Accumulation of eco' headwinds = Q3 profit taking..

From the look of the beatings out there, you'd swear, we had a terrible NFP report out earlier today.    In any case, we don't think it even matters that much if the job report comes out weak tomorrow.  (GS said 250k today and from the employment sub sector of the ISM today, this is very probable).   Why, doesn‘t NFP matter now?   Based on today's action, we are assuming investors have already written off tomorrow's job report as being "no good".   We discussed the ‘headwinds’ and today this accumulated with below consensus IJC#/ ISM#'s and made investors wary about holding into tomorrow.   So, everyone might as well sell in front of the event and book gains from an excellent Q3.   In the forum today,  we noted why not to look for "opportunity" today,  we believed no underlying bid would come in and as it turned out,  it got ugly into the close!.  

In addition to accumulation of  eco'"headwinds",  today was really all about broad based profit taking after an excellent Q3.   We already had Chi’ town PMI indicate ISM probably would not meet consensus.  It wasn’t the reason for sell off.   It wasn’t horrible enough and say under 50,  it was just the accumulation of data coincided with Q3 end which is an excuse to book profits from the largest winners the past 90 days (stocks & sectors).

For some sectors, it was pretty ugly.  The biggest winners in Q3 were hit the hardest.  It seemed smaller caps fared somewhat better.  The plays on our Shadowlist fared pretty good considering the magnitude of the sell-off.

What does it all mean then?    Technically, we broke and than closed below SPX 1035-1038 .  We noted last week this is "important support".  It sets a stage to test the early Sept gap 1016-1018.  

So, a bad job report tomorrow may give market participants some more reasons to sell, but we think most of the damage from a bad job related sell-off has just occurred.    We are about one week or so away from the earning season.   Would we like to buy JPM under $40 a week before their earning report?   That's definitely a good setup we think.

Again,  investors are wary the past few days as it‘s pointing to a “stall“ in the recovery.   Right now, we aren't getting too worried off these Econ. data because we are bound to have some fluctuations ahead in data points.   What we think is more important is perhaps a three month average of those data.   It paints a better picture if we are progressing or stalling.   This is why earnings season is even more important now as all this mixed eco' data might just be 'noise'.    As far as selling off in front of an earning season.    Frankly, we'd rather prefer heading into the earning season closer to SPX 1000 than SPX 1100.   Think about it, if we are actually at SPX 1100 heading into the earning season, we don't think anyone would be willing to chase or hold onto a good report.     On the other hand, at a lower level, there's definitely more probability of upside than the downside if we have another solid earning season.

So, here we are, there's plenty of worries this week to cause investors to step aside.   In our opinion, we need Bears and naysayers in order to keep this rally going.  The double dip camp will get louder now. Skeptical folks will keep things in check and force this market into a technical pullback once in a while.    In all, it's very healthy and a short lived correction is the probable outcome. 

BIG "IF" tomorrow...if NFP miraculously comes near consensus, the market will most likely show 'opportunity'

DJIM #40 2009

A clear sentiment change by the close of Friday’s trade and it's timing really stems from our premarket alert on Tuesday warning…“ISM# tomorrow, today is the Chi-town # … as a possible prelude.   If this falls <50, watch out as it's unfathomable to many of us in the 'recovery' camp. Very recent headwinds in US eco' data make this noteworthy to watch today”.  

As the market fell 5% from those Tuesdays’ morning highs,  it is clear the sentiment changed, the Bears got some ammunition as the ‘recovery camp’ and it’s long run got dampened due to the accumulation of negative eco’ data over the past 1-2 weeks.     As we said late last week, eco’ data can get bumpy from month to month now and Sept. numbers might just be ‘NOISE’.    To get a clear sign we now await EARNINGS to see if this trend can be changed back to a ‘recovery’ theme.

A 5% fall in 3-4 days can wipe out many of your recent gains,  it’s a pretty clear known in trading that when the broad market falls 5% as it did this time, many of the individual stocks, especially high beta winners will drop twice or three times as much as investors run to take profits in this class first.   Prior to the dime action that saw the market window dressed to 1070, we said,  “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“.      This premise remains till next week,  we may get a bounce as alluded to Friday from the gap,  but if for some reason you’re overexposed, oversized or just didn’t get out during last week's bounce,  use the next bounce to cut down.   Bounce may occur for technical reasons and the fact it’s a pretty mute week for eco’ data.  

Even though AA (7th) kicks off the earnings season this week, the official season kicks off Oct 14th with the Financials  and INTC.    Simply, we are in a neutral bias..this means a “WAIT and SEE mode”.    Considering over 90% of the stocks on our list are below 9EMA,  we don’t find this engaging to do anything other than catch a individual bouncer for a flip trade.    Other trade possibilities this week is to look again for a USD trade,  any weakness is a commodity- linked stock trade possibility.
 

Range Bound...

Let’s just say, it’s nice to see the market continue Friday’s reversal after four days of selling last week and have it’s first green day in October.

There's couple of things to note with regard to today's action.  First, technically ….Before Friday’s trade noted…”..What does it all mean then?    Technically, we broke and than closed below SPX 1035-1038 .  We noted last week this is "important support"."  It sets a stage to test the early Sept gap 1016-1018“.  

After today, we are above the “important support” once again and we didn’t re-test 1019 just above the gap alerted was a ‘good for bounce chance’  Friday.   Next “R” at 1041 and 1046.

Second, today put some ease back into investors' mind after the string of disappointing Econ. data from last week.    More often than not, markets sentiment can swing wildly from one week to next.    Today's ISM non-manufacturing.#,  an indication of the service sector, came out at 50.9 providing some ease  as it was more in-line with recent Q3 readings than last weeks was.  The # helped to built some positive sentiment in the morning on the heels of Goldman Sachs upgrade of WFC and COF which helped the financial sector log a 2% +day.

Overall, breadth is very good as majority if not all of the plays on our list ended in green.   Today's also the first day where we saw some broad based gain from the commodity sector as the result of a weak USD bolded on site last night as a trade to watch this week.    Granted, volume isn't particularly strong across the board,  probably because this is literally the week before earning season.    We are hopeful that today's action can put this market back into the range which we've discussed before, between SPX 1038 and 1060.    We don't expect to make much headway in either direction simply due to the lack of economic events and earning reports wait and see.    However, this doesn't mean that some of the small caps on our watchlist can’t enjoy a good week.   Some of the notable ones on our list include HITK SWM  which made new closing high.  DGW, added last week in alerts broke its range.  TRIT,  is a recent IPO in same group to watch for upside break trade as well.

Last week, we said to keep an eye on China because of their "Golden week"  holiday.  This has been very quiet on the news flow here, but we can tell you retail sales were up over 15% YOY in the first 3 days with tech stuff HDTV / 3G handest exploding off the shelves.  Maybe, early next week the final data will get some 'noise' here.

With a week to go before some of the major companies release reports, we are hoping to find some quietness from this market.   Range bound/ A holding pattern.  This may actually give some of the plays on our list a chance to make a move higher and we'd love to sell some into the strength if that's the case.    Again, we are eyeing the coming earning period just like everyone else and last thing we want is to set another bias/ trend heading into the earning season.

Global Rip..

As an overnight Global market rip flowed into Europe (most exchanges up 2%),  U.S markets had no choice but to follow.  We were actually quite relieved that 1060 proved to be technically troublesome as this is the top of the ‘range bound/ holding pattern (1038-1060) noted yesterday.  The reason is simple, we don’t want the market to get out of hand before the market has a true read on earnings and cause a sell-off on ‘good earnings news’ down the road.   Either way, up or down we go later,  the strong impetus for the market will be earnings and not Aussie interest hikes, talk of 2nd stimulus talk as was the case today.   The real money is not going to chase the market to new highs on a relief rally,  early afternoon,  we had evidence of this as how easily the market can sell off without conviction buying coming in.  

Most importantly in DJIM land,  this relief rally played out perfectly bouncing 40pts from Friday’s gap support levels to unwind positions and make short lived trades.  After seeing the benign G7 statement this weekend in respect to the USD, we entered the week saying look for a USD weakness trade.  It is incredible to see what has ensued as all focus is on FX with Gold ripping,  Aussie / Canadian dollars at highs etc.  

As far as sec’s, strength was broad based.  Our China’ listed stocks, such as HMIN EJ BIDU  were strong.  One of our few retail stocks, TIF  made a nice run to NCH.

As reports start to trickle out this week, the market will begin to get a read on things and start to get a feel for how to position itself, either for upside or downside.   Every report from PBG today to COST tomorrow morning to AA after hours will be dissected by the real money to begin a feel for what lies ahead.

rejuvenated

For the longest time, the earning season is usually kicked off with Alcoa announcing a miserable quarter.    Today, we got quiet a surprise in AH as AA  announced a profit with 9% sequential rev. growth.  Remember the good ole EPS’s days, one thing we always looked for was SEQUENTIAL revenue / eps growth.   Not YOY, but sequential!  So, can this be real?  You betcha!    Although the profit of 8 cents/shr is largely due to aggressive cost cutting, FX, the top line Rev. figure is for real and China is the driver. 

AA’s impressive Q may turn some skeptics on to believing a global recovery, therefore, real money would start to enter the market.  A sentiment change is the key here, now all we need is for other companies to show they are 'rejuvenated'  like AA. 

After yesterday's market "rip",  we'd expected some back pedalling from this market.   What we didn't expect today is the lack of it as we traded in a very narrow range.  Financials  made it back to back to back  >1% days ahead of their big earnings week indicating the street is optimistic.   From the tech land, we had Google's CEO commenting that worst is behind us and he's seeing improvement in the Ad. area.    This is simply great news as more advertising from business means more confidence from Corporate America.   This directly translates that there's more consumer confidence and spending down the road, according to this logic.    Yes, we are still range bound with SPX 1060-1064 as our short term resistance.   However, if we get a decent IJC number tomorrow, SSS Retail #, we are sure to bust out of that resistance and who knows where we'll end up by the end of this week.

At DJIM land,  even though we wanted to be unwinding positions, if we got a reversal last week, we still left the option to day trade selectively.  Once again, our focus on the Holiday China was led by the only 2 stocks we introduced this/last week in DGW +$3/ 9% and TRIT +$2/14% .

We are also looking at quite a few commods due to the AA report.   We wouldn't be hesitant to chase a few in pre. market or at open depending on the sentiment holding overnight.

Okay, so a positive start to EPS season...the question is how patieint the market will be before positioning money into other names.   If the tone continues and it is definitely early, our premise of putting money into stocks for pre- eps moves will drive the overall market higher. 

"Golden week" stocks!

A lot of real buying in the morning off AA earnings, Jobless claims #, positive retail curtailed at 1pm off a weak 30yr auction and we finished at SPX 1065.    Well, that’s what the broad market was doing and seeing, we really didn’t notice as our “Golden week’ China stocks had all the fireworks.   Of course, we’re talking about alerted UTA TXIC and TRIT  all running probably with many of the same players behind them. 

There is really not much to add before Friday’s trade,  investors will wait to make bigger commitments when we really kick off earnings next week and begin to get Sept eco data.  

DJIM #41 2009

DJIM #41 weekender will be posted prior to tomorrow's unofficial earnings season kick off.. 

We are 'observing' the Thanksgiving day/ weekend up North.  If anything of interest does pop up today, we'll send out an alert post.  

..Here we go...

Since the NFP report on October 2 and a test of the gap 1016-1018,  the market has seemed ‘bullish’ towards this earnings season or has this rally just been a function of the weak USD ??.   Today, we got up all the way up to 1079, a point off the Sept intraday high with inconclusive  evidence this high is deservingly so, if based on earnings expectations. 

So far, AA  beat forecasts but its ~6% pop was met by sellers (the stock closed up ~2%). RPM  struggled despite beating and raising.  According to Barron’s, “in recent weeks, analysts have raised their estimates for 641 companies and lowered their marks for 383, bringing the positive-to-negative differential to 258 companies, or 17.2% of the S&P 1500.  That's the most bullish in nearly two years. 

Once again we moved higher on a low volume day (under 6bln),  ES traded about 50% of its 10 day average,  as investors wait for week 1 reports which will will be dominated by tech and financials. In tech land, there will be a slew of semis (INTC, AMD, XLNX, ALTR, CY, FCS, ASML, and others), as well as the first major enterprise firm (IBM ), and internet company (GOOG ). In financials, there will be only a few names, but they are some of the industry’s largest (JPM ) starts things off on Wed, GS/C  come Thurs morning, and BAC/GE  are Fri before the bell).  There will also be some important health care companies (JNJ on Tues). 

Interestingly, while we wait for big name earnings, a few DJIM's EPS' were in the headlines AMC with earnings related reports.

ININ – preannounced earnings; sees revs $32-34MM and EPS .28-.31 (St was .15 and $31MM). "Product and services revenues contributed to results for the quarter, both increasing compared to the same period last year," said Interactive Intelligence founder and CEO, Dr. Donald E. Brown. "We received two license orders that were each more than $1 million and eight other orders each worth more than $250,000. Company results were due to strong revenues and continued expense
management."

BWY   acquires BLL’s plastic pail biz, raises guidance – Ball Corp announces sale of plastic pail plant to BWAY Corp for $32MM. BWY guides 4Q and FY adj EBITDA and EPS to high end of guidance range provided in early August; also sees adj FCF exceeding $50MM vs prior guidance of $46-48MM

A Giant(s) beat...

Today's the day where you can almost skip the entire regular trading session and go straight to after hour action.   Why?   We hope we don't have to answer that question.    Basically, the day's action is very meaningless despite some not so good earning reaction to JNJ and downgrade of a few financial companies by Mrs. Whitney.    In fact,  SPX lost only three points and the other two indices are unchanged.   

What happened in after hour and what happens pre- mkt tomorrow (JPM ) is probably going to set the tone for rest of this week and beyond….“the official season kicks off Oct 14th with the Financials  and INTC“.   Everything before this was pre-game stuff.. AA etc,   now the real game starts.  As of tonight, the Bulls have led of the game with a lead-off “Homer”.    JPM  will make it back to back dingers, very likely.

INTC, one of the most influential technology company, reported earnings AMC that beat the most optimistic expectation.   In addition, INTC also guided next quarter much higher and with significant higher margin than the consensus.    In all, it's a very good if not a great report from this technology giant.

So, the question is, is this good enough for our market?    As far as Intel and the feeling about tech world, we think it's good enough, especially because of the implications for so many of the tech companies reporting later.  However, we still have many reports from many sectors to consider in the coming weeks.    In fact, we have JPM on deck in the morning to give us a first look in the banking world for the current quarter.    What we think that is NOT going to happen though, is that the market will get sold off like it did after INTC's last report.    Also, now we know who has set the bar now for earning reports as far as big company's are concerned. 

At DJIM land, we highlighted 2 previous DJIM eps listed winners, ININ  and BWY  in our journal last night as both companies came out with guidance.     While BWY did not breakout in a big way (still positive close),  ININ did what we asked for.  Still, the trading ranges for both provided some great entries even for intraday trades.  BWY ($1.70 range low to high/ ININ (3.50 range).   As traders, we just have to focus on the winner of the two going forward.    Based on the volume and reaction of ININ today,  we are expecting follow through in the coming days/weeks.    We are just hoping more institutions take a look at this little company start piling into it.    Also,  TRIT,  this is the one with the kind of trading momentum we look for and love.  AONE, another IPO here had good action late afternoon as well.

Bottom line,  it's going to be a busy week and earnings season.  

Best in class now...what than?

The hoopla of Dow 10000 2.0  was almost comical today,  included in this hype is the idea of billions of sidelined money coming off the sidelines in a psychological move once 10,000 is regained.   What many are missing is the inflows of capital since April has been even steeper than back in 2003.  A lot of the money is already in and will continue to flow in the rest of the year.  It's just not going to sunshower all of a sudden because of 10k is our opinion.

Short term….Maybe, it’s the Canadian in us,  but we think it’s a better idea to put on a hockey helmet as we creep closer to SPX 1100  than a Dow 10K 2.0 baseball cap as was the fashion on the trading floor today.   We hope we see some consolidation tomorrow and we hope geo-political noise (Israel saying they will attack Iran after Dec.) does not take away from the earnings parade.  Crude related stocks may be a trade tomorrow on this.   Casinos and China travel co`s may see weakness and be shorts for the day as restrictions are tightened to Macau.  

A trading note…Was there any question we’d do a 10K close?   Well, if you pay attention here you have seen us alert on market direction due to the close in Europe.  Did you notice the discrepancy today at noon when the FTSE CAC  closed?.  Those markets closed up 2% and we were barely up 1%.  As often the case when you have such a differential, the European money comes here and drives us closer to the results across the Atlantic.

As great as it was to see INTC  and JPM  put in amazing numbers,  even CSX  helped the transports.  A drawback is definitely here is the ‘Bar’  has been set very high at the beginning of earning season for financial and techs.    Best in class reports come early, everyone else following starting next week or so has high expectations to meet now.

10k Honeymoon...

As we discussed yesterday, this is very much a honeymoon phase for those who think Dow 10k somehow brings this magical investment crowd back into the arena.   For DJIM and those already in the market, we actually have some concerns and it’s SPX 1100.

We noted INTC/JPM  have set the bar on how a corporate reports should be presented.     Today, we didn't get such a reaction from GS as the whisper # was missed.  AMC action, IBM  was getting the cold shoulder as well.    GOOG  showed accelerating revenue growth and was the only to meet markets current elevated expectations.  Still, note all ‘so-called’ disappointments encountered buyers on early weakness which is a good sign.

The idea that it (corporate earning) can't get any better than from those who we've already seen is a realistic proposition.    Sure, there'd be small caps and some mid caps that will give out incredible reports, but we have to wait as these come later.    In the meantime, in terms of big mega cap stocks that tend to move the broad market, we just don't know if any company can move this mkt through SPX 1100 and beyond.    Sure, we'd hope to see it, but we have to also prepare the other side of the outcome.     Can this week be the best week from earnings perspective and it's all down hill from here?    Well, we’ll now sooner than later.     Ok folks, we are not trying to be negative here or pouring cold water onto this market.    We are simply calling it to the best of our experience and probability.    Everyone loves this market to go forward endlessly, but it isn't always the case.    In the next little while, we are actually more eager to hear/see reports from the commodity sector.    We feel if the economy is recovering, some of these commodity stocks would be very sensitive when it comes to demand and supply and thus their bottom line.    So, it will be an interesting quarter to watch as we have a feeling that we'd see some positive surprise from a few of the well known commods.  Aluminum stocks have been added to usual coal, steels etc. this eps season.

Below is a comparison of our sympathy aluminum alert plays RS/ KALU (+7-9%) off AA earnings. 

We expected consolidation today and pointed out 2 possible trades to get through the day, one was the probable weakness of casinos (WYNN/LVS) related to Macau and a Crude trade.  As far as crude, the breakout to $77.50 led to a big energy rally  and definitely played a major role in creeping the SPX closer to 1100.

In mid-small cap land, today was a day to pick up shares on weakness/ low volume.  Notably, (ININ TRIT) today & TXIC  are plays that won’t be leaving our Shadowlist anytime soon.  Also, remember in any weaknes and/or rotation on days ahead,  we have stocks like HITK, SXCI, LIFE  in defensive areas to trade on those days.

DJIM #42 2009

The best possible outcome to a kick off in earnings probably occurred last week.  The market had no reason to accelerate upwards any further and it had no reason to sell off.   At the end of the week,  we simply consolidated and now await our niche to begin reporting without worrying what the broad market will do.   Now that real ‘Giants’ reported, except say AAPL/TXN on Monday AMC/ CAT Tues PMKT, we anticipate small caps/ mid caps to bring many surprises to the table as we had glimpses this will occur after a ININ  raise and nice report from an Industrial like CYT  and speciality story plays like QDEL.  So far, 61% of the SPX co’s have reported better revenue which is what the market has it’s eyes on this Q. Stocks like eg. JDAS, STLD EDU, CREE, EQIX  will give us early week reports that will put more light on what companies in our niche may look like this Q. 

So, be patient and don’t get up in the SPX, oil or USD story on a minute to minute/ day to day bumps.  Until niche report cards, we can go trade the commods’ after a higher oil last week and/ or China’s which will have eco data later this upcoming week that will show it’s strength.

As long as we hold recent gap 1079-1075, we don’t have to worry about the broad market as the Bulls hold court above here.

Tech Game Keeps Up...

Well, so far, the momentum and high beta technology names have done a great job of keeping this market's up.    Not only have names like GOOG  and AAPL  run up near the recent high before their report, they deliver the kind of reports that make them gap up to new high.   In the case of AAPL tonight, it ran through its all time high on a bountiful and definitely company specific factors.   Simply,  nobody can rival AAPL, their revenue growth, high double digit  potential and therefore the broad market  maybe realizing this is not running off the report.  Anyway,  this report is just a mind boggling accomplishment as they destroyed even the important whisper numbers market is eyeing.  The fact that AAPL's trading at $202+ in after hour on very decent volume just goes to show the kind of mentality of our current investment community.     The message is loud and clear, people would still pay for growth and people would pay up for an iconic growth names like AAPL with a passion.  ATHR. a DJIM listed from last Q,  beat it`s raised guidance for Sept and issued strong guidance for Dec.

As far as today`s tradie, the bid on weakness continues and longs are really not selling holds. Importantly no collateral damage has been done from the GE BAC  reports. We are a hair away from that all psychologically important SPX 1100 level.    Right now, it doesn't even feel like SPX 1100 is a wall even though shorts have been definitely lining up here.  A break at 1100 should trigger buy stops, volatility.  At this point, we simply have to accept the fact that earning enthusiasm may continue to carry this market.    While the big boys are doing their part by keeping this market up, we are also keeping our eyes on many smaller company’s reports to look for opportunity.  

Again, there's plenty of reports this month that we are keeping our eyes on.   We are also looking for some various collateral reaction off commodity report  such as the STLD 's report tonight and CAT 's 'outlook' will be crucial tomorrow and maybe more important than AAPL's report for the economic recovery game. 

Yesterday, we noted the trade ideas outside of EPS to look for included the higher crude continuation from last week ( crude ticked higher off USD weakness again today) and a China trade due to anticipating strong eco #’s later in the week. DGW +6.7% NCH, FUQI 8%,. EJ 7%, (UTA , HMIN, BIDU 3-4%  off our China shadow list.   Tomorrow, look for weakness (short term) short opps' in Brazilian stocks/ indicies  due to a 2% impose on capital foreign inflows in an effort to curtail Real`s lift and prevent bubble in their mkt.  Wait to see if this materializes and becomes a noisy issue and spreads as a Global issue.  The short term idea here is US inflows have sustained Brazil's Equity markets and this logically can't make many happy.

..as sloppy as it gets

If you missed today’s premarket and the bullish reports from AAPL and CAT ,  you missed the highs of the day!.   Expectations of a push over SPX1100 on the heels of those reports didn’t materialize and the failure to do so makes many take some off the table.  

As many scratched their heads and /or pointed to the U.S eco data points as the reason for the tepid start after the opening bell,  we were shorting Brazil’s ETF  and a few of their stocks …“Tomorrow, look for weakness (short term) short opps' in Brazilian stocks/ indicies  due to a 2% impose on capital foreign inflows in an effort to curtail Real`s lift and prevent bubble in their mkt.  Wait to see if this materializes and becomes a noisy issue and spreads as a Global issue.  The short term idea here is US inflows have sustained Brazil's Equity markets and this logically can't make many happy.” .

below: EWZ mid morning swoon.

Simply, these actions would have FX implications and big money knew this would spread to a global issue as the USD would strengthen and push US markets lower.    Surprisingly or intentionally, Briefingcom didn`t even run a story till about 11am and than we saw a big swoon in EWZ (volume spike) as traders piled in and US markets fell as the Dow lost about 70 points quickly back to 10k.  You can easily see the correlation of EWZ and US indexes on a chart mid morning.    As said, this is a short term trade opp`and we used the  added weakness after the stories ran to exit as you rarely see 6% drops in any country's ETF in a day.   Even if this is an unprecedented act on equities by Brazil,  we don't expect this to be a big noise for USD going forward, but who knows.  This act may have other implications or further acts may arise depending if it works or not...so the story may have some noise left in it.

Anyways...the day can be summed in a few words.."sloppy and disappointing" as it relates to pushing above 1100 in the very short term.   We have to wonder what it would take now to get over this wall as we are running out of AAPL and CAT's.  Maybe MS WFC  can bring the financials back from recent underperformance and market react positively.  Otherwise,  watch the Sept peak of 1080 (1079-1075) gap more intently now.

...what's a Bove?

It was 5 trading days ago as DOW caps were in back in vogue, we said, “we think it’s a better idea to put on a hockey helmet as we creep closer to SPX 1100”.   Simply,  this was to avoid getting any hits into the boards as in banging your market head against a 1100 wall too many times and to avoid any concussions as in a sell off sooner than later.   Of course,  in market terms this means don’t be holding too much until we break through the wall.   Hopefully, today we had the helmets on and didn’t get smacked around in the late day ugly sell off with most of the 170 DOW points and 20 SPX coming in an hour. 

Coming off a sloppy day,  we were disappointed by the action and said …“Expectations of a push over SPX1100 on the heels of those reports didn’t materialize and the failure to do so makes many take some off the table”..   The same thing can be said today, another failure  or two in the morning brings out more selling as traders lose patience banging their heads against a wall.    The morning run to SPX 1100 was suspicious and not deserving.   Overseas markets gave no reason for an early move and MS WFC  couldn’t have been the catalysts to breakout.  We were trading the alerted SLM  and weren't really paying attention to a creep towards 1100.    The suspicious factor grew as the studs were hardly moving or in the red.    We’re talking GS, JPM  and the best sub group in financials recently being the Asset Managers BLK, BEN.    If you’re gonna' have a party, you have to know you’re invitation has been accepted by these studs!.   Another failure or two at 1100 and no participation from the GS etc. and it wouldn’t take much else to ruin the day.

What ensued in the afternoon was a bushel of negative things.  We were surprised the TARP 7 actions by the Pay czar didn’t cause a big reaction as we figured Wall street may get pissed off.   Just before this hit the wires, we had WMT give a red light special  in their analyst meetings and post TARP 7 news, we had the Bove WFC downgrade that was construed as the only reason for the sell off as it was going on.   That’s BS,  the broad market doesn’t do an outside day reversal off on a stock downgrade that was already red or flat to this magnitude.   Simply, in our view it was the failure earlier in the day to >1100.   All the other things just added to it! 

BTW, it’s ES futures 1100 that is the real line and we didn‘t even get there!!.  

What’s important is these excuses cited are not FUNDAMENTAL  and give a chance for a bounce if we avoid any FUNDAMENTAL reasons overnight or premkt.  Jobless claims# is fundamental, if you’re wondering what’s the difference.   If we hold 1076 weeks low in the ES overnight and get through the IJC#, we should see a bounce unless those that missed the sell off come scared in the morning and initially add to it.