Underlying bid prevails today as the bigger fish go fishing...
Just some scattered trading thoughts, mostly due to fact many aspects of this market/ plays remain the same since late last week.
Two characteristics of the market still showing,
1) Shorts are NOT starting fresh shorts due to upside risk of news. Ones that pressed with downside were left dazed and confused. Also we still feel the Hedgies/ Institutions, MF’s pensions (whales) are chasing equities to pretty up their books month end/ Q end.
2) We kept mentioning the underlying bid providing support yesterday, we thought and got it in the morning as we extended higher (helped by durables, housing) after not such a nice close on Tuesday. We alerted in the afternoon, we were aware of Whale buying the Industrials in the morning (this spurred by eco‘ data), the idea was they would come into the closing broadly. Remember, this is mostly the time whales buy, this is why last 30 minutes to a close is such an important ingredient to the health of the market. Besides, we didn’t think the low volume downside to under 800 or the Treasury auction news was all that important. Other news providing some headwinds was Trsy asking for authority to seize hedge funds and worries they won't just let banks leave the TARP in near-term. Almost to the minute of alert, we got a V-shaped bounce started which scurried out any shorts that pressed into this downside move thinking this rally was broken. Again, the underlying bid is there for now.
Remember, instead of scurrying around the find a stock that may work during/if we get a big move such as this 140DJIA +reversal in minutes, just go with SPY/SSO or even better go to JPM/GS to get the most out of a move. We’re having some trouble getting through ~820SPX area, but this kind of close will make everyone think twice..the bulls (encouraged ,confidence) and bears (losing faith, jittery). This is looking like more digestion above 800 before a move higher, instead of indigestion. A meaningful break of 820 very possible tomorrow. *eco data tomorow morning.
Sec's
We had short covering early in the steels , again X leading the way. Considering, we are about a week into the inflation linked equity trade, we succumed to quite a bit of profit taking as the broad market sold off. Always remember, if your stock/sec has been fastest to the upside, it will be one of the fastest down as the broad market turns. This trade will have hiccups, so as we answered in the forum last week, everything is still a trade, not an investment, so take profits along the way. We've all learned the past 12+months this a traders market. As far tech/Naz related stocks, we had SMH $SOX breakout after the opening bell, but it got taken down with the tape. $SOX, we'd like this 230 broken convincingly to attract more interest, including ours to go into the high beta's stocks.
More tailwinds than headwinds...simple for now.