No news is good news today......
Friday, June 26, 2009 at 05:35AM The purpose of our Daily Journal has always been to act as a lead, we always say trading is about preparation, which in DJIM land is being ready to take advantage of a probability and/ or possibility, abeit a rally in the broad market/ individual stock/ sector. All we/you have to do after is pick out the relevant plays from the 'Shadowlist' as 99% of our trades originate at the list. Our own practise is to review our own Journals, so we don`t lose sight of things and our current strategy. That's how and why, we've stayed on a 'bullish' track since late March. It's easy with all the daily noise on CNBC or the web to lose track of your own beliefs.
Today’s rally shouldn’t have had you on the sidelines watching the broad move, scratching your head looking for a specific rally reason and/ or some fresh meat to buy. Simply, it’s a broad window dressing day with no newsflow to account for such action….“A question circling our heads is if the window dressing was done early for this Q to (956), if not, we could see some more action to close the month. It's an interesting question mark to ponder, right now. It would seem wise for money managers to take advantage of this quick slide and do some more book juggling before months end, wouldn't it?..June 19th. But, it’s useless to wait for the day or day(s) of window dressing to make a move and make money, you had to be prepared (positioned) from earlier in the week and in all probability to book some profits today at R gap. Why?... well, we've moved about 4% from 888 in a few days and it is a technical marketplace)…“If we get closer to SPX 880, we feel this is the area we have to be more aggressive in buying, Why? We haven't started the next round of earnings yet and this upside risk remains for the Bears”. Well, we got to “lucky 888.8” and now it gets interesting again with the SPX stopping at 920, which is the June gap R.
This market has become very technical as you know, but the catalysts that drive the market up and down are anything but conventional. How about no real catalysts? There's really no sound or logical explanation that explains the move from SPX 940-950's to the recent low of 888 and then back to SPX 920 today. We can only guess where it'll end up tomorrow!. So, we can only conclude that all of these moves are likely part of consolidation that may setup for a bigger move down the road. We just don't know yet when that will be.
Back to the action and what a day we had. Recall, we said Monday don't give up on 200MA so easily and today we reversed off the new 200MA! This move pretty much erased all of the market losses from Monday's dreadful sell-off. We are in fact sitting at the same point as last Friday's close. All of the SP groups ended up ~1%. There's really nowhere to hide today if you're a bear, not in a FDX truck (TRANS up big) and not even in the back of a store (even Retail rallied). Only the Banks- brokers lagged, but after a few days of underperforming the market, finally picked up some momentum late in the afternoon after lagging all day to help the market close strong. We feel that financials are the missing piece for the next leg up. If miraculously the financials start to act half the way they did back in April, then there's no question we can take out the recent high and march higher. We all know that big financials will kick start the earning season soon and perhaps some upside surprises can give a boost to the bulls cause.
Other than end of quarter buying (today was T+3 settle day), we also have Russell rebalance tomorrow. DDRX , a play we mentioned as a possible play on the index reshuffle, possibly even to the 2000, jumped a couple of points today in anticipation of the move tomorrow.
After today's mkt move, we are going to be a bit patient and see how things develop over the next couple of trading days. Next week is a shortened week and we don't believe a lot is going to happen. If we do see some weakness on our favourite plays, we won't be hesitant to buy once again.