Wall of worries...

Usually, we use the phrase "climbing a wall of worries" to describe a healthy upward rally in a bull market. Right now, we are wondering if the phrase is also sort of fitting in todays environment. ` Looking at the action today,  it just felt that yesterday's bull move never actually happened.   Frustrating for those who are looking for more upside?   Yes!   Is it healthy though?   Given the reasons for sell off today, (profit taking, weak earnings, bad eco data globally, Washington not so clear (stimulus, Bad Bank), we think it is healthy and legitimate, as much as the move yesterday is legit.   It doesn't make much sense now, doesn't it?   Well, it actually makes perfect sense in a distressed bear market.

For starter, the reasons for getting a rally from late last week is the " bad bank idea+ stimulus pckg". If both ideas are called into question today, then this was the perfect time to lock in profits.    We have to say though many equity plays we follow are currently trading at a much higher level than they were a couple of days ago.    Using the doubt and cast of shadow on policy makers indecision to lock in some profit was the them.  Complete absence of buyers today.   As far as some of the financial issues are concerned,  we let go quite a bit yesterday as with everything into the strength as discussed in Journal.  After 4 consecutive green days, you know the odds are against you if you hold too long in this trading environment.    As far as the commodity sector goes, it was pinched as discussed (USD$ continued strength after FED), but the damage isn't nearly as bad as the indices suggests,  the Financials were just  ripe for a knockdown thanks to negative headlines and Obama’s critique of Wall Street later in the day.

The trick in this market environment is that it's almost always better off to buy on weakness as oppose to chasing the strength.   Today, you can almost buy anything at a way more appealing price than yesterday, especially with the financials.   This market is currently being led by the financials, in either direction.   The financials, are currently being led by belief whether government will do something to help them survive.   Ultimately, market participants can only do so much in determining the course of this very crucial industry. We feel, whatever the course of action the government takes on the financial industry,  it can only help. The only thing we traders can do at this point, is to avoid any unwanted risk by not playing those risky entities like Citi or their European ADR equals.

Technically, even though we broke the just shredded and important 850 SPX level, it doesn't necessarily mean that were go straight to 820 SPX, the next support, right away.   If it does, we'd be very surprised and we'd be on the buying end aggressively.   Some commods’ like Energy Shale plays (CHK HK GDP) showed some unusual strength today, despite weakness spread throughout the services (HAL SII) and the domestic integrateds (COP  HES MUR),  so we are keeping a closer eye on them.   Tomorrow is the last trading day of the month and we hope we close the week off on a better note.  GDP number on deck.