YourPersonalTrader- Toronto Canada/ London UK

DJIMSTOCKS- since 2006 - Toronto, Canada/ London UK  

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Entries in CConsumer Disc (1)


Looks can be deceiving...

Fortunately, the phrase just does NOT apply to this market!.   How about that SPX 907, eh? . Just in last Journal, we said , “As far as we're concerned there is no reason the SPX should be at least be higher than where it was end of 2008 (900) in the short term.  Things are a hundred times better than they were at that stage globally, so why should we be lower.”.   Talk about short term, as in right here, right!.

With a couple of positive economic data add-ons (Pending Home Sales and Construction Spending) to the already noted China PMI that was getting headlines all day, we got a nice kick off to the trading day.   Since $CRX broke out of six month range on Friday, we might as well get some follow through right away from the commodities as noted in Journal.     What a follow through by commodities though!    Not only did we got a sector (coal) upgrade from Goldman, (you heard about it here first, before CNBC, Briefing) just about every commodity stock you can think of had a really nice gap and finished strong.   

What really pushed SPX index above 900 was the financial squeeze in the afternoon.  WFC up 24%, BAC up 19%, what???    If you look at some of the bank action,  you'd wonder if we had some blockbuster news from the sector today.   Nope, it's just a simple "lets squeeze them hard" type of day from the financial sector and our premkt thesis that the “hope vs. fear“ NYT story was a notable headling to watch for a broker- bank trade.  We thought if fears abate in the market, we have a possible trade in the group.   Later, we noted a Citi headline and in the recent "The Premise“ journal outlined…“Preferred to common offers instead of Gov't transfusions.  Watch if some are announced soon, you may have squeezes unfold”.   Boy, did we ever!.   Why you ask?.   Simply, if this was to happen it meant the C, BAC WFC capital problems would have an easier time raising the moolah than feared.    One way is through Pref's to common.   Also, long ago we said 'equity deals' when on the table would be a time to buy the market.  Another stock offering was announced AMC.  This signals "Capital markets" are opening up!.

Remember what the the premise behind DJIM was and is and why we repeat, quote past lines.  DJIM is to simply to "LEAD' you by giving you what / where we are leaning to/ watching for as traders.  What you do with the information is in your own hands, how you decipher it and how you trade it.

The biggest rips were in BAC, WFC, running on this seemingly "negative" speculation of raising capital.    It doesn't matter if it's a commercial bank, insurance company or a broker, every type of financial stock ended up a healthy amount and the XLF  over $11 close (finally) coincided with the SPX 900.  SP finanical index +10%, abnk index +18%.   WFC,  probably takes over JPM as the strongest performer from the big banks.   GS broke out of recent range and MS is sitting at the recent high.   This is the kind of action that definitely makes you think if we have really entered a new era.    This era, is what we felt as the recovery era.    Of course, it's still too early to even officially announce that we have entered this recovery phase after just one quarter of earnings/data.    What we do firmly believe is that this is what most investors/traders wanted to see or look forward regardless the legitimacy of this belief.

The conclusion is that from now till the next earning period,  we will probably be trading in a golden (hopeful) period.     Things will definitely look and sound promising.   Dips and pullbacks will be bought aggressively in the next couple of months.    This is what we strongly feel at this point.    Most important of all, there'll be lots of great trading opportunities/setups on the long side.

Here are some sector overview...

Commodity linked stocks,   Simply, the China PMI  is rallying the commods'. The dirty Coal stuff, MEE, ANR, JRCC  etc, had some unbelievable short covering action back to back days.  We can add JOYG, BUCY  as a coal -link trade now that is more stable going forward as it touches more sub groups in a recovery trade.    Steel stuff CLF, X, SCHN, RS are the ones that we are also buying aggressively on any dips.  AKS  is up 40% since buy in alert April 21st..   Oil means a lot for our play OIH and many solar plays, FSLR, STP, TSL based on its recent move, we feel are grinding higher. 

Tech linked, we are still sticking with the familiar names these days.  RIMM, EQIX, RVBD  etc. are all on our active trading list.  MVSN  safely creeping to new highs.  CYOU  violently doing the same.   Premkt, we noted basking the results and Asian mkt strength trade via 'CAF '  to avoid chasing the eps gaps,  CAF opened $36's and drove to nearly $40 (+8%), while CYOU/SOHU declined most of the day from opening bell.

Consumer/ cyclical linked stocksGMCR  looks like it's going to be ready sooner or later to start another leg up.   GES, GYMB  keep making new highs.   We also really like many casino stocks.   Judging by the recent reaction from PENN, MGM(tonight) etc., this sector may just run longer.    Our favourite are still WYNN and PENN  though.  LVS  has doubled since we took it on as a breakout and squeeze play on gaming April 21 just below $5.  Let's add ASCA  to the group list.

Right now, everything seems to be benefiting from the renewed optimism that economy might be picking up.    It really doesn't matter what sort of play fit your style or timeframe, as long as you play the correct side.    This is the kind of market that does not reward sideline action.    

"All the horses are seemingly stepping up to the gate for what will eventually be back to the 'Easy'  trade days".   This is something we all can look forward to from recent action.