The bullet points to tonight’s Journal relate solely to what we alerted in the afternoon as they are the most important trends visible. It is also what we were crying for in the late week’s trade when nothing moved in our trading universe, yet stocks like DIS were making new highs and creeping the DOW 30 higher. Today a wide range of mid-small caps from our shadow list performed very well….from China (HEAT UTA CAGC etc. to Casino’s ..LVS WYNN (thanks to Dubai 10bln resolution) to commods’, notably steel..X..
First and most important is the small cap index was outperforming, thus DJIM shadowlist and finished the day to multi week highs (+1.5%). Second, the economy sensitive sectors, notably the transports up 1.7% and a break to new 52wk high and through >4100. The SOX closed right at 340 and is not just yet conclusive of the daily double we are looking for further upside. Still, we closed at 1114, another new closing high on SPX, yet off 1119 intraday high. C ’s larger than anticipated capital issue made the financials lag as this left some overhang, still other important names made a nice recovery later in the day as DB made positive comments that helped improve the tone and morning’s weakness was bought up.
Close, but no cigar just yet to break north of 1115/1120, setting up for FOMC 16th to settle the score or just the anticipation of not much change to break north before the decision. At this point, you cannot trade on your heels in anticipation if the FOMC statement language will change, even after the recent strong jobs report. Minutes down the road may play a bigger role. We think Bernanke gave enough clues recently that no big changes will be present (sorry Bears), yet some tweaks/adjustments should be inevitable after the strong jobs.
We just can't picture the FOMC in grinch mode and pissing off vacationing important trading players/ desks.