DJIM #37, 2009

So far in September, the daily volume of this market is trending lower than that of Jun, July and even August.   The volatility of this market has also been much lower.    Of course, we are still early into this month and early into fall trading, but we're just wondering if the lower volume represents a sign of content.   In any case, we're in a healthy bull run, volume or not.

We closed at SPX 1041 on Friday.   The way it feels, we can quietly reach SPX 1050 and beyond without much drama in the coming days.   Also, we are less than a month away from the beginning of another earning season.  Perhaps, it's wise to give those recent earning plays another look before they start moving in anticipation of a good follow through report.   

In the coming days, we have a string of economic reports which include Empire Manuf. Retail Sales, Housing Starts, Philly Fed etc.   Based on the past trend, we are expecting numbers be better than the expectation.   However, just like in the past, market reaction will be the key.    As we climb higher,  economic data points will be digested to see if they are fully reflected in this market's move.

In terms of individual plays, we have quite a few plays that are either at the recent high or are very close to it.    You can say that the new high list is also very broad based because even the commodity sector got a nice push last week with cheap dollar.  As we said last week, be careful here with commods' as any short term dollar snapback will take away your gains quite quickly.

Here's a thought!   If last quarters round of earning was dominated by "cost cutting" and "higher margin", can the up coming quarter shift the theme to "revenue top line growth" and "improved spending"?   We certainly think it's a good possibility.   It's not that we need to see a huge growth numbers, but anything that give us a hint that things are returning to a normal state of economy will give investors some tremendous amount of confidence.    Perhaps then we'd see some more sidelined money moving into this market.   At this point,  it's still all speculation.  The Bears may have a rude upside risk they are not considering at this moment ahead for them.

Here's some Honey...

Are there really Bears who don‘t like honey?.   Well,  it seems the ones in the stocks market these days just don’t, even when it’s handed to them on a plate overnight at SPX ES 1030.   Yes.. that's about 20 points from lows to highs the Bears got teased and than dragged by an underlying bid of swarming Bees!.   What had the makings of a 1+% down day due to world markets feeling the US-China trade wars,  turned out to be just a regular ordinary day in this Bull rally.....Bears not pressuring new positions….Bulls coming in with an underlying bid..new cycle high being made.    The Bears just can`t conquer their fear of upside risks and really who could blame them after the 2 recent slides that ended up disappearing by short covering with new highs being made both times.   Today`s upside risk is not really the Retail report, this report tomorrow has been a time shorts position themselves prior to this summer, which led to sell offs on day of.  

In our view, today`s upside risk is something you probably didn't hear much about in the media.  It is the Barclay`s conference tomorrow/ Wednesday, where banks will start updating the markets on Q3!.  We discussed the positive tone coming out of the conferences last week, notably the Tech`s sending a positive tone that helped the market make new highs.  Well, this week, this financial conference is fear for Bears!.  We all remember what the Bank- Broker tone did for the market to start this rally!.  Simply, the shorts were reluctant and covered in case things are upbeat leading to SP financials ending up 1.4% on the day.    Early in the summer, we said eventually after this initial rally, we anticipate the Banks- Brokers to lead the market higher in Q3-4.    Is this the beginning of this or are they going to be the reason we pullback and correct.    Simply,  this conference is important to the Bull cause and we'll monitor closely…(sell off on good tone or will market run higher?). Still, there is other data points to watch for, inc retail sales and earning from some notable names this week.

As far as individual earnings linked stocks, we had a few more hovering around and/ or making new highs like SWI,  which has had consecutive up days.   FIRE  alerted again last week is capable of duplicating such a move.   UTA  continues to find a bid, but after being alerted in $9.30`s recently, a run to 12.60 is not a bad excuse to take some profits as it just clears 50ma (even though today it had its best bid day).   A stock like this is one we'd be buying prior to its next earnings report due to its China and business factor.    VVUS,  showed it's capable of moving fast on any given day, we have no hesitation holding it long term as we originally said.

Shadowlist

 Updated list of stocks we're trading and/or watching for market/ sector sentiment. (Below, visit site)

Recession Over..(!?!?)

Nope, DJIM will never make such a bold statement.  We only say such silly things as a new cycle high is ‘inevitable’ at SPX1K when all expect the great September ‘correction’.   It is however, appropriate from someone like a US Fed Chairman to make a statement like that... not traders!.   Yup, the most powerful man behind the US banking policy, Mr. Bernanke, made such a statement today.    We'll get to this a little later.    First, how about this market, eh?    Not only did we clear SPX 1050,  we did with relative ease, which makes us wonder what this market is capable if we ever get volume back.    Overall,  the breadth, which we alluded to as one of the most important measures on the market recently, is still very good!. The only notable lagging sector seems to be the financials today.   If a bank -broker had 'surprise positive' comments from Barclays, this market may have really melted up and taken out the ST August trend line of 1055.   No real news is good news here, keep this Barclays on close watch tomorrow as comments have been `somewhat upbeat,  but this can change quickly and so will the market mood. 

1055 is resistance as it also is a point or two above the May 08 50% retrace.  If we close above today’s new cycle high (1056) this week, say hello to 1068-1070.  Otherwise, we pullback some.  We didn't say correction,  just a pullback.

As far as saying the "recession is over" is concerned, we're in a cautious agreement with Mr. Bernanke.  While the headlines state that Bernanke has declared the recession over, his words were actually more guarded..."even though from a technical perspective the recession is very likely over at this point, its still going to feel like a very weak economy for some time."   What would give us a final stamp for agreement?   The upcoming earning period!    We feel this earning period will truly show if we are on track to a recovery.    If we are able to show some decent reports, top line revenue growth with some optimistic views from the CEOs from a wide range of sectors, who would then argue that recession is not over?    Keep in mind, the recession did not start this year or last year.   According to some analysts,  the recession began as early as 2007, so it's been around for awhile.    Toward the end of 2008, under the pressure of financial crisis, the compounded fear simply drove everyone into thinking this recession would take long time to get out of.    Now looking back, how naive we have been and how immature some of the market analysts have acted.    Still, there's really no one to blame because we all faced the same dilemma and nobody ever experienced such a series of events like the past 12 months or so.

Today we had quite a few commodity plays breaking out on some heavy volume as the USD turns into dust.   Plays such as X  last alert in 33‘s hit 39, CLF, MEE, OIH, FCX, RTI  etc. all took out the recent high.    Also, the action seems pretty broad based as all types of commodity plays shared the similar action.     We are sticking to our same strategy when it comes to commodity plays.   We won't chase heavily into this kind of strength, but we'd be much more willing buyers of dips.   It has worked really well for us in the past.    Again, this is completely correlated to the USD rollover and it could go either way overnight, so do take some profits off when you have them.

A couple of tech plays from our shadowlist have also broken out today, SWI, notably FIRE , our last alert in low 19’s for another look on Friday exploded over $22.   We updated our Shadowlist yesterday (not link) and those of you who have not done so, now is a good time.  Names come and go as we’ve said before.  BWY, is one name followed here for awhile hitting new highs today got accidentally omitted from list.   AIM is one we added to watch after earnings Monday night, we’ll probably remove it in a few days after watching it today.

We're actually very excited to see this market behave the way it has since the month started.   The only regret at this point is that we aren't getting many good entry points due to the persistent uptick action from the market.    Again, if this market pullbacks prior to the earning season in any significant way, we'd be very aggressive in buying the dip.

Oh yeah,  SPX won the dash to 1050 over Gold,  almost in  'Bolt'  time!

..doin' the Hokey Pokey..

So…who’s responsible for the market moving almost 40pts since an overnight low of 1030 a few days back?.  DJIM members know…right?.   We definitely hope or you’re missing the point of our daily Journals.
Simply, the answer is the finnacials..banks- brokers etc positive/upbeat tone from Barclays conference.

Why?…."In our view, today`s upside risk is something you probably didn't hear much about in the media.  It is the Barclay`s conference tomorrow/ Wednesday, where banks will start updating the markets on Q3!.  …..Well, this week, this financial conference is fear for Bears! …………The shorts have been covering ever since and we say "hello" to 1068-1070.  The market not only closed above 1055 Aug upper trendline, it just went straight for a close of 1068 on a broad move.     Again,  shorts either cover or have no cojones to put on new positions due to "upside risk".  The best they can do is wear a protective cup. 

What we are seeing is our premise of banks- brokers taking leadership again for the next/ final leg higher in 2009.   It's seemingly beginning, but we have apprehension because it's happening too early.   What the hell are we going to do the rest of the year, if this continues now and we shoot to 1150-1200?.   To be honest, we need to curb the enthusiasm!

You put your right foot in,
You put your right foot out,
You put your right foot in
And you shake it all about.
You do the Hokey Pokey
And you turn yourself around
That's what it's all about!

Yep,  that's what the market is doing again this week as SP Financials (nearly 5% up) put their right foot in and the Techs put their right foot out! (+1.5% for the week) and the market shakes to new cycle highs one again.  Note, we had also lukewarm reaction to a few positive pre- announcements eg. SLAB.  No effect worries us some going into EPS season as it comes on the heels of muted INTC  reaction a few weeks back.

Commodity- linked stocks, adding to USD weakness, we had many positives from talk of China demand from atleast 3 different sources.  As far as VVUS  and it's offering AMC...you don't do a positive phase 3 trial without a follow up secondary.    It's the law of the land and in this case it's good its announced quickly.  Hopefully it can be priced immediately and than we can get on with the stock moving with some fat cats in.  It's occurred with OGXI which doubled since theirs, HGSI  which went up at least 50% higher after its secondary.  No promises on same % results, but as a long term hold it will pay.

" Bull"dozer

Even as bullish as we have been, we are getting somewhat restless.    There is no denying that this market has been robust.    Most of the worries have been cast aside and any resistance levels, shorts have been bulldozed,  mercilessly.   The most recent levels, such as this or that retracement level get chewed up as if a Caterpillar D11 was being used.    At this rate, we can easily go to SPX 1100+ without any kind of meaningful pause/pullback.     Oh yes,  we aren't even using the term "correction" anymore because it's actually an insult to the Bears these days.   Pausing, consolidating, grinding is what this market has been doing during the past few weeks and frankly we are overwhelmed with the pace of this bull cycle run. 

Still,  there's a few problems with this kind of market.   One problem is that the market simply does not allow us, the traders to build any meaningful position on some of the good plays out there any longer.    Yes,  we can chase the strength up a few points but seriously, not many of us are comfortable holding onto those high flyer or those breaking out at this stage.    So,  this has effectively become a very short tick swing fest.    Guess, this is where building a book of stocks, quality stocks such as EPS plays early is the big payoff!.   Sectors take turns to get pushed up these days and we have had increasing volume for the past three days in a row.    What this feels like is that the market can top out short term in a dramatic fashion if a volume flood is created by some catalyst.    Basically, we are 'cautioning' everyone to take a step back and not to get too carried away with this market at this point.  

As far as some of the individual play goes, things aren't as bad.     We do have an earning season coming up so there's bound to be some pre-earning run.    Today, we had a pop from DDRX  and we believe it's capable of running for couple more days till it releases report on Sept. 21st/AMC.  ATHR, also popped today after digesting its recent guidance and acquisition news.    AMSC,  it also popped out of recent trading range and got a new closing high.  Even a different type here like CTB  broke out seemingly over $17 today after possible entries in the 15’s since alerted a few days back.   It's interesting to see what kind of follow through we'll get, if any,  in many of the names we follow.   HMIN,   we also like this one as it's sitting at the recent high and the chart looks good.   Also, believe it or not, EJ  another China made a NCH today.   Still, as many sec’s out there, China needs a rest now.   The weakness in STEC  is overdone generated by a firms note on competition and therefore, STEC losing its advantage.   This is really nothing new and may only become an issue in 8-10 months,  by that time this particular market space will grow and there will be room for all to share in the pot.    It might be any easy bounce play tomorrow for some points, more importantly, it will definitely be a better play later after this gets buried under the rug.   Building positions from any weakness would be ideal here.

VVUS, did as asked and priced immediately the secondary at $10.50 tonight    We are hoping this gets the stock moving in the near future.    As far as we’re concerned, sooner than later, if we pullback and/or sentiment changes a bit in the broad market, we will have interest coming into more defensive sec’s such as biotech.  Call it a hedge if you like.   ARNA, another obesity drug play has a result pending, it could spark more interest in VVUS tomorrow,  if it disappoints.

Technically, a close over 1053-1055 on Friday would be a bullish sign for 1100 by early October.  If below,  1048 followed by 1035 ST support may be coming into play ST(short term).

We look forward to next week to see the IPO action in regards to the health of this market.  At least 7 to 8 companies go public,  making it the busiest IPO since 2007.

DJIM #38 2009

Despite the last week’s final box score of SPX up 2.5% on the week, we are going into a FED/ IPO/ RIMM week with a continued  ‘cautious’ stance noted late last week.   This is not a fear factor,  it’s just prudent money management of narrowing down number and sizes of positions awaiting a new catalyst.

As discussed,  it is becoming difficult to chase strength as the risk /reward is just not there entering a position of size on many of the stocks we’ve been playing the last 2 Q’s at DJIM at this stage.  We want better entry points now on many of our favourites.   In the meantime,  we hope to find a quick new one’s like CTB  last week to trade for a few points.

So, the best thing to do is get ‘selective’ until earnings sets the tone either way.   It is unreasonable to think the market will get out of hand to the upside prior to earning reports unless some very positive unexpected catalyst comes up before.  

Last week, we our lead was the upcoming Barclays financial Conference to watch for as an upside risk. This week… In the last journal, we noted the number of IPO’s coming up  that will give us signs on the health of the market, thus, the SP tape direction.  

Everything else remains the same, the Bull/ Bear tone , the technical picture. 

A Snoozer

Despite some early volatility to the downside, the market was generally a snoozer today.    Perhaps, no news is just good news at this point.   Heading into Friday’s trade, we noted technically, as long as we closed above 1055 it would be a bullish sign heading forward.  Today, we found the ever present underlying bid just above at 1057.

Best Sector, tech looked as if it’s done consolidating after 7 days, so we’d look here tomorrow for possible follow through.  Of possible positive interest for commodity sec is the CIC (china sov' fund) getting in the resource game with a 850mln stake in Noble grp (commodity trader).

As far as individual play goes, other than a couple of plays such as SXCI FIRE OVTI  making a new closing high's today, most plays are in a nice consolidating pattern.   What's most likely is going to happen going forward is that we'd see more HITK, DDRX  type of pre-earning run up.  Simply, we may get better pre-earnings moves than post earnings reports this Q.   We have quite a list of plays on our screen at the moment that will undoubtedly have some kind of pre-earning setup.

Other than a couple of Eco' reports, the most anticipated event will be the FOMC meeting on Wednesday and IPO‘s later in the week (list below on site). We don’t expect any surprises from the Fed. but we will keep a close look on how they interpret the recent economic activity or exit strategy. This will be closely watched as a sure sounding Fed gives market participants confidence.    In the meantime, there's really not much we are expecting from this market other than keeping our eyes on some plays that are poking with recent highs/

..'watch your (FOMC) language"

This is the message, the idea..lead (below)...one way the market may look at the statement, if everything else in it remains in check.

Another day, another new bull cycle high close.  Ho-Humm, eh!.   The story remains the same as the weak dollar is pushing the carry trades and flows to risk = equities.  ES (SPX) keep making higher lows and higher highs, only thing lacking in the futures is volume which was off by ~25% from the recent avg’s.  Everyone seems to believe we’re busting out higher, this includes Bears of all colors and all that is in the way is the FOMC language tomorrow afternoon.
 
We’ve discussed early summer our premise of Banks- Brokers leading the next leg.  We’ve been apprehensive on this occurring 'now' due to the fact... what are we going to the rest of the year if we shoot 1100-1200 very soon?    Today, we alerted to something we can’t ignore and that is a basket of big financials hitting new highs simultaneously.   Not many pay attention or know CS is just as big as a player as GS, JPM in running the tape.   Today, they (CS) and GS JPM MS  all held hands to highs and it makes us wonder if the next push is inevitable and in short order. 

FWIW, we have this headline of sorts into tomorrow…“Bank Breakout Signals the Next Move Up”;   Cramer thinks the big rally in the banks (esp. the large money centers) signals further support for the market.

Let’s just say,  if the FOMC excludes/ removes a sentence… “economic activity is likely to remain weak for a time”,  the market may melt up and our beloved financials will likely lead the way.  This is the way we’re positioned at close with focus on financial related stocks from banks-brokers to Asset mangers to credit cards.   If this statement remains, we probably won't be dealing with 1100 SPX too soon. It may even give reason to sell-off.  (This was the start of paragraph 2 in last FOMC statement, so give the statement a quick look when released.)

..'watch your (FOMC) language"..pt 2

Basically,  this market is typically doing better when there's no event.  Not that today was a real event.    A event like the FOMC meeting today, more often than not,  provides an excuse to "sell off the news"!   Not good news in this case as recently in the markets, just sell off the news.   Fed did provide a pretty upbeat statement,  however..as we pointed out as a lead….watch the language and today’s still included …“economic activity is likely to remain weak for a time”,  even if the context might have been changed a bit, it still was there.   A reason to sell -off possibly,  we said. 

We don’t care what the reason for sell-off was or if we were right.   Surely, there are many opinions tonight.   All we care is,  it happened and now we look ahead and see 1058 area and than 1038 as support. 

Based on the recent market action, we all knew that things are getting better and worst is behind us.     What we wanted to know, at this point, is that how much better things are now and at what rate things are improving?    This, unfortunately, cannot be answered by Fed or anyone right now.    Why?   Well, we have thousands of Corporate CEOs that are waiting(dying) to inform us in the coming earning season.

Fed merely monitors the overall economic data and acts upon them.    For individual company, they see every single area of operation that affects our economy.    So, it won't be too long before we get to hear from them starting tomorrow night with RIMM.  Hopefully, we'll see a nice growth number from RIMM because they are still considered a growth oriented company.     More Blackberry sales means more business users and more business activity.  On the other hand, we’ll see if this is in the stocks price, no matter what they say.   Well, it's up to analysts to decide later, anything positive they reveal will give us a better look into this earnings sesaon,  even if the initial reaction may prove otherwise due to today's action serving as a lead to any selling off news..good news.


Speaking of the market strength, we have an interesting test coming up.   We’ve talked ’ IPO’ importance,  SNDA, a major online video game company based in China, is spinning off its most lucrative business and trying to raise nearly $1 billion dollar via. an IPO (GAME)   Oh yes, it's not a typo because they just increased the offering today and it's nearly a billion.    This will give market participants some idea how much appetite people have for this kind of thing.  We also have AONE  and it has raised it’s offering price.  As we said, we want to see market fever or not here,  to indicate health of market.

Bottom line, don't be disappointed by today's "Fed Reaction" because it really isn't a big deal.  The statement was largely as expectated.   All they had to was remove that line we talked about to move the market to the upside,  but instead said they see a relatively ‘sluggish’ long period ahead.  FED didn‘t want to take the chance and say things are too rosy before they are proven.   Their conservatism made the reversal.   A surprise IJC number tomorrow and those pressing shorts today will be washed away..again…The initial upside was just short covering and later it was just sellers appearing after no real bid appeared. (volume).   Dip buyers didn’t come in, we saw this recently remember till things settled down and then buyers came in for this recent move to new highs.  

..dime action?

What all traders know from early September is this market can stop and start on a dime. 

Beginning of September this Bull run was seemingly losing steam (losing 3.5% from H to L).  In the middle of this dip, we talked about Bulls not coming in/ providing underlying bid until things settled down, especially after a 2.2% drop in one day.   Also, at this point we talked about the Bears missing an opportunity to press the Bulls to their knees.   Seemingly, we could be in the same pattern.  It’s seems too predictable now,  but the shorts have this as on upside risk always shadowing them.  The ability of the market to stop and start up again is there once again.   Right here and now is probably a great opportunity for such to occur soon.   Why?.  This dip has given an opportunity for money managers to dress up their books as we’re coming into Q end and they might be foaming at the mouth.  The start of Window dressing may just bounce this market very soon. 

Still,  this action is reminiscent of the action prior to AA  earnings last Q.   If this is the case 1035  is a possibility (because we closed below 1055 today) before AA’s earnings in 2 weeks,  but it doesn’t curtail a reversal possibility before.  Understand though, we're not talking a bounce of 70-80pts here like last time!!.  Use reversal if it comes to lighten up existing positions and/ or just get your daytrader face on for the time being.

Takeaways from todays’ action

IJC# was positive but was nullified by a negative housing number.  Strong USD pressuring commods’ and not helping bounce opp’ for risk assets such as equities.

Volume was heavy, but it was confined to the SPY and sector ETF’s, even in the continued sell off to 1045 there was minimal damage to the majority of individual stocks as many < 1-2% down on our list. Might be a positive.  Individual stocks taking a licking are more of the momo type (casinos) and/or garbage stocks with bigger profits to take off the table.

IPO’s,  we ignore the REIT IPO's, we all know this is crowded/ garbage space.  Instead, we look to one we highlighted AONE  and the spectacular day it had.  The offering and size was raised (positive) a few times and it still managed to get a herd into all day pushing it higher.  This is a positive for the market's mentality going forward.  Still, all the new issuance's and follow on issues hitting the market puts the market in a posssible digestive mood again, keeping 1100 out of reach for the time being.

RIMM,  judging by ES action tonight the market may shrug this report off and may signal a bounce begins from 1048.

DJIM 39, 2009

Last week, we had this market cooling post FOMC for 3 days.    As we have said previously, this market can start and stop on a dime, unfortunately it works both ways.   At least, we entered the week with ..” we are going into a FED/ IPO/ RIMM week with a continued ‘cautious’ stance noted late last week.   This is not a fear factor,  it’s just prudent money management of narrowing down number and sizes of positions awaiting a new catalyst".    Also, we alluded to a possible sell-off post FOMC, if some language was not removed from the statement.   The point we’re making is any big damage was avoidable to all of our books.   At Friday’s close,  we can only say we’re glad this market is able to pullback, as well, as shoot up.    At this particular time, we are also quite glad the market has paused right before the earning season starts on low volume.   There was no panic evident in the drop.

Currently, we are sitting at SPX 1045,  but it doesn't matter that much as if we can easily come down to SPX 1035 in the coming days.  This would be a true test of support/ underlying bid.   We’re still 2 weeks away from earnings season,  but we do have the always important NFP to close off the week as the highlight.   Right now, we aren't expecting to see any surprises from the Economic side of things, ( a few headwinds appeared ) and as long as the trend stays the same,  it'll keep market participants somewhat happy.    On the earning side,  we're hoping to see the kind of reports that are opposite of RIMM's.    What we will be doing now is going through our Shadowlist, mostly for last Q’s additions (see Sept 15th Journal entry for current  list) that have a chance to pre-run before the earning reports.    Note,  we don't want to be too early on those possible pre-run setups,  but we don't want to be too late either.

Coming into the week,  we are hoping the dip brings in end of Q window dressing.   The upside risk is simply too overwhelming to ignore for most of the big money.  

..dime action delivered..

Simply,  the market was high as a kite (M&A’s, a drug deal) today and it didn’t take much attendance to make a ‘technically’  impressive ‘ dime action’ move that definitely included ‘window dressing‘. 

We understand what a grind it’s been on the SP as today’s move was the biggest since Aug 21st.   Why was this impressive ‘technically’ only ?.   Well,  it’s because we found support in between 1048 and the important 1035-38.  It’s not a exact science to bounce off exactly, maybe 1041 low was enough.  Once we closed below 10551057, we noted 1035 was a possibility, but it didn’t curtail a reversal/ dime action before.   We pretty well got that and what makes the move ‘technically’ impressive is we closed above (1057 Sept 21 low).   So, why the emphasis on’ technically’ impressive?.   That’s because it was the only reason as there was NO conviction buying!.   Once the window dressing bid leaves in the next few trading hours,  we have no reason to believe a market high on a Drug deal and an end of Q window dressing can fly too much higher, especially with the NFP report on deck.  

Today’s leader  was the SP Financial index up 3.4%, but this really didn’t include the usual suspects..GS, JPM etc.  Instead, it was the asset managers we alerted to last week..names incl, BEN BLK, JEF  and insurance names such as PRE , a DJIM earnings play broke out nicely.  

In conclusion, we take the upside move in stride until/ if 1067 resistance is broken.

What to cheer for?

As soon as the 10am CCI# was out, our window dressing bid pretty well came to end.  Following a positive Michigan # on Friday, this CCI was a disappointment.  By close we gave back a portion of yesterday's gain on heavier volume,  still a pretty good showing given how light the volume was yesterday.    What concerns us now is what happens as this Q window dressing winds down and what October has in store.   Well, we may have a pretty good taste of that on Friday from the NFP report and tomorrow (ADP).

Technically, we reversed right at 1057…(yesterday‘s journal)‘..technically impressive is we closed above (1057 Sept 21 low)”.  Not a coincidence today, an important level to watch intraday in your trading this week.

As a whole, this market is holding up quiet well heading into earning season.    What we think is that people have learned their lesson from previous earning Q’s where selling before the earning season is simply a bad idea.    Whether people believe an Economic recovery is at hand or not is somewhat irrelevant nowadays.  Traders are more focused on the fact if companies can deliver positive surprises top- line/bottom line.    Why not?     Since, no one really has any grasp or firm idea how the economic recovery is progressing, the probability is pretty high some companies can deliver some impressive reports while others will not.    In a way, this is fairly rewarding for those who bet on the right kind of companies.  We just won’t do that by holding into reports and instead will look for a move prior to report day.   At this point, two different companies in the same sector can deliver entirely different kind of results.    To deliver good reports, it has a lot to do with management execution, cost control, and grabbing back market share against all of the competitors out there etc..    Therefore, we feel any companies that deliver good surprises have to be rewarded by investors.    On the other hand, you can also forget about those companies that aren't executing.   Cough-cough (RIMM ).  Simply put, not every company can ride the coattails of an early economic recovery environment.

Plays wise, we have …ROVI RTI CTRP  making NCH’s while other plays such as HITK SWM  are setting up.    Keep an eye on AONE  as well, it's a play that can get some excitement easily.   Even though our stance is somewhat cautious, it doesn’t mean trading opp’s are ignored.  Just don’t get caught with too many positions or sizes too large to handle.  At the opening bell, we alerted a possible move in the Shippers (GNK DRYS ) due to Cosco words.  By close these names were the near the top of our shadow list by % gainers as this report spread on wires.

..bumpy ride

We opened September just below SPX1K, today we close off the month about 60 pts higher. All the hoopla surrounding a traditional September swoon just never materialized!.  Unfortunately, we conclude the month with consecutive eco’ data points that may give the market it’s first ‘ headwinds’ in months.  Today, it was the Chi- PMI, ADP on the heels of Consumer confidence #, durable goods and some housing numbers in the past week or so.  Surprisingly …fortunately the dip buyers come in and provide an underlying bid , today is a prime example as we bounced hard into the green after a quick sell off.   At this point, the buy side is thinking earnings this upcoming Q will negate the current eco’ headwinds.

We pretty well covered our sentiment on the market through Alert-comments today, we can only conclude by saying, we can do without more headwinds in eco’ data to close off the week…ISM, NFP Friday. 

The market is held hostage now by two things, one is the SPX/ ES technical trade and the other is the eco’ data.    As we said last week, it’s time to have your day trader face on.   This means when we get a point or two move in a stock like GNK yesterday, CTRP today, we take the profits quickly and look elsewhere.   Today, we touched on China's 8 day holiday,  we'll keep a close eye on this sector to see if their celebrations spread to some of the stocks here.