.wild wild SPX

A tale of two markets today as we got the drift of up and down in range until one side gets a “catalyst” to drive the market.  We discussed the idea yesterday and it pretty well played out to script.  Despite, MS’  below expectations report that drove the futures lower premkt, the market was able to pounce off the 840 mark  and continue to squeeze the leftover shorts from Tuesday.   This sizeable move takes everything along on the tape with it for a ride.   Unfortunately, the morning and afternoon moves to 860  proved to be a formidable level to knockout.   The reason in our view is as discussed last Journal this bounce is short covering so far and won’t likely see new buyers step in without a noteworthy catalyst.   The shorts have their nervousness and those wanting to go long have their scepticism in catching the SPX 860-870’s and be left holding a white flag.   Left alone fear at the top in a correction.   

Notice the same market move between 9:55 to 10:30am was the mirror image of the swoon from 3:30 to close.   We commented cautiously late this was nothing more than short covering and the financials really took a swan dive in the last 15minutes with volume. 

The day may seem like a wash in the end.  If you went fishing and traded selective stocks/ sectors it wasn’t a wash of a day at all.   We had LVS  put in almost a 20% move, AKS  trading at $11 b/c of a downgrade popped to 12.40 level quickly.    If you have scepticism of the market getting through 860-870’s as we do w/o a catalyst,  you have to take profits on intraday trades or you are simply trading against your own beliefs.   We also mentions (forum yesterday) CMG ESI  APOL CAT and Solar  idea (journal) that run some quick points, some right off the bell.   Just narrow down your shadowlist to follow individual stocks- sectors and any add-ons we toss out to trade on a daily basis until we get a possible catalyst for the market to hold plays longer in duration.

One good thing we have is a bunch of charts like CMG GYMB GES TIF  creeping up on screens for breakout plays recently.  Throw up some more in the forum.

So, the premise remains the same as we watch important levels 840/860.

Initial claims # possible mover tomorrow.

Away from the spotlight...

Basically, all of the action today after a triple play rally is not from the usual movers and shakers ,  instead it’s from our boring listed  plays..old (commods’ ) and new (EPS’).  The index may have closed flattish and financials rolled over naer close,  but it's otherwise a pretty swell day around these parts.   The biggest story of the day occurred AMC.   We are referring to the gigantic offering from BAC.     Here's the eye catching number, 1.25 BILLION shares at an average price of $10.77/shr were issued/ sold by BAC.   Over 800 million shares look to have been sold in a large block!!   Wow, this is just something we don't see that often in our lifetime.    Will this massive offering give some more firmer support to the market?    After all, traders were worried that BAC might have trouble raising money,  but it's just not the case.( now ½ done to 33.9 capital plan).    We have to view this as ultra positive    It wasn't a big deal for GS, MS or WFC to raise money,  but a massive secondary raise from BAC(somewhat inferior quality bank), a 10% discount to the daily avg since announced seems to have not been a big deal either.    As much as you'd think this would suck up a lot of cash from the investors, this has to be viewed as very positive development for BAC, the financial industry and this market in general as someone took a huge 2/3 stake of the offering.   

Now..the real action today was from a lot of our recent earning plays and the group plays.    We’ve been highlighting buying pullbacks awhile now as our 'Premise' holds.   Recall, we said many new plays are toying around 9ema, of course this would include most of our plays as we've been in a 5-6% corrective market.  eg. BWY DDRX NEU GYMB  FSLR ICE CTV  LIFE...In addition to the earning plays,  if that's not enough, we also have commods’ feeding off the weak $USD unwind,  GNK JRCC SCHN X  and agri.(POT, MOS ) since we *highlighted crop report last week were gaining more ground today.   

Earlier, we also had EJ , a former gem here, which guided pretty nicely, gained a trade spot quickly on to our playlist.   In fact,  it seems many of the old Chinese plays are heating up here again.    ASIA  SNDA  TSL.. are just some of the plays acting well.   Remember, we have CAF  to basket a further move here.  SOLF  also reported a not so bad quarter and gained some positive reaction today from firms.   This may bode well for solars STP and TSL reports coming up.   Also, NTES SINA SNDA are other China reports shortly.

Also side market note , CY (semi) had the most bullish comments from the often mentioned ‘tech conference’.   Conclusions from conference are more positive than expected and we should see the space continue to get a bid this week.    ADI (semi)had a good report AMC

On the other hand, we also have runaway earning plays like ADY  STEC , which we are patiently waiting for a pullback before making a potential entry.  As we have mentioned before, this market is full of good trading plays and we really appreciate a slow trading day like today.  

Technically, we are currently range bound  (876-929) right now heading into a holiday week.    There's no telling how the rest of the week will play out (FOMC minutes tomorrow), but we do like the action in many of the individual plays on our list going forward.    If this market can nudge higher, our question and answer to “Sell in May or will it be Buy in May?…was correct at SPX 872 as it‘s become a stock picker‘s market ,  dominated by earning plays churning this market higher. 

http://www.djimstocks.com/djim-journal-09/2009/5/1/sell-in-mayor-will-it-be-buy-in-may.html