Any other day/ week/year to date, market gives the impression of resiliency, but with China down 4%, India down 7%, inflation hedging commodities (precious metals, copper) beaten up in a global inflationary landscape, UK double dip possibility GDP out today, you really have to wonder if a US rotation to IBM,GE, WMT and away from smaller higher multiple stocks can carry the load for US markets to keep rolling higher?.
As far as today’s late reversal, it is nothing more than short covering driven by ES into the State of the Union with little individual stock participation, but given the upbeat pump job by Obama, we may have some follow through with risk assets (commodity linked stocks, growth stocks) playing some catch up. Still overall, the market and it’s indicies are not in sync suggesting any move would be short lived.
Shadowlist
- Momentum/earnings/“winners of ‘10 – Selling continues (RVBD,CTXS etc.) post VMW earnings, but if there is a positive takeaway it was FFIV’s reversal from $102 -$107 in the green. Still, considering 9 ema broken on most, we’d wait only consider a dead cat bounce intraday trade until a definite shift occurs like last time (post EQIX sell off) that was produced as earnings started to come in better. Earnings positive was an upbeat JNPR.
- Commodities – Again weak dollar doing little to offset China worries as the groups get pounded. Another dead cat bounce may be in order in this sector soon. Those inconsistent Solars reversed hard in afternoon as a preview of Obama’s speech was released, simply a sell on the news occurred after run up. Steels (X) is the likely short term trade possibility.
- Miscellaneous- As some defensive posturing is going around, HTWR produced a nice reversal day off 9ema.
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