Google+
YourPersonalTrader- Toronto Canada/ London UK
'CLICK TAGS'- Stock/Sector plays '08, See full 'Search' above
Can't display this module in this section.

DJIMSTOCKS- since 2006 - Toronto, Canada/ London UK  

· Daily stock market color and insight before every U.S market-open, 'INTO THE TRADING DAY', 5X a week before 8:30 am/est. Follow our extensive trading desk experience and lead in recognizing daily event upside/ downside risks ahead of each trading day.

· DJIM bridges the gap between the retail-investor / trader and the institutional players by filtering out the noise, abundance of information (good or bad) generated through the media/ Internet.

· Our daily Journals encompass our trading methodology allowing you to interconnect with us by ‘Shadowing’ our trading platform watchlist. A 'Shadow'list of 50-75 stocks is tailored and fragmented (outperforming SECTORS, MID-SMALL CAPS, EARNINGS/ GROWTH (EPS) linked stocks, IBD 50, MOMENTUM STOCKS) to gauge single stock action and the broad underlying market for SP 500 direction to go long or short. New plays (stock/sector) are added, especially during earnings season through Journal updates.

· A simple to follow package allowing any investor class to save time and enhance returns!.

______________________________________________________________________________________________________________________________________________________________

 

Tuesday
Feb172009

DJIM #7  2009

What's next?    While traders are enjoying this long weekend in North America,  many probably hope that this long weekend can last just few more days.   There's definitely a sense of uncertainty among the traders, the analysts and perhaps the entire investment community.    In fact,  we feel that there's just as much uncertainty among the less than convincing policy makers as to what will happen next.     Sure, a stimulus package has been signed and a financial rescue plan is in the works,  but, it just doesn't give anyone any comfort that those plans will have any sort of short term positive effect.    Over the long run,  we feel market will eventually recover and things will pick up for the better as there are hints of things stabilizing from recent economic data.    Economy always comes back and this is just one of those cyclical things.    The question though, is how long the bad time will persist and how much worse we'd get before we get better.  This upcoming week has more important data and if it's good,  there is a chance the market will turn away from the policy initiatives in D.C and turn it's attention.   At least, that is the hope that may cause a decent move soon.

But, here's some more truth!   As of this moment,  we as traders sometimes have a tough vision seeing three or four trading days from now, let alone three weeks or three months out.    This market, as we know it, is turning into a giant bowl of uncertainty.    We had a lot of news last week, but we have just as many unanswered questions on the table compare to a week ago as D.C clearly did not deliver.    What sort of financial plan will help co's like Citi or BAC?    What will happen to GM or Chrysler when their reports are due at the end of this month?    How effective is the stimulus package going to be to stall the unemployment hike?   What are the corporate earnings going to be look like for next quarter?    Nobody, as we know, has an answer to any of the above questions, unfortunately.    This simply forces us to trade for "the moment"!

Market,  technically, we avoided a breakdown last week by hanging on to SPX 820 by it's fingernails!   Frankly, we don't know if the next push down, maybe even on Tuesday, will break it down for good.     If this market were to hold on to the recent low and move away from it,  you'd have to look for some positive development from Washington and/or investor shift to eco' activity if the data continues to show the consumer is stabilizing and inventories are rebuilding from the producer side of things.    Last week's announcement of a plan to help those that are in danger of foreclosure gave market a needed boost from the low.   If we can maintain some kind of news flow that provides similar calibre of effect,  it will begin to give enough confidence for market players to step back in a more meaningful way.    For now, we just have to take it one headline at a time and have patience.   As we said heading into the last trading day,  Thursday's wild shoot had no conviction buying.   Once again,  it proved to be nothing more than a short covering rebound as witnessed by Friday's closing prices.   The market just couldn't hold heading into afternoon.

Sectors,  we continue to make our trades in some commodity area where any potential news from Washinton won't affect them one way or the other.   In fact, we view weakness brought on by the market as opportunities in some of the commodity names.    They can be volatile to trade and that's why we are sticking to "buy on weakness, sell on strength" strategy.

This is a short week,  but we still have quite a few earning reports and those economic activity numbers to look after.   Every week is a new stock market adventure and this short week should be no exception.

Wednesday
Feb182009

Global sale..

Market had the shakes premarket and it was pretty evident early it wasn’t going to shake off what was bothering it.  On a day when the U.S markets should have looked ahead to its future (Stimulus signing), instead it got trapped in current global turmoil ( European bank exposure to East/Central banks and Japanese dismal GDP numbers led the way).   That was the negative tone to start the day, later things turned negative here as the eco’ data dismissed for the time being a bottoming we saw in recent January PMI’s numbers here and in China.   The Empire February reading,  showed a rapid decline in manufacturing still exists, which was the opposite of what we had discussed as a potential catalyst (Eco data) to turn investors attention to better events and the future.  Also,  MER-BAC tossed a 660 SPX scenario into the mix to spook investors.    Stick this in a blender and you have a break of the crucial 800 level as stocks across the board went on sale with any chance of recovery over 800 met with more selling throughout the day.  There was no late short covering rally in the makings as seen lately.  Unfortunately,  SPX 800,  most likely is the new 840- 850 resistance in the short term unless we get some positive newsflow quickly.   Besides any positive D.C noise, a glimmer of hope is the realization US financials have little exposure to the new European bank problems, the problems in Japan should be weighted against the better outlook in China and the Empire number may only be a blip, besides the fact that we have all kinds of stimulus on the horizon.   The question is can and will the investors focus on what’s going on here and not globally at this moment.  

Simply a flight to quality theme today as the SPX closed in on November 2008 lows, we had Gold surging while all base metals/ commods lagged,  treasuries surging,  USD surging,  VIX exploding = a worldwide equity plunge!.   

Best to stay clear now and watch if US financials can shake off their peers misery across the pond.  This is what we’ll be watching (a financial led bounce) to initiate any new intraday trades on the long side tomorrow.

Thursday
Feb192009

Lurking under the Yawn...

You just can't help feeling that one of these days, this market will try for the SPX November low and test it.   As far as today, it was a pretty good yawn fest with few trading opportunities.  A lot of headlines, but nothing ground breaking within them to move the market in either direction.   It's probably expected after Tuesday's dramatic sell off.   Having a strong follow through to yesterday's heavy loss and a test of Nov. low in two days time is just simply too overwhelming and stressful to even think about for most traders, so we had nothing but a tepid trading day.   So, which do we rather see first,  a quick move back over SPX 800 or a test of Nov. low around SPX 750?   Honestly, moving the market up in current environment is probably unhealthy at best.   A few of the biggest items that have carried over to this Q are still to be resolved.   We are likely going to have those (Citi, GM) as market catalysts to mark a bottom, as far as this crisis is concerned sooner than later.

Up until recently, technology seemed to be one sector holding up.   AMC, we had HPQ  report a big revenue miss,  but EPS held up quite well and this might be just enough for some life in the sector.  The report does show a sharp deterioration (over 20%) in BRIC countires.   To us, techs are all about GOOG, AAPL and maybe RIMM.   If you can get a handle trading those, it's irrelevant to even track COMP or Qs.

Commodities took a licking yesterday along with everything else, but today's market painted a different picture amongst the various sectors.   Due to the MS ag. conference, most of the ag plays fared very well.   The weakest spot lies in the natural gas and steel sector and everything else is slotted in between.    We are eyeing a few things here, but given the current downward market bias, we won't be in a hurry to establish a full position any time soon.  The $CRX hit January lows and made a slight reversal today, we'll look for some follow through before getting into individual equities.  A weaker $USD and a stronger Oil seem like a fairy tale these days to get anything moving.

This is a short week, but it already feels like a super long week.   We have option expiration to deal with on Friday and it'll be interesting to see where traders want to pin this market.     Lastly, we had PCLN , an old favourite here, post some decent numbers and slightly upbeat guidance.   This one tends to be volatile and AMC action is already pushing it to the best level in few months.   It has huge short interest on it and it may be a candidate for some trading opportunities(dip) tomorrow, if market pulls another dull day.   Other than that, we just wait on some Eco data in the morning along with potential TALF news to possibly give some market direction.

Friday
Feb202009

"Stress test" this...

"Stress test' this seems to be the signal Washington, the world has tossed at the market recently.  An uneasy trader, investor is evident throughout the market.   Where to start?.

1. On the heels of a terrible January Empire number, we had confirmation today eco data is worsening and last months PMI’s # and BDI were just a mirage.  The Philly Fed number was atrocious for February.

2. GE trading below $10, BAC in the $3’s and C in the $2’s spooking investors as these prices only a few months ago seemed impossible to reach.   It is pretty clear BAC is going the way of FRE/FNM type of nationalization as the preferred shares are seeing action today trading at a steep discount to their $25 par values.

3. HPQ’s results are a wake up call to the only recent bright spot on the market as it pulls down and weighs down the space .  The slide of business from BRIC countries noted yesterday signal a rebound in 2H 09 won’t be as expected in scope.  In the Machinery sector, CAT recent retail sales are blah!

4. “Stress test"  for the financials is underway and with few details of the specifics,  the market is worried about who will not meet and beat the test and if one fails what will happen to the bank that does?…Again,  a problem with few details to anything D.C is doing keeps buyers away from bank side.

5. Eastern & Western European bank fears remain high.

The beginning of the week,  we said 800 is the new 850 and this is proving correct as far as resistance is concerned.   After a early positive bias, 797 was the high as Commodity sectors buoyed the market and after the close we are zoomed in on the 752 November lows (close) support level.

If 752 area gets tested quickly,  it may prove the short lived time between 750-800 proves to be a buying zone for a rally in some duration.   The reason is there is a big divergences in the market.    The equity market is NOT following the credit markets!.   This is the fundamental course to follow and the market may just be saying lets test 750 area before taking the natural course of things in a market.    Fixed Income deals are being eaten up and there has been no reaction yet to TARP2 while credit markets continue to improve from it.   The TALF launch  is any minute and this will in no doubt help the credit markets and equities should finally begin to follow as it restores consumer asset backed credit, lending to students, small biz etc.    Also, stimulus’ may not be perfect,  but its impact will stir things up in the coming months.   Simply, this zone 750-800 could end up being the 'big buying zone'  looking back at things a few weeks, months(s) down the road.  The equity market can wake up quick and follow.   A TALF launch most likely will cause an immediate positive reaction for a trade,  so watch headlines emerging to get a step up.

Right now, there is no place to hide  it seems, today even the educational services stocks took a beating as focus turned some ratio of defaults.  Hang in there as the possibility remains this turns very soon,  otherwise 650-700 comes before it's time.

Monday
Feb232009

DJIM #8, 2009

Stage is set, votes are in, soon we'll find out who the winner is.   If you think we are talking about the Academy Award winners over the weekend, you are surely mistaken.  Scumbag millionaires have been winning for over a year.   What we are referring to is the potential announcement from Washington D.C. with regard to the financial rescue plan.   There was a report on Friday that some more details will be released from the rescue plan this week.    What we don't know at this point, is whether the details will involve Citi and/or BAC specifically or just another general guide line.?    What we do know is we’ll get some sort of response from the Treasury team in light of the recent action in our financial market and that is all we can ask for at this point.   We also heard late Friday, Citi and BAC claims that they have sufficient funding/capital to survive as a private entity.    What we want at this exact moment, is some action from the policy makers to give us a clear message on HOW they want to handle this.

Many have written off Citi/BAC common equity, but unfortunately they are the reason this whole market is in this peculiar situation.     Oh yes, we are still in a deep recession and economic data is pointing to dark times world wide.    However, our market would not have test the November's low so quick if it wasn't for the instability of the financial sector.     Lets just deal with the financial situation now and then we'll worry about the stimulus, tax cuts, reviving economy issues afterwards.    It shouldn’t be so hard to prioritize things for the world's most powerful administration, we'd imagine.

Technically, we quickly tested SPX 750 area (touched 754) and we held it at the close.   It is a big area of support as many believe this is the area where risk/reward much favours the long side.    We definitely agree with that notion for now.   We discussed looking back this 750-800 area may be the buying zone.   Why we think that?    We know the exact reason why this market got down to this level in such a quick fashion.    The probability of an immediate resolution to this financial rescue plan,  especially with regard to Citi/BAC, is pretty high.    What we feel is that once they either (partly or not) nationalize the co‘s,  put in a massive equity  or whatever the creative approach they use to give traders an impression that this "crisis" is over,  then we'd definitely have a quick rally over SPX 800 + in no time.

We are buyers at the current level and lower.   We are still limiting to our exposure though and await a newsflow positive signal.    For now, we expect the government to eventually do what this market expects them to do.    However, just in case they don't and we close below SPX 750, then a quick exit plan will be the only solution.

Tuesday
Feb242009

Sidelines..

Once again a rally (Friday) proved to be nothing more than short covering nonsense.   One positive is it still shows the shorts are on the edge of their seats ready to cover quickly, showing a lack of conviction on their parts.   Unfortunately,  a lack of conviction is prevalent on the buy side as well and we just continue to drip lower as no follow through buying is occurring.   The overnight SP cash high hit 785 and was not even tested in the morning after a positive pre- market tone dwindled quickly.    Simply, the market did not view the move off 754SPX as a true test and now all eyes are waiting to see how it handles these critical lows between 741- 752 going back to November.    Just like the rest of the market,  we can only sit and watch waiting for someone, somebody to take the lead into buying this SPX market that is down 6 straight days.    All technical’s are basically pointing to a rebound off oversold conditions,  but the newsflow is just not convincing anyone to chase the tape up as their is continued disappointments coming from D.C.    Despite actions of Citi/ BAC late last week,  the grave action in their prices is just not forcing the hand of Washington to do anything drastic.   All they do is reiterate or regurgitate news.   Saying you favor a private banking can only go so far.    It was exceptionally quiet from D.C over the weekend and the market didn’t like!.    Once again,  all Geitner is doing is reiterating what has been said,  now it’s a convert preferred stake into common of Citi hitting the wires today.   This has been part of any aid package discussed previously and the market reaction was muted.   The only thing that seems as a possibility for aggressive action is if whispers of a run on deposits start at these banks!.  This is seemingly the only thing that would drive drastic action from D.C!.

In brief,  just do what the market is doing is, sit on the sidelines and wait for market to react to a slip of 741.  Just like 754 wasn’t 752-750, the market didn’t do one thing or another at 742.   It probably wouldn’t do anything at 741, it would have to slide lower intraday to get any real reaction.  It’s not that the market is so picky and needs an exact reading, it’s just that it’s got no conviction to do anything either way.   There’s only one way to handle a test,  give it some news either way.   Example, if there is sufficient bad news overnight and we`d sit below 741 in the premarket,  if we bounced someime after the opening bell that would signal a true test and potential reversal.

As far individual equities- sectors weakness is seen throughout, even the green action in financials was very light.   The techs are still getting a whipping following HPQ`s report.  The big cap hardware’s were all down 4% or so, HPQ’ DELL, AAPL IBM etc.   Semi`s off 4% as well.   Huge downside moves Ag`s -Chems and Steels, metals is not offering a place to run as the $CRX broke its 2009 lows.  This $ CRX commod`index has been shaved about 25% in about 2 weeks.

The only stock doing anything worthwhile, NCH is GEOY  as it got final clearance to start getting revenue on the books.  GEOY, ``…this stock will make some headlines as soon as it clears some more regulatory hurdles in the future and comes on more screens`early Feb.

Wednesday
Feb252009

Technical Rebound or....

..something else?

Market squeezed higher today after a few days of dramatic decline.   Perhaps, looking back, it's inevitable that this market would rebound after being sold off for that many points and days.   There was really no real news worthy catalysts today (Bernanke‘s Q&A did give clarity on stress tests/ preferred shares), so we have to attribute the rebound to the premise we alerted early in the trading day.."technical oversold bounce, short covering, Banking Index solidifying last few days, while SPX floundered.    The only question is the volume on the way up today.  Was it sufficient to signal a successful test of November lows. 
 
Ideally, if there's some sort of detailed response from the Fed with regard to the financial rescue plan, things would feel much more comfortable at the current level.  What's good about today's rally though is that it's led by the financials.  The $BKX index up 3 points.   From the look of it, it does feel that the policy makers will NOT let the financial system collapse due to either Citi, or BAC or any other institutions in question.  "We don't need majority ownership to work with the banks" and stabilize them…... "I don't see any reason to destroy the franchise value..“, Bernanke.    At this point, we just don't know what exactly is going to get done.  We chased some financial names today at a very decent price.   We are still only sticking to the ones that market favours such as GS MS NTRS JPM  etc.   Most of the other financial names though, including insurance co., are still off limits to us as they are mostly speculative trades.   Commodity stocks, oil included also had a rebound today following the market tape.

Market did not quite hit SPX 780 -(SPX 785cash, the overnight recent high) and this might be the minor resistance in the coming days until an attempt at SPX 800 mark.  It's NOT unrealistic to expect that the market will try for SPX 800 tomorrow even, but that would require some timely positive newsflow overnight/ premkt.    Given the circumstances, we have held almost all of the stuff we purchased today and recent days .."We are buyers at the current level and lower.." and are willing to hold till we give the SPX 800 a shot.   That would be a substantial 7.5% lift from these recent lows.    If we do pull back tomorrow, we won't be hesitant to buy on weakness as once again traders will be eager to buy in front of the recent low.    Also, the probability of positive news from Washington in the coming days is very high at this point.   Either way we look at it, it does feel we'd more likely rally off positive catalysts than getting sold down off fear.

As far as plays wise, we are concentrating on the ones that are driving the rally. Yes, it means the financial names we mentioned above as well as SPY/SSO.  The commodity sector that seemed to enjoy this rally as much as the financials was the Agri. sector.  We like POT/AGU  at this point if market keeps the upward momentum.   We’re still negative on the shippers, steels as overnight holdings.

It's only Tuesday, but already it feels like a turning point as far as recent trading goes.  Come think of it, we aren't thinking in a fantasy world, and all that's missing now is a piece of legitimate news (positive) from D.C.

Thursday
Feb262009

TARP..TALF..now we have RPWD or `RUFF`

Seems tonight D.C has leaked out the details and given clarity to all the bailouts.   The public should view this as a positive because many are drowning so far this year with the DJIA down over 17% in just two months.   It`s a `RESCUE Portuguese Water Dog!!`.  Yep, that`s all it is,  the Super Dog that saved Portuguese fisherman will now save America!    Alright, maybe it`s not the whole plan,  but after today`chop..zig zag trading our minds are in bits and pieces and worn out.    Maybe,  if Obama released this critical info during his Union address,  the market would not fallen 2% in the first hour of trading.   Yes,  we wanted a pullback today, but that was a bubble bursting before our eyes in the 60 minutes!. There was nothing healthy about it as we would need 200 points on the Dow just to finish green.   That would be a rally in itself and seemed improbable as it would mark back to back days of such.   Well, what did really leak during the day was the Stress Test basics as the market rallied to almost green just before 2pm (the release came at 2pm).    As soon as the news came out publicly, the market reversed hard.    Soon after it reversed 20pts on the SPX until hitting SPX 780 and coming down hard all over again.    So what we had in the 3 hours was the digestion of the stress test,  unfortunately the general public, traders don`t understand what all this gibberish is and so what the happens is it becomes a market trading on intraday technicals!.    What we needed to see is late day buying by MF`s, you remember those when the whales come in a buy a market late into the close!.    We didn`t have such from this news,  but think this needs digestion overnight.     It should not be viewed as negative and we`d expect the market to trade back up, maybe not 780 immediately, but close enough.    The tests do not appear to as onerous as feared and it gives a good impression D.C does not want to Nationalize,  but give out some medicine to let the banks heal themselves.     So, the strat`of the buying zone till 800 remains as in most recent Journals,  we'll wait for greater headlines to decipher the game if it nears 800 as we close off the week.

Thursday
Feb262009

..lost in the forest

Lately, you can't help but wonder about one thing.    Is the new administration of Merry Men, led by "all so promising" Obama, out to bring down the stock market back to medieval times?    This ain’t Sherwood Forest!

Announcing plans or strategy to revive economy that do not inspire the Wall Street does have a dire consequence.    Constant verbal attacks don’t help, either.   Think about it, by displeasing private investors/ market players, market goes down and wealth is destroyed. We’ve already lost a generation of investors we keep hearing due to the experiences of the past year, let’s not loose the pillars.  Robin Hood needs to take a breather.   As more wealth is destroyed, less funds will be available for investment to revive the economy.    Of course, you can't pinpoint the whole issue at the administration because after all, they inherited the problem that WE created over the years.    However, because the people elected a new administration to guide into an era of hope, at least show us that you are capable of directing.

Does anyone own those "safe" HMO stocks?   We don't and we feel sorry for those who did tonight as investors got spooked by health care reform.    Market went down today despite the strength of bank stocks, maybe in the long run today’s action will lead into a desperately needed leadership change.   There's really no such a thing as a safe stock after todays action in managed healthcare.   There's always cheap stuff around, but nothing is safe these days.    We’d hate to imagine if banks stocks got rolled over today, we’d be right back at recent support.  The healthcare is 17% of the SPX500 and we cant’ move forward if its down 4% on the day.

As far as the sentiment goes, we feel people are still feeling a bit mystified by the recent "details" of the bailout plan.  There's really no details still as far as toxic assets and bad banks are concerned, but ¾ of the plan details have been released.   In addition, GM gave us another bleak outlook of its problem and we can only guess one of these days, its problem will be addressed by the government.    So, the conclusion is that we basically have more stressful problem going into the weekend than what we started at the beginning of the week.

Technically,  SPX 800 is looking more like SPX 900 couple of weeks ago.   It just looks so far out of reach, investors, traders are becoming more and more discouraged.  The biggest test is SPX 780 last couple of days and every time we get close, we just get magnetized back down to SPX 750.    With the way this market behaves and the way market digests recent news from D.C., we feel there's a good shot we'd test SPX 742 again tomorrow.    Our trading plan has not changed that much, limit our exposure now and only buy on dips unless there's a clear reversal.    What we do have to prepare ourselves for, at this point, is the notion that we may break SPX 742 and test the lower ground in the coming days, failing once again at 780 gives us a more negative bias.   It's not a fantasy and it's very much a reality.     So based on that assumption, we are allowing market to come down lower before using up all of our buying ammunition.   The plays on our agenda are the good banks, some commodity sec's and ETFs such as SSO/SPY/OIH etc.

Bottom line,  it's frustrating out there for just about everyone.    It's a very clear sentiment that are shared by many trading professionals.    For us, the only thing we keep doing these days is not to let the frustration get to us and keep a clear head for trading.

Monday
Mar022009

DJIM #9  2009

Friday’s trade had all the makings of a true test of SPX November lows investors had been eyeing.  The markets tumbled at the open to a new intraday low of 734 and than steadily recovered, even to go green.  The perfect scene was being played out on the heels of terrible market news (Citi/ Treasury swap, GDP revisions etc.)     Unfortunately, as we always talk about, it’s the close that matters and their was nothing pretty about this one as we closed at new lows (SPX 735 lowest close since Dec ‘06).  

Unless, we have some positive news over the weekend,  we can’t imagine what that can possibly be,  a follow through open to the downside is inevitable with such a close,  plus all talk this weekend will be on 50%.   Yep,  almost to the dot,  the DJIA has now lost 50% from October 2007 highs.   A whole new bunch worries (incl. Healthcare -Obama- budget) are a blow to the psychology of the market and we could only sit back and hope for the market to play out the true test scenario early in the week.   

The daily tape had selling 4 out of 5 days into the close,  seemingly it’s a constant bull trap and buying any sign of a reversal will make traders think twice before getting in on one this week.    Also, we are below the 750- 800 buying zone and so all bets are off until we get back there on a close.

Those jaw breaking declines in HCare took MED tech stocks with it,  will watch names like STJ, BDX, ABT, MDT SYK for intraday bounce trades to the long side early in the week.

Tuesday
Mar032009

Shorts forcing fear...

It's not like we haven't had worse one day declines than today!   It's the pace that we got ourselves into this technical/fundamental mess that really put the fear into many people's minds today.    Think about it, SPX is lower last 10 of 11 trading days.    We are down over 15% during the last dozen trading days and nearly down 10% last four days alone.    This is, by the way, just the index performance.    For many of the individual plays, the performance is much worse.   Even though the volatility is nowhere close to last November level,  the level of fear this market exhibits is very similar.    Basically, back in November, the fear is that if we'd go to SPX 600s the next hour or day.   Right now, the fear is that if we'd go there the next couple of days.    Last year, it was hedge fund puking!   This year, it is just the lack of MF‘s, institutions on the buy side.    Whatever the case,  what's happening out there is very unsettling, to say the least.

We've talked a lot about the lack of confidence from us/ investors toward the new administration over the past week.    This is definitely being showcased throughout the trading lately.    AIG/ Global Mkts may be the culprit for the selloff,  but in reality, we would get sold off no matter what due to last Friday‘s close as no ’positive’ newsflow came over the weekend.   There's been a pick up of talk of SPX 600, 500... if we break the 700 level as no support is seem technically.    When you are testing the new ground, anything is really possible at this point.  

The shorts have no reason to cover and take profits as they see a market with no buyers lining up.  Shorts just press until proven otherwise.  

We suppose the overall strategy when it comes down to the bear market is to conserve your capital while squeezing out some good trades on occasional opportunities.    It's no exception this time.     Despite the fact we are down these many points, the trade here is to look for a rebound.   The next rebound may be stronger than anything we've seen lately.   As we've been doing in the past, limiting our exposure to this market is the key to portfolio management.    In addition, slowing down the pace of trading is also a good habit if you want to stay in a healthier state of trading mind.

There's really not much else to say about this market other than pointing out the facts.    This is the first trading day of the week and the month.    Already, we got a glimpse of what things may come down our way.    Things may be rough out there,  there's no reason to lose our discipline these days.

  • Small positives overshadowed by big mess picture, China (3rd straight month), US PMI
  • Bernanke,Geithner speak tomorrow, may be a catalyst for mkt moves.
  • MS conference this week for tech, may give overall mkt a chance like last week during GS conference.  It’s the biggest SPX group.

 

Wednesday
Mar042009

Squeeze lurks..

All the hoopla surrounding the significance of the 700 SPX level proved to be of little consequence for today at least.   Those anticipating a big rush down will likely be disappointed here.  In our view, the significant level was the break of 750 and follow up blood bath.   As this 700 fear dissipates, we feel the market should start to reverse as the door is almost wide open following the introduction of the TALF and some whispers on “Bad Bank’today.   Sooner than later, the market will start to look forward off the significance of the launch barring any new negative headline in the short term.   After all,  this is the last of the details the market has been waiting for and it‘s time to look ahead.   Basically,  when the shorts feel this market will not go straight to 650,  they will begin to take profits and their buying will lead to more buying from the other side.    As far as today,  we had hoped the TALF launch plan would have a better reaction,  maybe all the spectacles in Washington (Bernanke, Geithner) diffused the potential today for a starter move as they got all the air time.   All we got was a couple of feeble moves without a lot of support as financials didn’t participate.

 
Right now, the best newsflow continues to be from tech following GS conference last week (MS this week), today wireless stocks ALTR/XLNX both said China infrastructure builds were responsible for their upside numbers.  Hopefully, we can find some leadership from this group, a move involving all the major SPX groups at the same time lurks.  The premise here is for a nice short squeeze shortly.

Thursday
Mar052009

GE'less rebound..

Finally, after many days of declines, we got a rebound that had showed some charisma from many sectors, some of it only by speculation of more China stimulus.   If it wasn't for GE, JPM and those related to them, we'd probably closed near the high.   It's definitely a concern because the financial sector is clearly being dragged down by negative newsflow (GE-Capital) saga and market just can't make much progress without the financials.

The good thing is,  is maybe we have lifted some pressure off the talks of SPX 600.  Maybe the rebound today is inevitable in the face of tremendous selling pressure over the past few days.   However, we just don't know whether SPX 690, or 680 or 660 is the interim low to trade the bounce off.   For those that have been adding some positions here and there, today's definitely a day to pare some off.   We can see how easily this market can give up gains, so there's no need to hold onto "trading" position if it's already profitable.   Right now,  we'll see if this market is able to get back toward SPX 742 or not.  We are still on shaky ground and there's no telling if we'd head below SPX 700 and beyond in the coming days.   We don't want a market rising on foreign speculation, we want it to rise due to changes here!.   A lot of the factors that are associated with GE, JPM or Govt. policy are beyond our control.    Sentiment can change in a hurry and it's best not to lean heavily toward any one side.

What we do believe at this piont is that if the market pulls back and consolidates, there'll be buying opportunities.   Right now, oil stuff and as well as some tech stuff are showing as resilient plays during the past few days of selling.     In addition to our usual OIH and XLE etf as oil plays,  RIMM  and AAPL  as tech plays,  we are putting EQIX, SOHU  and BIDU  on closer watch as potential plays.   The last two also of course carry the China flavour as it's apparent that their market is behaving much better than ours during the past couple of months,  it has little to do with today's stimuli rumor.    Even though the financials did not fare that well due to the fear of GE capital, we are willing to give stocks like GS/MS  a shot on pullbacks as a result.    Charts from older favourite such as JPM  and NTRS  are showing deteriorating technicals,  so we'd avoid them for now.    As always, BAC, WFC, C are off our limits.  In all honesty, you only need so many plays to make up a small trading portfolio anyway.

Bottom line,  sentiment is very much lousy out there so people are still very cautious.  If there's any real rebound cooking here,  it may just be the result of an oversold condition, and not a major catalyst drive rally.    If we do get a significant and meaningful catalyst which we think will drive this market higher for a while, then we'll definitely change our trading mentality.   For now, take the profit as it comes and don't be lazy about it.

Friday
Mar062009

Mercy call!

It’s getting to point that we’re lost for words as we measure the toxicity of this market and it’s surroundings.  It is sad that companies- banks are getting destroyed without any leadership standing up and putting an end to it.  Where's the cavalry?.   There are ways to do it, but nothing is being done and it's causing an uproar!.   Some of it you see in the media,  some of it is underground.  The one place it's evident for all of us is in the market where displeasure is seen with everything coming out of D.C.  It's loud and clear!   The market is in a desperate state, even the techs were finally succumbing to some pressure.    An act of desperation was seen in the previous days rally as the markets here relied on global influence only to have the rug pulled out beneath it by morning.    Simply, Chinese premier pulled a 'Geithner' move and left us asking who is responsible for making up these stimuli new spending measure rumors.    It makes no sense the market did what it did because of China, GM`s K filing or Moody's downgrade of JPM.    You would think by now any downgrade is priced into the financial stocks.   Moody's and peers are always behind the curve and it shouldn't be a surprise when they downgrade the sector players.    So, once again we had what amounted to miniscule short covering rally.   This market is only tradeable for intraday scalpers.    As previously said this week…The shorts have no reason to cover and take profits as they see a market with no buyers lining up.  Shorts just press until proven otherwise.

The concerns are mounting regarding if D.C can halt the steep decline in the economy!.   If all this fear, frustration this week is just a lead up to the labor report (expectation 650k loss), we'd be surprised.   It's much more than this.    If a rally of sorts occurs Friday off the report,  we'd simply use it as a trading vehicle like all the rest recently.

The DJIA is now down 20% since inauguration day.  D.C, do you see or hear?

Monday
Mar092009

DJIM #10  2009

 

If there’s one thing we traders learned during the past few weeks,  it is that there's no such a thing as certainty in trading.   Despite the improbable odds that we wouldn’t go much lower without some sort of relief bounce,  we just kept on going lower.   What we are referring to is the case where many traders have been looking for a meaningful bounce during the latest slide and they haven’t been able to get one.   From middle February till the close of Friday, a stretch of just less than a month,  this market has dropped a whopping 21%(SPX wise).   Usually, this kind of massive decline would take a year or two to complete, but we have had a 'Obama Bear market' already.    Of course, we are dealing with an extraordinary market environment here and the conventional way of thinking or behaving has been thrown out of the window.   Had anyone been going long aggressively during the latest decline, we can only feel their pain.  For those that are still holding their long term 401k account or similar type of accounts,  we can’t even imagine the kind of losses they are incurring.

As traders,  we shouldn’t have a political view on this market.   However, understanding how others feel would give us a better understanding how people behave in this market.   Clearly, the recent activity showed distaste for the new administration.   It just feels that people are throwing out their equity investment in a protesting way.    It definitely feels very emotional out there.   When it is this emotional, it usually coincides with the term... irrational.     At this point, we are only hoping that rationality would return to this market sooner than later.   Recently, everyone, including DJIM traders, has been very critical about the handling of market related matters from the new administration.   Whether we like it or not, we still have to come up with trading plans to deal with the change in political environment as far as this market is concerned.   Instead of pointing fingers in rage,  we may as well accept what it is and make assumptions on the likely outcome given what we know.

First,  we feel there’s a disconnect between how market wanted things to be done and what this administration wanted to do.   This means that this market will have to find a bottom on its own, or a natural bottom.   We shouldn’t count on any miraculous announcement from the government to give us a lift.   The upcoming hearing of “mark to market” accounting can potentially get a bit of excitement from the traders,  but we have to really believe it when we see it.   Second, we feel that this market has already discounted a lot of the grudge toward the government policy by selling down many assets across the board.   We may have already hit the “melting point” without even knowing it.   In any case, we are really close to a short term bottom in our opinion.    Because the market has been practically dropping every single day during the last few weeks, it’s really easy to jump on the bandwagon and call out the next level, let it be SPX 600 or 500.    It just doesn’t work like that and hopefully it adds more to the rebounding pressure.

As far as plays wise,  we are mainly sticking to ETF's mostly as they are virtually guaranteed to run up when this market bounces.   We have been buying some SPY/SSO/OIH in recent days and would add aggressively, if we see a strong uptick.   The recent resistance may be at SPX 720 or so,  but we feel we can just as easily go to SPX 742 on a strong run.   The coming week may be a good test to see how resilient the recent “irrationality” is.   It is tough out there,  but it isn’t the end of the world for traders. At this point, it does favor a long trade greatly compare to anything else.   If this game is nothing but probability, we like the long odds here.    Again, we also have to fully stress that no matter how we trade, we have to absolutely limit our exposure to this market to a comfortable level. Bottom line, we are actually looking forward to trading in the coming week.