''I go 1st..you go 2nd....and than..

...I go again!".  That's the 'Bull' transcript according to our DJIM spies.  The Banks- Brokers start the rally in March, the Techs follow and than snooze after MSFT earnings and than the Banks- Brokers take over again!.  The question is if the Banks- Brokers are really an impatient bunch and want to get this next leg started a little early?...

So..a few ‘ bullet’ points on market action , it’s quite simple…

We’ve been saying, including last before Monday‘s move over 1K, ….”we don’t plan on occupying a level over SPX 1000 for too long this summer, we prefer to make a strong bid to occupy the 1000++ for good in the latter part of the year when a powerful growth spurt will finally be evident to all, including those who are still Bears now.  We think rotation into and leadership will be from the Banks-Brokers later in the year to signal the next move”. 

Guess what’s happening?…In just a few hours this week,  we’ve had global PMI numbers that give credence to a ‘powerful growth spurt’ in 2H2009, which is now scaring away the shorts from pressing new positions.  Shorts/ Bears don’t want to get run over by the growth train money flow that is entering the market just now and we are seeing rotation into the Banks- Brokers occurring the last 2 days (XLF new highs)!. 

Don’t get us wrong,  we love the idea to go higher this summer, but this is a tad early in our view if we want to see and think we'll see in '09 (SPX1100-1200)!.  We have another 15-20% leg from the SPX to use up later this year, we feel.  But, talk about exuberance now!.  Market is acting like 50% is not enough off lows, let's go for 70% now without a pause.    The question is.. will we have to move up the dates of another leg up in our playbook.     It's hard to imagine an overshoot late summer-early fall,  but as we said these are not normal times we've been through, so upside risk remains for shorts and those not participating yet.    As long as we avoid, most notably an overshoot gap open and/ or spike soon,  it would help avoid the beginning of a good size reversal.  (1014 was the level we noted here as possible 1st R, hit ~1007 today).  If we keep inching higher, it will be beneficial for higher highs into late August and back to skool days.    So far, once again the market is showing and underlying bid and resiliency even as we hover around 1k, we watch the A/D line on the NYSE closely. 
 
Also today, we had some life in the mid-small caps and earning reactions were very good (WMS CTSH EMS ).  If this continues we'll feel much better that this is not a short term topping out process as discussed yesterday. 

This is a telling week, just keep an eye on this bank- broker rotation follow through, renewed strength in mid-small continues along with a healthy AD line to power this market higher or not.

Intact

To kick off the week, we said we’d let the SPX work itself out at 2009 highs while we focus on individual equities.   So far, we haven’t missed much as the SPX has closed relatively flat for 2 days off best levels of day, while 2 biotech stocks we said should be on top of your trading list heading into the week have been 20%+ gainers.   The Bears will probably say the market couldn’t break Mondays highs with 3 positive headlines ( CCI/ Home prices/ Bernanke ), but as far as we’re concerned, these items were pretty well cooked into this recent rally.  The only thing that weighted on the market was a sell off in energy/ crude that took the SPX tape down with it.   This could happen on any day and is hardly an indication of where the market is going.   The rally is in intact and any weakening we're seeing this week is more a sign of the end of summer times.  The Bears are getting all riled up at the wrong time.  This market should go nowhere till post Labor day if this lightly attended market is any indication.   We’d use any surprising sell off in individual liked equities as a chance to add that position either for a quick trade or a longer hold.   

As far as those equities on our list, besides the biotech HGSI, BCRX  moves this week,  most of the stocks we’re following closely are holding up well and everyday there is one or two making new highs.eg. STEC CTSH SXCI EMS  today from our list.   Tomorrow, it might be a few others as been the case.   Off hand, we’d say there is a core of about 15 stocks that we’ve bolded  most recently in Journal that are performing just right and that's where our focus is.

We don’t expect conviction to show up on buy or sell side.  If we do a up move like today again, we would not put too much into it as profit taking will show up again and we’d use exaggerated weakness to pick up those most affected from our core. 

...NCH for SPX coincides with 10+ earnings plays

We'll start things tonight with this little biotechnology company called Vivus.  Some speculation into our diet.　Some of you may have heard of this company at one time or another, but we are sure that most of you have heard of this name tonight. What's so special about this play other than the fact it's finished up 70% off 75 million shares? Here's the thing, take a look around you and see how many of your own relatives or friends that are overweight? Ok, we are just going to stop right here. Basically, VVUS  came out with their phase 3 trial results on their obesity drug Qnexa showing significant efficiency in reducing patient's weight. According to many analysts, they've set the golden standard for this type of drug. This ought to get people very excited because at this point, at little over $800 million market cap, there sure is a quite a bit of room on the upside considering also this was stuck under $10 for years now. We have seen it with DNDN, and we have seen it with HGSI. In our opinion, this VVUS story is better than both of other stories. Therefore, we started a somewhat sizable position today and will continue to add off any dips. One thing about this company though, is that it's also heavily followed by institution.  From what we hear 'holders' were adding longs even with 70% lift. Once the initial fever is gone, the play will trade much more stable and have the potential to move much higher. We are currently treating this one as a longer term play for our portfolio.

Now onto the market!　Ok, here's the thing, it takes not ONE, but TWO attempt of correction to make most people realize how powerful and vigorous this bull rally is.The most recent pullback, despite that one day massive volume, is over with on higher lows. Right now, we are expecting new highs to be breached on any given day now. As we said Thursday night, it will be inevitable once ~1020 reached.

Many plays on our DJIM earnings linked watchlist screen were showing some impressive individual action that are moving in tandem with the index. Most impressively, COMP, or the technology index has broken out today. 　This strength is displayed throughout our technology linked names, including many bolded into yesterdays trading, CTSH +4% , ARUN +4%, ROVI +2.5, STEC +5% ININ +4% . Also making news highs on our list including  EBS +11% EMS CTRP WYNN PWRD FSYS CVLT. So, is this the type of market worth chasing at this point? If we do break SPX 1039 , we think it's worth every bit to chase this market. When you have a consecutive blowout report like HITK (we bought some) had today, its making alot of players to look forward to the next round of earning season. 

As far as commods', we've turned our eyes from coal to steel as SLX looks to breakout.  Still, we'd caution at this stage for the whole group and keep positions small and on a tight leash to turnover.  As we saw late in day, they can rollover quickly as the USD rallied off lows.  The correlation is very strong now between USD and these stocks.

China  linked stocks, slew of key data coming up Thursday night.

All of a sudden, Sept. is looking to liven up trader's screen for a change. If August proved to be somewhat boring, we sure aren't getting any of that drowsiness from the market so far this month. Bottom line, we are looking to add more stuff if we get some mini dip opportunities next few days as the breakout of this market just seems imminent.