DJIM #13  2009
Monday, March 30, 2009 at 08:08AM
Demi/ YourPersonalTrader in Financials, TAILWINDS

On the back of this rally,  we've outlined consistently the tailwinds are outweighing the headwinds and so let the beat go in and trade with a bullish bias.   Unfortunately,  this weekend we've got the one potential headwind (D.C!).. "Unfortunately, this is a D.C sideshow the market has to deal with on a daily basis now".    Instead of waking up to continued M&A activity on Monday to keep the market rolling,  we've got that D.C cloud over the global markets as they talk tough with GM/Chrysler.   In reality this item goes hand in hand with the things were ' tougher' in March banker comments from late Friday (still ,NTRS BAC said there are tentative signs of bottom in economy during meeting but this not really reported) and thus the 2-4% downside globally.   SPX held 790 overnight.   At this juncture in the rally,  we think this reaction is more of an excuse to take profits.   This exaggerated move might may turn out to be a buying on the dip opportunity.   If last weeks underlying bid/ support takes advantage drops is any indication,  the market should shrug this off.      Nevertheless,  we'll avoid the initial sell off opportunity to buy into and just wait for more headlines.      This is going to be a rich newsflow week and we expect volatility intraday Monday through Friday!.     After taking advantage of the inflation- linked trade last week,  we're in no hurry to add early this week and instead turn our focus on corporate earnings.    After all the positive financial newflow and 'hints' of stabilizing economic data it all winds into the upcoming corporate earnings season.    All the momentum and good breadth seen is at risk  as all eyes are on 1Q reporting season.

Besides,  the wildcard play on commodity equities here,  we have stocks like EBS MYGN  that should withstand broad selling as their sec's are usually quite immune.   We also added STP  in hope the solar 1 - day frenzy has any legs,  we said this China paper will do nothing for U.S based Solar co's on the revenue front, plus the budget is not so great so far.   Still we went with the STP  ADR despite all the negatives,  even a 'short this play' call from FBR.     We think it acted well late despite this and started a speculative position,  maybe traders will look for a sector to manipulate higher.    As we said following the Treasury buy news,  we are turning to individual stocks- sec`s away from the market driven technical SPX /SPY trade.    We are hoping, like the commodities,  some niches will emerge and not trade with the broad market on a daily basis.

Article originally appeared on Your Personal Trader (http://www.yourpersonaltrader.com/).
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