Tech Game Keeps Up...

Well, so far, the momentum and high beta technology names have done a great job of keeping this market's up.    Not only have names like GOOG  and AAPL  run up near the recent high before their report, they deliver the kind of reports that make them gap up to new high.   In the case of AAPL tonight, it ran through its all time high on a bountiful and definitely company specific factors.   Simply,  nobody can rival AAPL, their revenue growth, high double digit  potential and therefore the broad market  maybe realizing this is not running off the report.  Anyway,  this report is just a mind boggling accomplishment as they destroyed even the important whisper numbers market is eyeing.  The fact that AAPL's trading at $202+ in after hour on very decent volume just goes to show the kind of mentality of our current investment community.     The message is loud and clear, people would still pay for growth and people would pay up for an iconic growth names like AAPL with a passion.  ATHR. a DJIM listed from last Q,  beat it`s raised guidance for Sept and issued strong guidance for Dec.

As far as today`s tradie, the bid on weakness continues and longs are really not selling holds. Importantly no collateral damage has been done from the GE BAC  reports. We are a hair away from that all psychologically important SPX 1100 level.    Right now, it doesn't even feel like SPX 1100 is a wall even though shorts have been definitely lining up here.  A break at 1100 should trigger buy stops, volatility.  At this point, we simply have to accept the fact that earning enthusiasm may continue to carry this market.    While the big boys are doing their part by keeping this market up, we are also keeping our eyes on many smaller company’s reports to look for opportunity.  

Again, there's plenty of reports this month that we are keeping our eyes on.   We are also looking for some various collateral reaction off commodity report  such as the STLD 's report tonight and CAT 's 'outlook' will be crucial tomorrow and maybe more important than AAPL's report for the economic recovery game. 

Yesterday, we noted the trade ideas outside of EPS to look for included the higher crude continuation from last week ( crude ticked higher off USD weakness again today) and a China trade due to anticipating strong eco #’s later in the week. DGW +6.7% NCH, FUQI 8%,. EJ 7%, (UTA , HMIN, BIDU 3-4%  off our China shadow list.   Tomorrow, look for weakness (short term) short opps' in Brazilian stocks/ indicies  due to a 2% impose on capital foreign inflows in an effort to curtail Real`s lift and prevent bubble in their mkt.  Wait to see if this materializes and becomes a noisy issue and spreads as a Global issue.  The short term idea here is US inflows have sustained Brazil's Equity markets and this logically can't make many happy.

..Tales(s) of the tape

It’s what’s inside that counts, the saying goes!.  You can apply this to the market today.  On the surface the market grazed (off only 3.5 SPX pts) above the 1060-58 gap of October 8th,  yet the underlying market was terrible with widespread deterioration.

Weekend`s edition, we said stick to ‘bigger names’ ..small caps lagging action.  Yesterday…avoid (high beta cheap-outperformers) micro-mid-small caps.  Unfortunately, what we want to avoid is mostly what our DJIM trading list is comprised of.   Today, the selling continued and got aggressive with many of the EPS out performers being rocked…ININ, HMIN, FUQI, TXIC, TRIT, BIDU, WYNN, STEC, AONE  etc.  Some were new earning report related, others sector realted (China), some IPOs.   In the broad market, the TRAN breakdown has the SOX as a partner.    Also, even though we've avoided commodity linked stocks recently, we can't help but notice the damage done in sub groups like steel today.   This type of selling is reminiscent of the days when HF`s dumped at the end of a month(s) in 07-08. As we said yesterday, they are locking in profits as fiscal year end for many is Oct-Nov.   While the selling seems to have abated on the surface, buyers are hesitant to step up until the market finds its support level.  You should as well, if your time horizon for a trade is more than a day.   If you can flip intraday, some names will provide a trade, possibly even tomorrow after their beatings.   A stock like WYNN  that is $20 off highs and has ability to squeeze at anytime is starting to look attractive even as a longer term hold possibility, other smaller beat up names don't have the same characteristics yet.

Also from yesterday…"…be careful jumping into excellent reports with both feet immediately.  Wait for reaction to confirm buyers will still eat up growth stocks".     Today, we alerted a stock with a cautionary…'see if it catches on'.    What we see clearly now from this stock and others is even small caps are going to have a hard time catching a bid from an EPS report in this current environment.  The 'sell on the news' is spreading and we again caution about getting in on a stock early from an EPS report at this point.

SPX has been down 6 of last 8 days and 3 in a row and 1060-58 might be ST support, but the market awaits GDP (Thur) and homebuyers tax credit news/ financial bill etc.   So, while the market box score may look okay on the surface tonight,  there are ominous signals internally that require the above trading basics to stick to.