't be a hero.  Today we can only repeat it when it relates to getting into any new positions unless you just want to swing a few around intraday. If you're holding through it's quite fine as we are getting into oversold territory and it's not the end of the world.   Do consider selling some though into any rally.   Waiting for Oil price dips is what the market will most likely wait on to pounce and bounce.    It just might become too predictable and we'll start to see volatile days trading off the price of crude.    Geez, that sounds like subprime stuff all over again,  if we get close to that volatility.    BTW, it doesn't help we're getting noise on the financials again including downgrades the past few days. 

The commods' are still showing strength or at least one is every trading day.  Yesterday, it was coals early on, but we are not chasing at this point day to day as we'd love a pullback to hit here of substance.   Interestingly enough after yesterdays mulling, European markets saw commodity stocks surge to bring that market back up to flat early on.  Will see if this crosses the pond or will even continue in Europe.  Just watch $CRX for clues.

a blessing?

It is going to be one long summer if the market gets oil massaged tick by tick.  Watching the market indices tick upward or downward on every Oil movement was incredibly boring and frustrating while holding in a tight trading range.    Hopefully, this obsession fades some over time, but at this point its clear nobody wants to do anything or dare to go against oil.     Thursday's trade may have had a lot to do with trading desks being emptied before the long weekend and Friday may be more of the same unless we get a short covering rally of sorts.    If you were still short heading into a 3 day layoff after a big drop with the chance of news come Tuesday...would you not cover?.      This would be a blessing as nothing witnessed Thursday gave hope of a reversal.      Maybe it's wishful thinking, but it's the only thing we can see happening Friday to initiate an intraday trade.      Despite the modest green in the major indices, we were hardly impressed with the NASD pulling off a +16.   Reason is the action in AAPL, BIDU, RIMM simply continued to suck even after the big stumble this week.   Considering we always use these stocks as a measuring stick of sorts on the market, we were disappointed and left wondering wazzup?.     We're not going to get the Financials leading us out of this,  so we need the techs to do something to lead out of this oily mess and it needs to include the above.    Maybe Merrill Lynch is thinking this by raising AAPL target to $215 from $186 this morning..lol. 

Early in the week in DJIM #20 (below) , we discussed the possibility and need of a pullback in Shippers and Solars.   Well, we 're getting one..one that gained steam yesterday for quite a few familiar names.     The difference though is our plan to buy the dips was in a healthy market, not one that has been drastically damaged this week.    The playing field has changed since and so we're clarifying this buy dip strategy here.    We can't see ourselves accumulating these names just yet despite the big haircuts.    Of course, trading opps' will present themselves as bargain hunters will come in,  so trade them if you can watch them all day, just don't love them again and take them home with you for too long.    Letting this selling play out and waiting for the market/ individual sector to make a move up first is how we're approaching this.    The same can be said for the rest of the stocks in our watchlist.

Shippers,  with EXM earning out of the way and DRYS set to report AH, we feel this sector is desperately in need of a pullback.    The further it moves up without a healthy pause, the more likely the group can take some beating on the next pullback.     We'd love to get back into some with sizes on dips though.    At the moment, the risk/reward is only good if we do intraday flips.

Solars, enough is enough, already! Lol    Ok, it seems it's never enough for these solars!   Our favorites have changed recently SOL CSIQ ENER... are just behaving like wild animals and we'd concentrate on these names.    At this point, there's no technical setup and the only spirit out there when comes to the solar sector is buy as many as you can!   Ok, again, we like pullbacks in this group and otherwise we'd only resort to day trades.

Have a great long weekend!