Your Personal Trader - DJIM Journal 2011

Maybe today’s rally will make "SPX 1250 hit, could be low for awhile” hold and stabilize things some, but overall it was a disappointing underlying tape. It can simply be summarized as a ‘bargain hunters’ bounce as our primarily high beta Shadowlist didn't do much away from commodity linked stocks ( notably coals, GTLS,CRR). The ‘risk on’ trade was back, but not exactly everywhere you’d like to see it. Just by glancing at the list, you can decipher easily that investors were looking for value off the consecutive days of selling instead of buying with conviction growth stocks. Considering Friday is OPEX day and macro headlines seem to point to a positive market bias, the bounce may hold and/or continue. Otherwise, we’d say the market is prone to a red day off a tape like today's on any other day. Hopefully, if today’s tape is seen as some stabilization (a first step), it will bring some confidence for investors to buy higher beta names.

Shadowlist

Commodities- The lead into coals past few days carried over as coals outperformed. (WLT ANR CLF >4-5%). Tonight good ole' Cramer jumps on the bandwagon. It’s probably best to get off the solar trade as its shelf life is really uncertain off Japan.
Momentum/ earnings/ winners of ’10- As per the above…after noting the outperformance of names in this group during the sell off this week, it was disappointing the see almost all high beta lag the market. The RUT simply was a rut along with tech. Part of the lag was guidance (gov’t and defense spending) from SANM (EMS sector) which weighted on opticals and networking/equip communication stocks after killing all the EMS stocks. This just adds to all the uncertainty related to Japan for Q’s ahead (supply chains etc.). Next week we will finally see some bigger names reporting that will hopefully clarify the situation.