...taken with a grain of salt

http://www.conference-board.org/economics/ConsumerConfidence.cfm

Honestly, most of us probably don't even have that eco' # marked on our calendar.   Well, maybe some do, but when we said it was a slow week ahead for eco' data points, we certainly avoided this one as being critical as most.    Yup,  all this market needed today was an inspiring "confidence" number coming out right after the market held at support ~879 (Thur low)-880.   Is this too much of a coincidence?   It sure wasn't a joke to the Bears, who can't seem to avoid upside risks!   In any case,  we got a heck of a squeeze/ melt up after the data was released and we closed near the high of the day.

The bad part, unfortunately, is that there's really a lack of any news of any kind besides this eco' data point.  The focus is still on the TSY auctions this week.   It seems the market will use anything as a catalyst these days, keep this in mind,  it could work the other way later in the week on something seemingly not so crucial at first glance.   This is also a shortened holiday week and so volume was still relatively tame.    Nonetheless,  we closed at SPX 910 and we are 19 pts away from the short term top.   So get ready to lighten up on some positions, folks!   Can this market get any more mechanical/predictable than this?   Maybe, maybe not!  Until the day comes that confirms we breakout of the recent range,  we are going to have to treat and respect the recent resistance/support.

It took time, but most groups advanced with the Consumer discretionary  led tape (early cycle recovery groups), including the high beta Casino/Lodging  trade with last Fridays late buy HOT  leading the charge. 

Tech stocks  were led higher today with AAPL/ RIMM  (upgrades) acting great,  while our smaller plays such as STEC  PEGA  EQIX  were holding up as well.  We said techs may get some attention this week based on a better than expected tech conference/ earnings.  The upgrades were a result as this group stood out.

Financials, closed near it's highs.

Commodities opened weak, but closed near/at recent $CRX highs.  At this point,  it doesn't feel like we are brewing for a big move up unless something dramatic develops.   We are treating the recent top 920-929 as a point to lighten up some positions and use any weakness to add back some stuff.  

Again,  this is a holiday week so we aren't expecting anything huge to happen.   If a big move does come within the next couple of days,  we'll be here and ready to trade.  In honesty, we wouldn't mind for this market to hold near the upper end of the range till the end of this week.   We'll see how long this CCI has investors/ traders believing in a economic recovery as well?.  At this juncture, we want to see conviction and that would be breaking out of the range before we get as giddy as those 5,000 CCI households !.

DJIM #25 2009

In last weekends, DJIM #24,  we finally conceded to the fact that , “ We need to respect the probability of a profit taking correction finally from those participating since March to allow latecomers a chance now to get in”.   What we didn’t and won’t concede in 2009 is ..“we are still very much bullish longer term on this market”, even though we thought we lost momo`the previous week.

As we come to the end of 1H, this upcoming week,  we look forward to a climate change for risk appetite in equities continuing as the recovery takes us out of recession with manufacturing and financial systems rebounding.    The landscape is definitely changing,  but after a 50% decline with many individual accounts bloodied it takes more than 3 months to rid investors of fear and regain confidence.   What’s occurring now is natural in the process of a recovery.   It is called 2nd guessing,  especially those green shoots as they are known.    Instead of looking at obvious fundamental changes, many are turning to the , ‘what if’ mentality.   This the ‘watching life go by’ way of mentality crowd.   Many are already suffering this from SPX 666 and will only punish themselves further if not looking for another ~20% from this market in 2H 2009 at some point.    Last week,  we got what is now is a 4th consecutive correction of ~5% off SPX highs holding during this rally without what should be sooner than later, a meaningful correction of around 10%.    So….is this the one that declines further or are we going to be questioning the same thing if/ when we begin a 5th consecutive 5% ?.     After, seemingly holding above 200MA, we are beginning to doubt the current correction will allow latecomers a chance to get in.    One thing,  we definitely believe is those latecomers will NEVER be given an opportunity to get in the 600’-700’s, maybe even below 850SPX.   Those in the market will never allow such a gift.   Human ..fundamental nature…say you buy a home and keep putting money into over time.   You’re never going to let someone buy it at your initial investment price are you or lower (unless of course stuck in the recent ordeals).  Well,  same in this equity market,  we won’t be letting the latecomers into this neighbourhood so easy.  It’s gated now.    They’re going to buy this market at a premium!.   Maybe they are getting the message as current inflows into equities are surpassing those at 2003 lows and MF inflows have doubled over the prior 4 week trend.   We`re not talking chump change (9bln vs. 4ln)

Here’s an idea of what may be happening that will not allow a meaningful correction just yet.  We are having an orderly quite transfusion.   A transfusion where those in market for weeks are doing some profit taking, but the selling can’t gain traction as the Bears hope because there is sufficient inflows taking the supply.     In essence,   this is why our premise from March of an underlying bid prevailing keeps on motoring.    Those that have been following the market with us for over 5 years,  you know in the good ole days,  we always said the market will not go down further if declining at that time due to EPS just around the corner.   This theme is also possible now in a 5% correction as the upside risk remains of corporate growth here and there.    We are also up against what could be and actually should be window dressing for end of Q2,  especially with a 5% decline already in place for a buying opp’ for managers.   This all works unless higher powers used the 956SPX early on in June as a time to cash in early.   A game of cat and mouse here as we‘re stuck in June gap resistance last few days.   Simplifying,   we are fine unless we close below 200MA.   To be honest,  we’d accept a terrible and unexpected headline over the weekend to see how strong we are at 200MA around 900SPX.   This would give either side (Bulls-Bears) a belief system.   Bulls..“nothing can stop us now” and the Bears a belief in finally pressing shorts with confidence(maybe).

To simplify more, we’re sticking to this Q’s plays, mostly EPS or story wise until new babies are born in the upcoming Q.   Even though,  the big boys like RIMM may have EPS cooked in,  it should not stop the risk appetite for newborns in the micro-small cap world.    Keep those STEC PWRD CMED ’s upside guidance coming!.   Speaking of,  you might have noticed strength on Friday anything China  related in any sector outperforming, besides PWRD, CMED.   See Shadow list link on site..EJ ADY STP.    Also,  noticed some risk was coming back into our Casino/ lodging... ASCA WYNN PENN HOT LVS WMS  plays,  so look here as well starting next week for possible continution. ( we think these C-L`s are a group that may move best into their earnings given recent slide).    If we see the same reaction (RIMM) going forward....”cooked in..sell news,” in micro/small cap types off earnings,  we’ll now it’s time for a real market breather,  but we doubt it as the risk appetite back for such plays should continue in a recovery trade.    Other than individualé group plays above,  we always have banks- brokers/ commods sector  rotation to take advantage of on any intraday/ short term rallies to dive into for a trade.