YourPersonalTrader- Toronto Canada/ London UK

DJIMSTOCKS- since 2006 - Toronto, Canada/ London UK  

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Entries in GOOG (1)


Rage behind the rally...

After few more days of straight rally, we finally settled down a bit/ maybe only paused today with market ending just about unchanged.    Interestingly enough, we are right at the resistance of SPX 1095, which is the level we've talked about last couple of nights.   As discussed it’s a slow eco’ data week, so we think it’s favourable to the Bulls cause, therefore even 1095 looked vulnerable today/ this week.   It seems the theme with the market so far this year is that the harder it pulls back,  the quicker it rebounds.    For those of us who have played this game for a long while, this kind of market behaviour does make you go ummm!.

Ok, after five straight up days, we didn't really have that much time to review the force behind the latest rally.   It just seemed that everything happened so fast and all are scrambling to play catch up, to a certain degree.    So how did we go from a low of SPX 1027 all the way to SPX 1095 in a mere six days?    As we have written before, last week's FOMC and NFP#/rate had enough of a positive catalyst and it's partially responsible for the drive.    Also, if you look at some of the recent EPS winner, especially from the mega caps side, then you'd have a real answer as to why we are back at this point.   GOOG at new high, AAPL back over $200, MSFT back at $29.... and these are only the technology stocks.   There are also many other stocks from many sectors that are doing just as well.   Commodity stocks, credit card co., Casino... and than just about every stock that had good earning are trading near their recent high again.      Still, the message is pretty clear.    The bigger cap stocks are doing what they can to keep this market elevated.    We don't fault the money managers for quickly chasing those companies back to their current level.    When Fed made clear that interest rate is going to stay at "zero" for an extended period of time, the reality is setting in that equity is still the place to be for the foreseeable future.    Coupled with the "attractive" level we were at from that pullback, it just doesn't take much for those fund managers to bid up the names we mentioned in a ferocious fashion.   Recall,  during the late October MF’ sell off, we said what better time than to put money back in the market early November at lower prices...'Wouldn’t you as a money manager pack it in last week and start fresh next week putting cash back into the market." . We are definitely seeing some of this during this rally. A lot of the the guru media is talking this now heading into year end.

At the same time, we were hoping that some of the smaller earning plays would tag along the wave too.   Although most of our smaller plays are up and near the high, but we think the story of late definitely belongs to the mega caps.    Therefore, we think it's prudent to have a balanced holdings in our portfolio.    It's hard to believe but do we sound like a fund manager even these days?  :)    Whether we hate playing the big caps or not, we feel this is the best way to maximize our return.    In other words, it pays off to buy some AMZN, AAPL, JPM, GOOG  or even MSFT  last week as well as some of our favourite smaller caps.  A few commods’ like CLF  recently off earnings (WLT always liked here), or a high beta yet a consumer play in WYNN  is now $10 dollars up since late October..(." is $20 off highs and has ability to squeeze at anytime is starting to look attractive even as a longer term hold possibility..").   Even a stock like FLR (44.38 close) beat up recently and after earnings looks like a bargain going into year end as its a great company at very low levels and should look good to managers to put back in their books.  Underperformers will likely be chased as much as the winners, but should have more immediate gain potential.

As far as the financials discussed last, the reports out of UK were fine and the B of A conference is helping credit card names as there were "consumer positives" come out of AXP.   It should help sentiment broadly if it gets some noise.  So, we'll keep eyeing them financials for upside kick to the market.

We still have nearly seven weeks of trading before the end of year.    No matter how this market behaves, we absolutely believe that market participants are locked in a high spirit to move this market higher.    So, if we get any more dips, and lets pray we do, we are sure that you know what to do!