Buy stops kick..

Even before the first influential EPS report this week,  the storyline started to change premarket to a corporate driven one by MW's CNBC appearance, upgrade to GS-bullish preview of bank earnings.  We just said the market must first jump over a hurdle this week with the Banks-Brokers reports and today it got a flying start as it jumped a couple of hurdles at once.  This is good as there will be some messy reports from the group upcoming to not let this short covering move get too far out of hand, too quickly.

Still, this was not what really caught our eye!.  What was equally or even more important was the market's and groups ability to shake off and not wallow in the CIT  unfolding debacle in front of it's eyes.  This CIT liquidity crunch has all the potential to remind the market participants the Credit crisis is not really over.  Will this giddiness last, will the market continue to brush this off or start to worry about this and/ or other potential pitfalls.   As swell as today was, we have to monitor this star crack from becoming a big crack on the markets windshield.   Sentiment can change quickly, we just hope we can move forward from the same issues that broke the market before and concentrate on earnings. The market seemed confident in the gov't solving this problem for today.

At the open,  the CIT fiasco had a tug of war with Banks- brokers news flow, but managed to stage a bounce off lows in the 200ma range.   Last week, we pointed out in an alert to watch SP futures at 884.25 levels for a possible rip due to what we saw as a potential kick off of buy stops on a future re-test. 

As you can see by the ES and SPY charts (by volume spike) below this is exactly what happened.   If you weren't following our lead and or just blinked, you missed the DJIA pop 50-70pts in seconds as these buy stops- covering ignited a market breakout all the way to 901 by close.  At 894, we also put to rest the H & S formation for the time being.

Also important today was some individual stock musings (many from our shadow list) that included earnings, upgrades, estimate revisions and contract news to set a positive tone going forward.  Some include, PHG for earnings,  BBY ROK KFT GOOG upped and/or raised,

DJIM's …GS ARUN PENN LFT raised and-or upped,  STEC  28mln contract, WMS  (Ohio legislation news), helped it make 10% (low 30's to low $33's) since last weeks alert.

Well, it seems waiting with powder for "July 13th or so" wasn't such bad idea recently. Still, we've got a long ways to go (99%),  hopefully, full of good surprises as today.

Too good to be true?

Goldman's report was widely ‘whisper’ anticipated and it only says so much about its own savvy operation ( hedge fund), which does not represent anything from our economy.    Day opened in a good mood follow through as indexes were up slightly, it's a pretty decent showing given the kind of exuberance we had yesterday and it has carried into AMC.  Basically, it's all eyes on Intel tonight!

To make it simple, ‘Chipper ‘ INTC  did not disappoint!   They reported revenue of $8.02 bill and eps of $0.19/shr with a gross margin of 50.8%.   This easily beat the consensus of $7.28 bill revenue, $0.08/shr eps and 46.4% of margin.   To make things better, they guided for a seasonally stronger 2H.   This report looks outstanding and deserves the kind of after hour action it receives.   But,  how does it impact the trading environment?    Being one of the big tech bellweathers,  it certainly affects all of the hardware and software companies out there.   Here's the caveat.   Despite this spectacular number it doesn’t jive yet with evidence of PC demand.    One plus one doesn’t equal two for the rest of the PC/Processor market.  If anything this part will curb enthusiasm at AH’s SPX highs.   End demand is not evident yet in the broad marketplace and enterprise market is quiet.    "A little improvement in consumer spending" was in the CCall,  we`ll see how far "a little" can go in a market wanting growth/ spending or will this story go into an inventory (replenishment) correction file.

Still, we are excited to see INTC kick off the earning season with a bang because it generally helps sentiment.   Having said that, we have always believed, going into this quarter, that the techs may potentially have the best upside surprises from their reports.  We definitely don't expect the same kind of potential from other sectors.   

As last Q…as we go through earnings season , we will compose a Shadow list ‘B’ of reporting stocks that may become inclusions into list ‘ A”.   Basically, it’s a preliminary list, we’ll see if a DDRX BWY STAR STEC ARUN  winner emerges as from last Q’s list.   We’ll add ININ  today, a little software company that came out with decent earning and great reaction.   It did have a pre day move into earnings after an analyst note, so it has 2 days now of gains to digest, so we’ll wait here for consolidation. 

Overall,  we think this mkt may have hit resistance at SPX Futs 911 AH's, which translates to 917 SPcash approx.   Even heavier resistance comes around SPX 920/925 area.   It's way too early to speculate we'd break the latter.   However, we have to remain open minded as this market can trade in a very emotional way  vs. technical  this earning season,  but the reports would need to continue and come in a feverish pitch from the big boys.   Bottom line, the bar has been set and we'll have to see if other companies will follow suit.

Emotion dictates this trading day

In a battle between technical trading and emotional trading, the latter "However.." underlined yesterday seems to be the decisive winner today. As we mentioned on the weekend, the technical-centric kind of trading environment prior to this week may come to an end as the storyline changes to corporate report dissemination. When an earning season starts, all we need is a few big earning reports to kick start the momentum. We often say that market is rarely wrong. In fact, market is never wrong. How traders interpret market action will determine their own trading strategy, and hence, their trading outcome.

For a while prior to the earning season, we were saying a pullback is just healthy and just plan for the week of July 13th. We were also very selective on playing the dips. Techs/China earning plays were our main theme and they have done very well during the past few sessions. We came back to RVBD, STAR alerts yesterday and today they were positioned just right in the tech frenzy adding ~7% at their highs. Going forward, we still feel that the best earning surprises will come from the tech/China area. What's also particularly intriguing for this quarter is that many company's estimate are sitting at a reasonable(low) level. Investors/Traders' expectation may be high for many stocks out there, but the only thing they are comparing their expectation to is the current estimates. Therefore, we feel that this is definitely favouring companies this quarter. Another reason for potentially upside earning surprise is the companies' with the biggest international exposure  being the winners. We know that INTC sold a lot of chips in China. For some reason, our analysts were so obsessed with America's economy and job number, they seem to understimate the potential business from Emerging markets floating US companies. This may be partly the reason why analysts missed the mark on INTC's earning. Of course, this is INTC and we can't simply derive this conclusion upon every other company out there. However, this is a legitimate edge we have to use to gauge the overall earning trend.

Recall, we said heading into the week..”We think many companies misjudged the potential of a fast recovery and will have to improve outlooks. Billions have been added in EM GDP in the past Q with Industrial production leading the way. Companies in the SPX should see this in their top and bottom lines and sectors- stocks with the most international exposure will likely be the winners, notably technology, materials, industrials”. It’s clear these 3 groups led the charge today.

Tomorrow we have JPM to report and this is a crucial report. We should have a first glimpse on the operation of a big domestic financial company during the last quarter. JPM is much more important than GS simply because JPM's business is much more diversed and deals more with the consumers and small business. The sector jumped a hurdle or two Monday, but we don't doubt there will me a messy report or two down the line.

Other notables, NVS, MAR, IBM, NOK, PPG, HOG, CY, BIIB, GPC, BAX, APH, GOOG, PBCT, FCS, ERIC

Simply,  We said we'd be 'bullish' over 900 once again, last 3 days and bull gap pretty well confirms in our minds we hit a summer low at 869.  Why? The breadth Advancers/ Decliners, 3 days straight is too good to ignore.  Todays gap to 910 and 911 vicinity June channel top is our support/buy dip view now.  Today's action has thrown all TA and just casual market outlooks going forward for a loop we'd think, every short & long TA prognosis seemingly needs to be revised now.   Even those long term investors on sidelines this summer waiting for mid-low 800's will have to rethink now or possibly suffer from PA.  This includes every manager calling for this majority view when everything was seemingly falling apart since NFP report.   Once June congestion area absorbed (this will take some summer time), 956 high will fall as long as we hold todays gap /911.  Yeah, we're living in a 'Field of Dreams"..so far, so good though since this weekend's reference to it.

As powerful as the last three days have been, we feel that we definitely need some cooling down in order to further the advance.  In addition, we need more evidence that more companies are doing better than what analysts/economists fear. After all, this is a confirmation quarter and there's a lot of stake on the table here. We're still only in the first inning of reports. A good string of reports will not only bring more market participants back into this game, it'll also help consumers' confidence as well. It's just an inevitable chain reaction. What we may see here is those on sidelines begin to feel performance anxiety(PA) and chase. We got a glimpse of it today as volume increased and tonight some are feeling the symptoms of PA, thus, any pullbacks will be buying opportunities as long as the reports are above average.

Bottom line, there's no need to be bothered or buy antsy tomorrow if you haven't made a killing last three days. This week has caught most of the market off guard, yes..both shorts and longs. Only big difference is shorts got shampoooo..'d in the eyes with the H & S formation and lost a ton, while longs just don't make that much unless they speculated the farm into earnings. We have made some small gains here at DJIM and we feel there's lots more setups to come, most importantly, we're here for new fresh meat off earnings and don't want to get into guessing day to day moves of the SPX/SPY.

...little blue pills

We’ll keep it tidy into Friday’s trade as there is not much we can say,  we haven’t said the past week or this month at lows.  We’ll ignore the Roubini wire cross (later rebuffed) that was credited with the 130pm lift off.  We saw other positives earlier (neg headlines..NOK EPS  shrugged off, CIT  noise again muted) and just before the wire cross (FDX  exploding over 200ma).   Besides,  what anyone says at this point is irrelevant to us!.  Why?.  We’ve believed one thing and we’ve stuck to not being held hostage since NFP report that brought down the house of green shoot cards and pessimism spread like wildfire..we said starting July 6th…“NFP…only a cautious bump as the world’s economies are not held hostage by one U.S payroll data point.  The manufacturing output bounce is still the focus with earnings around the corner to potentially carry weight for the recovery”.  So, nobody can say anything about recession, recovery blah blah…to change our minds and how to trade in the meantime.  In many respects, our 'The Premise'  trading methodology is stll holding true from late March.    If we had swayed any with the market pessimism at/near July lows, we wouldn’t have said what we said in (DJIM #28) and therefore, prepared for what has ensued this week.

A side note...It’s interesting and a good exercise to go back now to around July 6th and see how things played out… a standard correction of 10% on the dot to 869 the day after we noted such, the 2nd re-test of 869 mid day soon and that ‘Golden Cross’ thingy.  You only learn from experience as with anything and we can only say that we/you will and always respect some of these historical/ technical lessons 1-10-20 years from now.   One thing is to read hundreds of pages on trading, another is to experience to them first hand!.  Speaking for myself (Demi), I’ve never touched a trading book,…just picked up pieces off the street you can say, including off Jon and BT.   It’s the StreetSmart's trading book you can say, you’ll probably become a better trader off a psychology book(s) than any trading book(s).

So..what we’ve seen this week is corporate reports not  being hostage by a single July NFP report.  Why would they be?  Think about it logically.   The reports keep coming in solid as witnessed AMC today.  It’s been a steady stream.  China GDP  didn’t slow down last night because of NFP, did it?.  The breadth of the market has been a key to watch on this move, 4th impressive ratio today.   Performance anxiety(PA) pill is working!!.  Strong equities= weak $USD= commodity linked trade (even though, we think coal linked are due for a whipping down the road because of energy divergence).  Of course, China data helps commods as well.   Only slight negative is the move in afternoon was a SPY-ETF's-SPX fut motivated move with little participation from individual equities, but on the other hand individual stocks should digest some of these gains.

Oh boy...would we love a pause, a pullback now, but the market is overdosing on those little blue (PA) pills and wants to go all night and day, so who knows!  We'd continue to love our techs on some weakness from last Q..notably STEC  boom boom today..RVBD, STAR.   So far in this Q, ININ , didn`t need to consolidate as it's got caught up in the mkt tape, we had CSIQ  in forum premarket at 13 pop 8-9% for a quick trade.   HITK , only drawback is its a pharma and those usually dont' have a earning momo' shelf life, but in this market going forward, you may well be able to sell " **** in a shoebox" and get away with it.   We'll see.   Anyways, we're going to be more selective now (go earnings plays forward or scattered fast trade ideas like CSIQ) and go bigger in size on less plays to take advantage of the exuberance.  This way any real market quick downturn here will not include our cash profits.   Simply,  if we get a small cap earning surprise, it should not matter to that stock if the market is down 300 pts at the open or AMC when it's report is released.

Unfortunately,  if mainstream media-analysts get bullish now, we'll have PA investors jumping on the bed, climbing, chasing the SP names and so who knows how fast this emotional trading takes to break 956.   Most importantly here to us is the mood has changed!!.  This is all we ask for going forward as summer lows might not even be 869, but higher at that 884SPX futs level we busted the other day.  A good mood will pay dividends to what we eagerly await and that is the best part…micro small cap earning play possibilities, which will slowly start to come out as we go into July end.

DJIM #29, 2009

It is just simply amazing what 5 days worth of trading can do to this market.    Even as those who've been doing this for a while, we never cease to be amazed by the extreme unpredictability of this game.   Fortunately, being on the right side of the trade will always put a smile on your face after a week we just had.    Heading into last week,  we felt July’s technical trade will come to an end as the earning season will change the storyline.    It all changed as a technical driven market turned into an emotional driven market dictated by various corporate news.    Of course,  there could always potentially be bad news to burst some air of this, but what this has importantly done is put in a new higher low for the market this summer.   Unfortunately for some for the Bears/ Shorts,  they probably forgot what it is like for companies to report blowout earning and guiding higher.   You can't blame da' Bears for having these kind of thoughts.    After all, how many quarters has it been for dismal reports and disappointing guidance?    Yes, in a typical Bear market and a recession, companies are "expected" to release discouraging results that give a continuous negative growth trend.     However, at DJIM, we've been working the trading thesis of a potential recovery trend trade.     We've been working on this trend really ever since the TSY news back in late March.   This week so far has just reaffirmed that thesis and what happened this past week has reaffirmed our recent thesis that one bad US employment report is not a disaster for companies here while we had a thriving Emerging market.

There’s a lot to like so far this Q’s EPS.   Top lines and bottom lines are coming in with sequential growth and guidance is getting better!.  We are not looking Y/O/Y comparisions, but sequential numbers here.    INTC, a company that's well known to just about everyone, came out with a report that simply dazzled everyone.    Nope, we aren't exaggerating because you simply have to look at INTC's stock and the action from the entire market that ensued with help of more solid reports later in the week.    Of course,  we’re only a small fraction into the reporting season and nobody should get totally carried away, just yet,  but it is acting like a tradeable market once again.    Still, we have too much sideline cash out there that is desperately looking to be put into work.  If reports keep surprising, who knows where this market may go with such help entering the market.   Also, helping sentiment last week,  we had the first important noted hurdle jumped as banks brokers reports have been favorable, plus we had long time Bear analyst MW putting out positive calls on a few financial firms helped to lift the financial sector.   We also had the markets refusal to let a ’credit crisis' reminders in CIT break it’s back or even a fingernail.  We noted early,  market was showing confidence the gov’t will get this worked out.

All this favourable corporate news flow has put SPX right at 940,  a level we haven't seen in about a month and it took only five trading days to go from that 884 SPX futs level we all had eyes on here at DJIM.

The bar has definitely been raised higher by the INTC report.   However, what has NOT been raised are the companies' estimate.   In other words,  if many analysts didn't get INTC's estimate right, chances are they may not get a lot of other companies' estimates right.    This pretty much leaves room for many companies to potentially beat the expectation and guide higher and stock action follow through.    We are talking about a recovery process here so analysts had to be conservative and cautious on the estimates.    This simply makes things very interesting because nobody really knows what's going to happen in the latter half of the year as far as economy goes.    Of course, companies still have to perform and come out with good reports to prove that they are doing everything right in this environment, even if it involves more cost cutting.   In our opinion, any company that shows that they can execute a very good quarter during the last three months deserves a full pad on the back because it was not easy.    Also, these companies will be picked up by fund managers as they look ahead in terms of what these companies may deliver when the recovery does kick in full force?

For DJIM, we are excited to witness and participate the frenzy of last week and we've become even more optimistic than before.     We are glad that this market continues to reward those companies that do well.   Even last week, we had past DJIM shadowlisted Q plays putting in new highs at some point ( STEC STAR CVLT EJ).      For us, we are feeling that the small cap world may give us a surprise or two in this quarter.    The next few weeks may be the most intense trading period of this summer, so we have to be on super alert at all time.  It will be a Small cap vs. Large cap trade this summer, you will hear these musing from analysts as we go forward.

The index may be hitting the near term resistance,  but we can hear market's whisper of  "where's the next winner?"   A few more big reports, in our opinion, is enough to set the stage to potentially break out of the recent high.  This week has everything in respect to EPS,  Horseman stocks reporting…Small caps like RVBD STAR and a load of commodity linked stocks.   Most of the latter , specially in Steels will report losses and it will be interesting to see the reaction even if they do stack up the losses.

Pints on us!

The solid earnings calls keep coming and the SPX keeps trotting along.  What else is new?.   To tell you the truth, unbelievably the short term outcome of SPX near 2009 highs is of little consequence to us at this stage.  Yes, that’s all the investing public is talking about as we close at a SPX‘09 high, we admit to hardly even glancing at SPX, SPY trading today.   All we see at DJIM is how well our shadow list is behaving and preparing for opportunities ahead for more Pint sized earnings on top of last Q's winners.   Okay, maybe not looking at SPX had to do in part being occupied with watching our premkt HGSI   forum post call at 3.5mln shares/ $10 that sprouted to 123 mln shares traded and a 25% gain from those levels.   But seriously, what excites us is not if the SPX breaks 956 intraday day high this week, but what possibly lies ahead as far as earnings are concerned.  What these solid earnings in the first week are telling us is we are going to get some nice EPS winners in the next 2 months.   Yes, 2 months because most Pint sized caps report for Q’s after all the Keg size stocks report.   Plus these Pint sized caps will have 1 to 2 months of better economy than the ones reporting end of June Q’s now, so earnings may be right out of the park!.  Also, remember half of these don’t even provide guidance which only makes an excellent past Q of relevance.  We should have much more than the (ININ  HITK ) so far this Q to play.

Back at DJIM farm today,  the  drunken’animals were running freely…just yesterday we said…“Even last week, we had past DJIM shadow-listed Q plays putting in new highs at some point ( STEC STAR  CVLT EJ   )”.   Today, we had a few more DJIM shadowed earning stars light up the sky, ( GMCR  PWRD  DDRX ) for 10-15% and some with new highs.  Nobody on the web can be beat that  "Fab 7”  for a few months now.  Also, if that’s not enough, recall in a Journal and later in Forum(06/24) we suggested a pre earnings move will probably come to Casinos after a member asked if it was a time to buy back than.  Well,  with earnings in a week or so these names eg  LVS, WYNN  are acting like earnings winners the past 4-5 days as prospects improve (may need a rest though).  

Even if the market falls into total darkness from something other than a solar eclipse, we have a ‘Premise’ here that's been working overtime since March and an easy to follow formula to stick to going forward.   Note, the "BAR' has been set high for the Keg sized companies by INTC, GS etc., so the big boys ahead will need to shatter numbers/guidance going forward for a great reaction.   On the other hand, if one of these misses it will lost likely be a very nice short quick intraday trade.  The good thing is our pint sized  earnings focus has "no bar" to play in.   Also, the probability a herd momentum mentality has set in and pints are the best way to cure any performance anxiety over one’s stock portfolio in years past.

Geez, just got all thirsty..luckily it's almost noon in London UK!. 

Cheers'

Bull Eclipse

As the other side of the globe is enjoying a once in a few hundred years event of a major Solar Eclipse, we couldn't help but wonder if the stock market, notably Nazzy days streak not seen for a decade), here is enjoying one of the rarest moment as well.    Yes, we are up again and perhaps it's getting a little tiresome?   Not a chance! :)   The only type of traders who are tired of our current rally are either in shorts or are in cash.    In fact, by visiting a few Bear blogs, you'd be able to find a communities of traders who are filled with disgust and anger with this 'Bull eclipse'  over their Bear dens.    Fortunately, they are the minority at this point, many are just a furball of their old selves and others are in the closet crossdressing as we speak.   We admit that we often visit such blogs as some of you seem to as well.   We do that not visit because we are looking for short plays or trading ideas.    Instead, we simply visit those Bearish sites to get an idea what them Bears are thinking and what their case of a trading argument is.    If a Bear is considered a Bull's enemy, then we have to understand our enemy to the fullest in order to beat them in this game.    Frankly,  it's been a scene of chaos at the Bear sites lately.    Many of the da’ Bears are self proclaimed very good technicians who make mince meat of the naïve or inexperienced traders looking for an edge.    However, at DJIM, we always believe that charting is a supplemental, extension to trading.   Understanding the big picture and understanding the market mentality, individual niches is much more important than looking at charts blindly for a trade.   Most importantly, we’ve always believed the first thing you need is to discover a good fundamental stock and than you chart to your hearts content as a guide for R/S levels.   This is where most of these Bear technical places go array.   Most only look at charts to begin with, probably night after night going over scans alphabetically till they see something that gets their Fibs excited.   They don’t care what stock ABC business niche is or care if eg.earnings are tomorrow.   We’ve seen humorous things such as going long a MOO etf trade, while shorting individual Chem fertilizers stocks and /or the corn futs in the group because charts painted such a picture at the same time. 

As we have been saying, what happens few months from now is anyone's guess.   Bears may argue that we may eventually head for a nasty downfall when all of the things unfold.    This may potentially happen, but come on, seriously, what does a hypothetical theory have anything to do with what's happening NOW?     It doesn't take a genius to figure out what's happening with the market these days.  ASK..Goldmans , Credit Suisse calls this week.  CS actually has just reversed their call into equities from their June call !.  You don`t see CS often in the news like GS-JPM, but believe us they are an integral big player in the marketplace.   

Yes,  the market has been up for more than a few days too many and we may very well pause here for a pullback.   So what?  The Bulls are in charge.  This current rally is the result of people believing and acting that things are improving from credit to corporate.  Yes, the consumer in US is behind, but as recently quoted here, "Build it, he will come".   Some of the major companies we know, have come out with some reports that handily beat the expectation and guided well.    We have discussed this "beat the bar" effect during the last few days, so we are not going to go there again.

Today's EPS winner has to be JDAS  alerted AMC yesterday!   We don't post # reports regularly here because this way you do some of your own DD before making a trading decision.   For those new or inexperienced this is the only way to learn/ decipher and understand what looks like a good trade and what isn't in the future.   We just have to say that the report is that good and that's the only lead we'll give on most plays.    As far as DJIM's strategy goes when it comes to earning plays, we are looking for those companies that delivers a big and positive earning surprise.  Unfortunately, if you just go on a 'headline' number wire cross you will sooner than later be finished as a trader. It's not that simple, you need to snoop around a headline number.  JDAS falls under the category and so did, notably GMCR STEC from last Q.     These are the best kind of earning plays we like because not only they are small enough to run up, they are also liquid enough because many institutions will own them.     On the other hand, eps play such as DDRX, BWY, ININ, HITK are always welcome to our list because they always have the "potential"  to pull a big one due to their float after the discovery process unfolds amongst traders.   In the case of DDRX, it pulled an amazing run-up.   In regards to MAIL post today, due to its thinness, it  may or may not do anything.  You don’t buy a stock like this to put in your top 5-10 holds at anytime.   Just like last Q reporting, we are creating a list of plays to keep an eye on (ININ HITK JDAS MAIL this Q so far) and hope for a portion to be become winners like last Q’s list.    Some will fall off the list as we progress, new ones will be added and some like STEC GMCR STAR, we’ll all be trading into the next Q.    These new ones, we now can follow on the charts, keeping an eye on such things as 9ema pullback to possibly buy again or for the first time.   In addition, we are also paying attention to 'group' earning plays.   A specialty group from a particular sector or country may get some hot attention if things turn for the better.   China plays fall into this group and as well as any commodity groups we might trade. 

We had a caution on commods/machinery trade today after CAT  up ~12% premkt pulled the group (JOYG BUCY ) up premarket as we may have “Johny-come-lately” playing here and so we may get sell the news after what we saw in China.  It didn't spill into the overall market, but, note banks( regionals) are not helping this market to break 956 roadblock today.  We can`t have BIOTECH outperform these last few days, most likely if a PB occurs here it will be because of Banks-Commods noise here.  

Most of these 'Machinary/Industrials' gapped and all lost roughly ~$3 off top as seen by JOYG chart below.   As a whole the commodity linked groups/stocks were mixed, notably BTU  (-5%) pulled coals group.   Considering, BTU is top of crop, some parts to their call will seemingly weigh more on other coal stocks down the road than itself.   Tomorrow morning is quite important to these groups as a number of each groups leaders report, so we remain patient here, but not confident any individual and/or group earning plays will emerge,  more importantly to us is what they say will give us signs for the market.

Bottom line,  there's many potential earning surprises from pint sizes down the road and we have to absolutely capture all of them.   It is our mission and our goal for this quarter.    This market may be a little overheated due to market's enthusiasm with earning reports from big companies.   If we get a pullback in the coming days, we'd be sure to get the latest, including last Q's earning plays on the cheap.

Tactical Orders...

By sunset,  only ammunition the Bears may have is the Bulls having some trouble penetrating last line of defense "956".   In our view that’s a like a military defense in depth strategy gone wrong as it’s delaying rather preventing the advance of the Bulls.   Basically, the Bear Front line fell back at our tactical call at 884 SPX futs  as buy stops kicked in for longs and shorts covering.  Since, the breakout,  the Bulls just penetrate deeper and deeper taking no prisoners and just causing more Bear casualties while reinforcing their own forces as seen by the A/D line all the way up.   The only thing this recent slow grind in 940’s -950’s is doing, is grinding away at the Bears morale with each passing earnings day.   There is no counter attack plan yet for the Bears and the Bull army just needs a signal (one new catalyst) to advance.  Only thing that could go wrong is if the Bears can build fortifications here because they are given enough time by some of our seemingly lazy sunworshipping Bulls thinking the job is done this summer!.  A slight problem we see here is the Bulls thinking there is some magical “884” repeat before buying in or they are waiting to pullback and reinforce.   Put on your helmets now, dammit!.   We don’t believe the same buy stops are here at these levels.  There's only Bear carcass left rotting up to 956.   The "884" was the beginning of the end.   That was the ‘Blitz’ this summer  and to be honest,  we have no plan to ‘occupy’ over SPX1000-1100 for too long during the hot summer month ahead.   Why?   Simply, we don’t want to create a  'bubble' market feel all over again and/ or bomb to destroy and rebuild the Streets we’ll call home one day over SPX1000++ all over again in the future.   We want a clean surrender in the latter half of the year.  We don't want to torture our Bear prisoners, we want what they have left in cash on our side by than!.   We rather tease and give them a Q or so to build up some tanks, planes, trains and automobiles, but they’ll only be shooting themselves in the foot as they’ll be helping our planned worldwide IP (production) pick up.   This way we’ll have whole new battalions of commodities links to help our technology foot soldiers that are making mince meat out of them now with our Chinese allies!.  By than our woman and children will be shopping again with the money we send home!.

In the short term,  if the Bears want to attack in the way of a corrective dip strategy, well, we’ll have a counter attack waiting for them in the way of our sidelined cash reserves’ ready to build an underlying bid for us at 927-934 support.   Some eager Bulls may want to get on some Bear blood even higher at 941.  We'll call it our " 7pt dip " ladder step plan to buy, if a PB occurs.

Okay, gonna put away the toy soldiers now…see ya’ on the battlefield, you know the DJIM plan…attack the strongest and fittest outfits…just throw money at them and they’ll be yours!

A/D line explosion...

It was almost picture perfect.    Well, it's pretty much perfect action right till 4 p.m.    We'll get to the after hour stuff later.    For a while, what was missing in this long rally, according to many Bears was the lack of volume.  Sure, this is summer trading and volume is expected to be lower than average.   The Bear's argument is that without meaningful volume the recent rally will not hold and we are doomed to pull back hard.    Well, today the Bulls answered with some heavy volume.    The volume is also accompanied with a breakout of recent high,.  We closed up over 2% on all of the indices.   These are some pretty strong gains, coming after a 11 day rally that is.    Breadth was great and most of our plays ended with some decent gains.    According to various trading desks from major firms, there's real buying through out the day.   In fact,  transport index broke through important resistance today.   Who could be buying still, at such a "late" stage of this rally?   Geez, we wonder!    As we have been saying for a while, we still have lots of sideline cash waiting to be deployed to make up the "lack" of performance. (PA).   Today's definitely the result of late money coming in to chase the market higher.  As we posted a couple of times yesterday, we’ll be breaking over 956 soon, reason being the A/D line was has been much better this time around!.  Today, this A/ D line exploded early , see chart below ($NYAD)+413% bringing momentum and new highs all over the place, plus we felt yesterday the Consumer Discretionary sector was pointing to help a breakout.  The SP Consumer sector  was in the top 2 gainers (Bullish % Indicator) on the day.

AMC stuff,
MSFT , we are sure many Bulls just don't want to hear the name after seeing their report tonight.   However,  we have to point out that almost one quarter ago, MSFT came out with a very impressive report and the stock shot up over 10%.   How can the fortunes turn so quickly after one quarter?    Ok, one thing we have to get it straight here, is that  MSFT did NOT report a terrible quarter tonight, it's just that compare to INTC or IBM or other tech giants, it's relatively disappointing.    The “Bar”  had been set pretty high for a lot of companies as we discussed early on, especially tech companies and a lot of the gains were already in the stock on the heels of INTC IBM etc..   The thinking is that if company X can pull off such a good quarter, why can't company B or C?     Here's the thing though, companies were still dealing with a very tough economic environment last quarter.   Just because one company can capitalize and execute well does not mean others are able to do the same.     We as traders also have to differentiate a good report from bad, and good stocks from bad.    In other words, market is selective on reward/punishing stocks and so should we be.  So, is this MSFT going to derail the kind of positive momentum we've built during last two weeks?   At this point, we are thinking it's unlikely.    There's still a very high percentage of SPX components that have yet to report.   Technical’s are just too strong to stall the rally at this point and an exploding A/D line is proof of that as it was an indicator of market going higher before to this breakout.    Based on many other well received Tech reports, we have to conclude that MSFT may be too big to execute well in this kind of economic environment.    We are very much focused on the earning plays these days.  

We added TBI , a staffing company, on the back of its earning report and upgrades today.     We also added some JDAS  during the early weakness.     By playing nothing but the recent earning winners, we feel that the risk is minimum even if we get a pullback.    In fact, we'd love to get some shares cheaper if that's the case tomorrow.    The trend is still the same and our strategy is also the same after tonight.   We are continuing to look for extraordinary earning reports/reaction and play those as we see fit.    Bottom line, we'll use the weakness from this MSFT report to gather up some more positions.   Also, importantly, if you’ve been on our Bullish posture, which we said below 900 would kick in if we got back above, today was inevitable and sort of anti climatic as we hit 979.  Reason being is you’ve should have been making money while the market led up to this breakout, not Performance anxiety chasing to make a buck one day.   This is also evident in great stocks, like AAPL  that had no reason to move,  it had done enough up to today as many other EPS recent winners of the past 3 months.

"Buy Stops kick"...rip alert prior to start of July 13th rally

Daily Journal subscriber excerpts from rally beginning before 884 ES SPX  breakout  to another SPX new high 979 SPX cash  by July 24th close!. 

Our focus : US MID-SMALL CAPS, IBD 100, MOMENTUM STOCKS/ SECTORS, see post below of some stocks heavily played at DJIMstocks.com last Qtr.into this Qtr. (STEC, DDRX, EJ etc.)

July 10th.....SPX cash close 879....

"...The SP futures hovered for hours around 883,  watch 884.25  as this resistance area comes with buy stops. This may lead to a pop if busted when re-visited."

Heading into Monday, July 13th trading week,...

"...So far July has been a technical driven market,  the storyline should begin to change this week as we hit ‘EPS’ season......Away from the majority coming into this,  we think this market will only face ‘green’ when it’s all over with and the market will be higher than where it is now.  We are bullish on what might be in front of us.  We’ve had a correcting market as pessimism has grown out of a disappointing NFP and consumer confidence numbers recently, we think it’s been a timely correction as this may provide more upside as better outlooks will surprise those doubting a worldwide economic turn is here.  The US consumer will eventually come around. "If you build it, he will come",  we hear those whispers in our 'Field of Dreams'.. We think many companies misjudged the potential of a fast recovery and will have to improve outlooks.  Billions have been added in EM GDP in the past Q with Industrial production leading the way. Companies in the SPX should see this in their top and bottom lines and sectors- stocks with the most international exposure will likely be the winners, notably technology, materials, industrials.....`

"...Let the 2009 summer games begin with the passing of the torch from a technical to a corporate driven market."

As it has turned out most traders living by TA only, got burnt by July 24th!

July 13th close, closed SPX 901.... 

"....If you weren't following our lead and/ or just blinked, you missed the DJIA pop 50-70pts in seconds as these buy stops- covering ignited a market breakout....

Into July 15th, SPX at 905....GS earnings / INTC followed up AH's

"...Howerever, we have to remain open minded as this market can trade in a very emotional way  vs. technical  this earning season,  but the reports would need to continue...

Into July 16th trading day at SPX 932..

"...... Simply,  We said we'd be 'bullish' over 900 once again,  last 3 days and bull gap pretty well confirms in our minds we hit a summer low at 869.  Why?  The breadth Advancers/ Decliners, 3 days straight is too good to ignore......Today's action has thrown all TA and just casual market outlooks going forward for a loop we'd think, every short & long TA prognosis seemingly needs to be revised now......  956 high will fall as long as we hold todays gap /911.  Yeah, we're living in a 'Field of Dreams"..so far, so good though since this weekend's reference to it.

Into July 17th....SPX now at 940...

"....We saw other positives earlier (neg headlines..NOK EPS  shrugged off, CIT  noise again muted) and just before the wire cross (FDX  exploding over 200ma). ....We’ve believed one thing and we’ve stuck to not being held hostage since NFP report that brought down the house of green shoot cards and pessimism spread like wildfire..we said starting July 6th…“NFP…only a cautious bump as the world’s economies are not held hostage by one U.S payroll data point.  The manufacturing output bounce is still the focus with earnings around the corner to potentially carry weight for the recovery”...... The breadth of the market has been a key to watch on this move, 4th impressive ratio today. ..... if mainstream media-analysts get bullish now, we'll have PA investors jumping on the bed, climbing, chasing the SP names and so who knows how fast this emotional trading takes to break 956.   Most importantly here to us is the mood has changed!!

Into Monday July 20th trading day...at SPX 940 

"....We've been working on this trend really ever since the TSY news back in late March. This week so far has just reaffirmed that thesis and what happened this past week has reaffirmed our recent thesis that one bad US employment report is not a disaster for companies here while we had a thriving Emerging market.."

Into Tuesday, July 21st trading day...SPX at 950

"...The solid earnings calls keep coming and the SPX keeps trotting along.  What else is new?.   To tell you the truth, unbelievably the short term outcome of SPX near 2009 highs is of little consequence to us at this stage.  Yes, that’s all the investing public is talking about as we close at a SPX‘09 high, we admit to hardly even glancing at SPX, SPY trading today.....Back at DJIM farm today,  the  drunken’animals were running freely…just yesterday we said…“Even last week, we had past DJIM shadow-listed Q plays putting in new highs at some point ( STEC STAR  CVLT EJ   )”.   Today, we had a few more DJIM shadowed earning stars light up the sky, ( GMCR  PWRD  DDRX ) for 10-15% and some with new highs.  Nobody on the web can be beat that  "Fab 7”  for a few months now.  Also, if that’s not enough, recall in a Journal and later in Forum(06/24) we suggested a pre earnings move will probably come to Casinos after a member asked if it was a time to buy back than.  Well,  with earnings in a week or so these names...

Into Wednesday, July 22nd trading day & alerts during day, SPX at 954...

Journal title, "BULL ECLIPSE"...

"...of the rarest moment as well.    Yes, we are up again and perhaps it's getting a little tiresome?   Not a chance! :)   The only type of traders who are tired of our current rally are either in shorts or are in cash.    In fact, by visiting a few Bear blogs, you'd be able to find a communities of traders who are filled with disgust and anger with this 'Bull eclipse'  over their Bear dens.    Fortunately, they are the minority at this point, many are just a furball of their old selves and others are in the closet crossdressing as we speak.......Yes,  the market has been up for more than a few days too many and we may very well pause here for a pullback.   So what?  The Bulls are in charge.  This current rally is the result of people believing and acting that things are improving from credit to corporate.  Yes, the consumer in US is behind, but as recently quoted here, "Build it, he will come".

Alert mid-day....

Later...."Breaking over 956SPX at some point soon,   the big difference now to June 956 intraday high is the one indicator we've been noting for this rally.  The A/D breadth (advancers/ decliners)  line is much better!!.  As long as it keeps up, we'll break 956"

 ..another alert to subs'...Consumers finally playing along today, biggest positive for higher. 

Into Thursday's Breakout (956) day,  SPX closed previously at 954..

Journal titled, "TACTICAL ORDERS"....

"....By sunset,  only ammunition the Bears may have is the Bulls having some trouble penetrating last line of defense "956".   In our view that’s a like a military defense in depth strategy gone wrong as it’s delaying rather preventing the advance of the Bulls.   Basically, the Bear Front line fell back at our tactical call at 884 SPX futs  as buy stops kicked in for longs and shorts covering.  Since, the breakout,  the Bulls just penetrate deeper and deeper taking no prisoners and just causing more Bear casualties while reinforcing their own forces as seen by the A/D line all the way up.   The only thing this recent slow grind in 940’s -950’s is doing, is grinding away at the Bears morale with each passing earnings day.   There is no counter attack plan yet for the Bears and the Bull army just needs a signal (one new catalyst) to advance.  Only thing that could go wrong is if the Bears can build fortifications here because they are given enough time by some of our seemingly lazy sunworshipping Bulls thinking the job is done this summer!.  A slight problem we see here is the Bulls thinking there is some magical “884” repeat before buying in or they are waiting to pullback and reinforce.   Put on your helmets now, dammit!.   We don’t believe the same buy stops are here at these levels.  There's only Bear carcass left rotting up to 956.   The "884" was the beginning of the end.   That was the ‘Blitz’ this summer  and to be honest,   we have no plan to ‘occupy’ over SPX1000-1100 for too long during the hot summer month ahead.

Into Friday, July 24th,....SPX hits 979.4 previous day,  

Journal titled...A/D Expolsion...

"....Today (Thursday), this A/ D line exploded early. .... discussed the A/D breadth line not to ignore!...

..Bottom line,  we'll use the weakness from this MSFT  report to gather up some more positions.   Also, importantly, if you’ve been on our Bullish posture, which we said below 900 would kick in if we got back above, today was inevitable and sort of anti climatic as we hit 979.  Reason being is you’ve should have been making money while the market led up to this breakout, not Performance anxiety chasing to make a buck one day...."

DJIM #30 2009

Was a muted response (SPX up ~2pts.) to MSFT/AMZN earnings a surprise?.  Not really!.

Reason being when you have such strong breadth (A/D-NYSE was still 3 to 1 positive), momentum, new PA suffering money coming in the previous day/ week,  the market will not sell- off the next day!   Friday’s trade was more of buyers taking a break than sellers being busy.  Makes sense.  If you just got in the market, you would not be selling Friday.  Considering the action last week, an underlying bid should be present next week on any pullback as this type of buying pressure is not a one day, one week phenomenon that can't have legs.  They might not be runway model legs, but there's still some leg left.  Any pullback is a market  'breather' at this point after ~10% SPX in 2 weeks.   The week was not without negatives.  A positive is it seems any negative noise such as TXN, QCOM (expectations became too high),  AXP reversed , Banks was met with dip buying.   That is not enough downside risk to the market and therefore it was being bought by a prevailing underlying bid.   First support now raised to 950- 956 and we could use the ‘7pt’ ladder from last week’s Journal as the next support from 950.  Still note,  this rally is a recovery fundamental one and not a technical one.   Supports are only climbing day after day, so waiting for 2nd or 3rd support levels may be useless in the short term.

Something lost in the markets dissemination of corporate earning and thus rally was more global data points reaffirming our global Industrial Production recovery thesis.   How could SP 500 companies be beating forecast by over 20% (its not all cost controls) if we’re in a recession and not in a recovery? …Hmmmm

Holding into earnings,  just a reminder..we don’t hold into earning calls!.  If you decided to stray from this rule because companies were beating/ raising G,  you had cold water poured on you by Thursday with MSFT.  This rule holds especially with small cap stocks that we may have loved last Q.  You could be sleeping by a Riverbed come Friday morning if you held through for RVBD results.

Speaking of earnings,  last week we peaked with Banks-Brokers, Tech earnings in a few ways.  One is SPX made new highs and other is we peaked with the big important names.   We now go into small mid caps season and the timing could not be better considering everything that took place.   We recently said it will be small caps vs. big caps going forward and we believe this even more strongly now.  Main reason now is the RUT (barely pacing SP).  Also, short interest in small caps(RUT) is 3-4X that of SP500.   There is room on the upside here even if market stalls ~1000 levels.  The  mid/ small caps can do some damage here, this fits right into the DJIM niche.

Earnings dates link updated.

Update on Sunday, July 26, 2009 at 09:04AM by Demi/ YourPersonalTrader

Correction: RUT now barely keeping pace with SP500 after Thursdays rip. Considering they are 'higher beta' stocks, we consider this still a lag in performance.

disappointing..

Okay..only mildly disappointing…

You’re probably looking at the title and saying what was so disappointing about today, SPX up 3 pts day after the recent  ~10+% rise.    Well,  we’re not even disappointed that market was not up greater, we’re disappointed because we can’t get a decent red pullback to relieve the overbought conditions and let others come into the Bull playground.    You see,  we didn’t  have sellers today and we didnt have buyers even like us already on board the bull train to press higher or/ new buyers step up.   Nothing changed from Friday and the trading conditions noted in DJIM weekend report continued,  notably any weakness getting a light bid.    If you’re on a Level2 platform, you can clearly see a lack of any meaningful size bids or asks to make any stock move in either direction.    If something did move today, it basically reversed back due to lack of conviction.    A few DJIM stocks making intraday new highs are prime examples of all this, (excluding HITK )… ININ TBI SWI  gave back the new intraday highs and others with the real strong earnings like JDAS, ATHR AAPL  are just stuck in the Nazzy/ Tech oxygen tank after it's trip to the moon.  It's unfortunate as far as timing that the latter 3 gapped into the middle of the rally giving them little room to roam higher at this point.  All this just made for a flat boring day, but digestion is still better than indigestion! 

So..until one group gets aggressive, we’re stuck in what looks like June trading all over again.   It will probably involve a surprise catalyst to initiate a move.   Today,  some were saying it was a negative that we sold into the Home sales number,  but this wasn’t a surprise catalyst as in recent weeks the numbers, sector options action had pointed to this data.   It wasn’t enough of a catalyst for the Bulls to run through the streets and it wasn't really a sell on the news in our view
 
Positives to take away, include,  Financials strong in all sub groups  and TRANS  keeps rolling and a big part of this recent rally (recall July 16th we said FDX exploding over 200MA was a positive) and allowing rest of market to digest,  while showing this market is probably capable of rotation to keep on going forward.  In this case as NAZZY tech takes a much needed breather.  Bulls have time on their side!. Also, some M&A activity today maybe a start to some more good noise in this area.

More disappointment...

Yes, don't be fooled by our journal title again!    On the contrary, this market has been anything but a disappointment.     We had a "mild" pullback early on into the middle of our 972-966 intraday note for a bid support.    It's considered mild because we really haven't even seen this mkt down more than 7 or 8 pts on SPX intraday in quite a while.  Believe it or not, today’s -2.5 pts SPX decline was the biggest in over 2 weeks!!.  So when this mkt was pulling back early on, we were excited and hoping that we may be able to get some stock cheap for once.  But…

Here comes the disappointment.   Things just don't seem to stay "low" for long these days and you only had a chance for a handful of light dips.  We had plenty of reason to dip (notably CC #), but long demand came in the form of an underlying bid.    Again, this is becoming a normal phenomenon with this market these days.     Little rants aside, this market has once again exhibited the kind of strength that is typical of a strong bull market.    Dip buying will be the game!   Plays like HITK SWI  don’t even give us a chance pause before they inch higher,  these names actually were climbing to 5-10% gains and new highs while market dipped.   HITK, for some reason, turned out to be the best runner among the ones we've covered, so far.     At this point, we do feel it may needs to settle down a bit.    We still have many reports left in the earning season and we won't be surprised to see some exciting reports/reaction surface as a result.   Currently, plays like JDAS  ATHR  ININ  are all developing nicely.  If Nazzy/ Techs come out of their oxygen tanks for some follow through this week these names should benefit.  If there's strength that accompanies a breakout among those plays, we won't be hesitating to chase higher aggressively by adding to positions.

Bottom line, we are pretty choosy as far as plays are concerned.  We do have plenty of earning plays to work with and we'd imagine there's more good ones coming out within the next couple of weeks.   For now, lets just enjoy what this market is offering us.

Sticks and stones may break our bones...

..but foul Bear mouthed analysts, CNBC reporters will not break our 869 SPX. 

We picked a terrible day to have CNBC on during the trading day!.  Wow, the negativity of noise stemming from yesterday’s disappointing consumer confidence #, followed today by the Shang bloodbath,cover # of the Durable goods book,   followed by a 2nd weak TSY note,  followed by a Beige book that really looked like a Grey book as it gave nothing but mixed signals could have left even the seasoned long bull to throw in the towel and sell today, while we tested and tested yesterday's support bid at 869.  Tomorrow, we just may cancel our cable and go with the wire hanger for an antenna!. 

If there was one day, today was the day,  we could’ve been swayed to sell it.  We really felt alone out there ;).  As hard as it was,  we hung in there on our own views and continue to believe the last few days had some fat Bulls reloading for a move higher.   The nice close to ~875 just reaffirmed some of this and the post 4-4:30 pm spike in SPY had a 'Hmmmm' interesting green tone to it.    A big part of our reasoning of not dropping the ball today was the performance of the stocks we’re covering as they are seemingly more resilient than the average stock.   The only one that wasn’t was HITK ,  but that wasn’t a surprise as we warned for first time on it, heading into the day…“At this point, we do feel it may needs to settle down a bit.”   In typical past year’s EPS runner fashion of cheap stocks, it dropped like a rock sooner than later.  Also, we have no part in the markets poorest sector today which was hands down any commodity linked stock and so are immune to this action and noise.  

If we are right about Bulls positioning for another rip, we will form an outside of 869 Bullish month tape.  These latest days are the 3 flattest days we’ve seen in a long time,  this holds true for portfolio balances.   Unless, you're taking profits this week as some plays move to highs, your P&L probably goes back to flat if you wait because there's been no conviction yet, which we discussed earlier in the week to press higher.   Something has to give here this week,  if we can get through the next few hours and/or overnight without more negative noise than the supports built up last 3 days may provide trouble soon enough to the Bears as alerted in morning.

Update on Thursday, July 30, 2009 at 06:14AM by Demi/ YourPersonalTrader

Below are 2 excerpts following our minority DJIM view yesterday (visit site below today's Journal) from GS & NTRS on DG #'s, the premise of fat Bulls loading up for a passing grade on the number is probably evident here and by ES (SPX) follow through overnight after 'Hmmmm' interesting action just after close.

A cautionary breakout..

No matter what happens during the day, it's always the close that paints the picture(chart).  You can say that today's breakout isn't very convincing, and some might even view it as negative.   So what?   The market got within striking range of 1000 as we got the rip we proposed reasons at length the past few days.  In the short term it's probably best we didn’t hit and/ or hurdle 1K.  It’s only recently we have had chatter coming from firms on SPX 1K, you can go back to March 23rd, when we said raising capital through equity deals for banks-brokers would be a clincher to drive this market to SPX 1K.   How do you think GS and the market to got to where they are now?.  It's been a domino effect.

All in all,  “The Premise” …, trading methodology, we’ve laid out to this day since late March hasn’t derailed, but to tell you the truth, we're in no hurry to hurdle this level as we've come so far..so fast!.  

“Okay. SPX1000. We are going there this year and probably even 1100 …”
http://www.djimstocks.com/djim-journal-09/2009/4/30/the-premise.html

Approaching a level such as SPX 1K was inconceivable just weeks ago, it will always get people a little anxious and a little nervous.  Don’t forget we almost climbed 30 SPX points off 969 in a very short period of time (as in a few trading hours).   Taking profit when this magical SPX 1k approaches is probably as natural a thing to do as anything.   It is sort of funny though.  We spent much of the morning in such an enthusiastic mood that we swear we might be able to see a SPX 1K print sometime today.  Toward the end, it was quiet evident that we aren't going to see SPX 1k just yet, scepticism arose and selling took indices and many plays way off their intraday high.  Still, it was highly correlated around the SPY/ index ETF’s /SPX futs as damage was minimal to many we’ve been covering.  First support moves up to Mondays high.  You can clearly see we hit up against May June trendline of peaks (red line) in the chart below.

There's no need to put too much thought into this action. There's no need to extrapolate anything beyond the fact we had a cautious push.   All we know at this point is that we have some tremendous underlying bids that are supporting this market.  This is the kind of support which will carry this market through SPX 1000, sooner or later.  If we didn't hit this magical level today, we'll perhaps try it tomorrow or next week.  The point is, what happened today is still a very positive further down the road, but if we try this SPX1k break too soon after today, we might have a bigger reversal in store for the short term.

Many of our plays did well overall today.  Recent plays for this Q going forward like AAPL ATHR and JDAS broke out of recent trading range and held pretty well on the sell off.  Other plays are setting up nicely on our watchlist. We added AMSC to our watchlist and we also started a small position off its surprisingly good report.  There seems to be one thing in common these days, many of the plays that get great earning reaction are also heavily shorted.   Look at GMCR today, the much anticipated report did not beat the expectation by a wide margin in our opinion, but the stock still gained a respectable amount(after down as much as 10% in ah).  It is just impressive.  We are feeling that there's money out there that are willing to chase performers (momentum).  The mood among the investing community is much different than what we are used to a few months back.  It feels like there's a lot more risk taking these days as some great earning reaction are up on "okay" reports.   One thing is for certain it’s hard to read at this point what type of reaction we'll get after a call.   A great beat number/ guidance eg like WDC has a muted reaction due to this being expected.   Also, one underlying problem we saw today was the NAZZY really lagging and this probably hurt by the close.   The cause was some terrible -20% earnings were weighing on the index stemming from previous nights reports (AKAM, SYMC, we also have SYNA AH’s tonight).  Also YHOO didn’t help at all.  Euro’ earnings  were much better and hopefully help the mood there and spread here. ( Sony TSM ALU).

We have to understand that what's brought us to this point is the combination of corporate earnings and economic data.  The reason why there's buying/bid at such a "high" level indicates the kind of optimistic view that's carried and shared by many investors.  Here’s a stat on Performance Anxiety (PA), for the week ending the July 29th , we had the biggest equity inflows since 2007 of 4.2 bln.(1.5bln previous week).  Until the day perhaps this economy recovery and corporate earning recovery hit a road block or turn sour, market's sentiment should not change.   We know that in order to reverse the market sentiment, it doesn't simply take one hour of selling or one specific event to do it.   We'll have plenty of warning signs flashing in front of us then.   Right now, all the signals we are seeing suggest a further improvement from the economy and corporate activity in our view.  As long as the majority of the market participants are on the same page, we are feeling confident that we'd at least see a higher market level from this point.

Bottom line, earning reports are starting to get interesting and hopefully the SPX 1K noise quiets and the market can concentrate on stock picking going forward.  We can almost promise you come 'Labor day', it will be tougher trekking going forward for awhile (unless some economic revelation occurs) and only strong earnings stocks will be standing straight, most likely.  We are pretty much done with the big reports and smaller stuff will take over the radar screen.  We are still waiting for a blockbuster one to come.