DJIM #28 2009

So far July has been a technical driven market,  the storyline should begin to change this week as we hit ‘EPS’ season.   This has to be the most anticipated Q in years,  a Q that will be dissected and scrutinized till the market is blue in the face.   Away from the majority coming into this, we think this market will only face ‘green’ when it’s all over with and the market will be higher than where it is now.  We are bullish on what might be in front of us.   We’ve had a correcting market as pessimism has grown out of a disappointing NFP and consumer confidence numbers recently, we think it’s been a timely correction as this may provide more upside as better outlooks will surprise those doubting a worldwide economic turn is here.  The US consumer will eventually come around.  "If you build it, he will come", we hear those whispers in our 'Field of Dreams'.    Simply, we think earnings will be a positive catalyst for the market this season as we’ll see many more companies beating estimates vs. missing estimates and improving outlooks.   This plays into the DJIM trading methodology of going after earning driven stocks,  we definitely think we will have plenty more to add to last Q’s crop.    As we said last week, if we had so many positive plays 3 months ago in dire times than this Q, we'll have even better reports-outlooks as a global economic turn has been seen since in Emerging markets (EM).   We think many companies misjudged the potential of a fast recovery and will have to improve outlooks.     Billions have been added in EM GDP in the past Q with Industrial production leading the way.  Companies in the SPX should see this in their top and bottom lines and sectors- stocks with the most international exposure will likely be the winners, notably technology, materials, industrials.  U.S Banks-brokers should not be the focus this Q for obvious reasons if we're in a global industrial production recovery.  Still, they will represent a hurdle this week the market must jump over first!

Let the 2009 summer games begin with the passing of the torch from a technical to a corporate driven market.   Even if we lose and don't get the "GOLD',  the worst we'll get is a Bronze as worst case scenario is maybe 50 points off the SPX from today's levels.  For us at DJIM,  even this outcome will provide many surprises to trade the rest of the summer!.

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