DJIM #15 2009

First of all,  we hope everyone had a great holiday.   Market‘s action last week,  definitely helped!  There's no doubt that many of the trading/investing community were discussing the recent market activity over their dinner tables.    The resurrection of the market!.   We can also imagine that many of them had the such comments as,  "Why didn't I buy the market in the last couple of weeks?"  "I wish I had these stocks in my portfolio!"  etc.    There is a very good reason for many investors/traders to fear these days.    The fear, of course, is that the market is moving higher without them on board.

As early as a week and half ago,  we just couldn't help but notice a swift change in investors' mentality.  It's not something what you can pick up easily by visiting various financial sites/blogs or by watching CNBC.    Many of the places you visit frequently were presenting a very cautious, and sometimes a very bearish tone.    It's true!   Those bearish things you often hear these days do present a real worry.    However,  we noticed something else at the same time.    Despite a 20+% surge from SPX666, and despite the recent flurry of bad economic news, the market was holding up remarkably well.    In addition,  every little piece of good news was viewed as extremely positive.    We just felt this market was only in a pause mode before heading higher and we've been highlighting all the reasons in BOLD over the site.    We definitely needed a catalyst.    To our surprise,  the latest catalyst came early as in a pre announcement on Thursday.    WFC , one of the biggest banks in the media spotlight announced that things are going well with its business,  especially in the mortgage origination area.  ” Watch  for opp's heading forward for big 1st day gains on a report due to shorts covering, even on just decent reports like these above.   A big beat report could be twice as hard!!.   WFC was it and we hope it's just the beginning where shorts run.    This news can mean a number of things to this market,  most importantly, they are all positive things that the Bulls love to hear. 

Now,  we highlighted last week the potential of a “ first trend change this week should be a pretty good one.”…and it definitely was as the market climbed from overnight lows of around 802 to 856 in 2 days.  Now, we are going to need a confirmation signal this week to carry forward.    In the coming week,  we have a number of market moving financial companies such as GS JPM C  reporting.    We also have other heavyweights such as INTC JNJ etc. on deck.     This week will be a test of the recent strength.    In our view,  we feel we have a very good probability that this market will set up for a further run-up.    Things may just not be as pessimistic as many would fear.    Also, we have many "underinvested" traders/investors that are waiting to get into this market, eagerly!     As long as the general consensus becomes that the "worst of financial crisis" is behind us,  there's a good probability that we will not see anything close to 700SPX.

At DJIM,  we were quite busy buying last week and we held pretty much all of our stuff over the long weekend.    Right now, we just can't help but feel good about this market.    We are still using any upcoming weakness in the market to accumulate more of our positions.    Until the underlying sentiment changes,  we will remain with a positive 'long' bias. 

The plays are all there on our shadowlist.  If its Bankers- brokers linked running, just go GS, JPM, NTRS, ICE etc.   If Techs keep rolling, we have the RIMM's  and EQIX's..  If its commods, you go with the latest sec's we're discussing.     If there's any play that we feel particularly good about, we'd definitely note one right away like WFC, NTRS, FCX on Thursday, but many daily alerts- comments/live trader are for those daytrading,  longer term investors have the shadowlist to fall on.     Bottom line, next couple of weeks are looking to be very opportunistic if earnings avoid 'blow ups'