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Entries in ARUN (3)

Monday
Jan032011

DJIM #1  2011

Instead of a recap of 2010 as everywhere you see this weekend, let’s get down to business as if January 3rd is any other day during the trading year.   No sombre violin playing for the Bears/ Shorts for the futile year they had and no Party like it’s 1999 by Prince celebrations for being on the ‘right side’ in 2010.   Yes,  2010 turned out to be the year of the momo/ growth stocks, which at end are cited as the ‘winners’ of 2010.   All in, just go back to DJIM Shadowlist in January/ February to see if the SPX 500 top 20/best performers ( FFIV, NFLX, PCLN, CRM CMI WYNN ARUN AZO CLF ) were amongst the 40/50 or so stocks in the DJIM composite at the beginning of 2010!.  Add later DJIM additions being involved in M&A this past year such as (BUCY, NZ, CML )  and the list dwindles some more for stocks to trade in 2011 as we can't expect repeat performances from the majority above.   That’s the beauty of a fresh trading year, new stocks and new sector groups emerging!

As far as the last week,  the notion to start the week of China hike offsetting any US market window dressing played out as the SPX was never more than 1pt up or down on any days close. (~1257-1259 close range).  Very  slow profit taking continued in the ‘winners’ growth stocks right into the final hours of December.  Sometimes it’s not what you trade from reading the Journal every morning, it’s what you don’t trade that keeps your accounts in check.  The potential lag in these higher beta stocks is something we covered here from the start of December.  Also, the flow instead trickled into Banks (BKX >15%) and other laggards (economic sensitive) as a product of investor confidence right into year end.    All in, as discussed we were no putting much into anything last week due to an illiquid market…incl..(SPX1260 “R”, no conviction after excellent eco’ data.). 

Mid –week,  we put focus back on Ag’ and related stocks/sub groups and an outlook for a China PMI that if ‘cooling’ to potentially wake up the market.  The number came out this weekend and it cooled off 1.3% from November.  A good start with US ISM on deck for Monday.  Other things to watch, the sluggish December for tech sector may finally get some newsflow starting with the Vegas CES (6th-9th) and possible pre-announcements into earnings season.  Casino Macau numbers out Monday/Retail and Auto later in the week.  NFP# out on Friday, add of +135 is the consensus.  Many major markets closed on Monday, incl. UK, CHINA, Canada, Australia leaving only money flow into US through the book door and thus a possible good start to 2011.

 

Tuesday
Jan042011

Back door

A nice way to kick off ’11, but still something to be wary of as the 1st trading day in 09/’10 produced even better results.  Still, despite the >6% rally of December the market hadn’t seen a >1% day since the first days of that month.  As pointed out last week, all the ‘illiquid’ action was irrelevant in respect to inability to cross SPX 1260 “R” and not seeing conviction off eco data to help for that to occur. Today, 1260 was crossed easily as the market rode to 1276 highs until volumes fell off later in the day.

  • Catalysts- as noted last week watch for a China PMI, if lower M/M it may wake up the market on ‘coolin’ factors. Importantly, inflation sub group of number fell 7 pts.  Also, Euro/US ISM came in strong signalling a synchronized global acceleration.  The ‘back door’ flow helped as well with most global markets closed.

Shadowlist

  • Momentum/earnings/ winners of ‘10 – woke up,  led by an article saying FFIV >3%  RVBD >7% APKT >9% were M&A targets spread to traders chasing other higher beta names for first time in a month.
  • Commodities-   Although Ag’s links lost steam after 3 days late in the day, the analysts are raising estimates/tgts on names as we had been looking for.  AGU  on Friday, today MOS (reports Tues.).  Coals , WLT, CLF >4% outperforming on Australian floods.  Steels  should also benefit from floods.  Precious metals, copper rolled over in PM. The ‘rare’ metals stepped up again as Dahlman Rose following in their own footsteps with another outrageous target of >80 on MCP >15%(did this with AUMN late last year, a gold stock we had up). AVL up >20%, REE >6%.   Looking further into OSN, it’s actually a nice growth stock with a ‘Rare’ connection, but notably a ‘steel’ stock that has to do with every China infrastructure aspect from highways to railways etc.  It’s also cheap and a fresh IPO importantly.  Still, it has issues as little China co’ are being exposed to fraud noise since December.  Everything else like CHGS CDII is definitely considered ‘junkyard dogs’ stuff here. 
  • NCH's- GTLS, JOYG, VMW, ROVI, HOLI, QLIK, ARB ARUN are just more Shadows putting in new highs intraday.
  • Financials- continuing December streak into earnings,  GS  breaking out
  • Consumer- Casino  sub group had very good Macau numbers and WYNN  finally got over 105.

Don’t pay much attention / trading decisions based on Global markets, thus the ES to start the day as most markets will be playing ‘catch –up’.  SPX 1280 as next ‘R”

Monday
Jan102011

DJIM #2  2011

As 1280 invokes ‘R’ for the past week, the market impulsively sells off here and will continue to find an excuse to take some profits.   On Friday, it was something completely immaterial in the ‘big picture’.(Mass. Foreclosure ruling).  Does any investor in Europe/ China give a damn and/or make an investing decision based on such with Sovereign debt/Inflation questions unresolved, respectively?  The answer is definite no-no, but in the US markets it’s reason enough to test 1260 support again!.    What was relevant and material was a weaker than hoped for NFP# , but a justifying Bernanke keeping QE2 ‘ alive and on track’  was much more important and offset the #.  If anything, the jobs number calls for QE3.  As far as the tape during the midday antics, it looked more ETF/ES driven as single stocks (exc. Financials/Banks), hardly twitched in either direction.  Indication is holders of stock are reluctant to sell as much as they are reluctant to buy more. 

Technical-  1256SPX 20ma (DJIM Benchmark for a few years now) is in focus and if broken will likely lead to a correction as shorts may finally lay out some exposure.  As per ‘RUT’ of a day'  post last week, the RUT has now lagged the SPX for consecutive weeks and could be foreshadowing ‘tiredness’ for the rest of the market.

Tailwinds(potential) Q4 earnings should come in better than Q3.  Shorts are not laying out positions ahead of potential train/ minimizing downside for now.

Headwinds- wary- (potential) US markets oblivious to rising Contagion noise again.  A case of shrugging it off or complacency at work?.  Looks like complacency in this view.

Shadowlist

  • Momentum/earnings/“winners of ‘10–   Entered the week looking for newsflow from CES Vegas and it definitely was the ‘Buzz’ of the week.(SOX >3%). Leading stocks CRM ARUN RVBD FFIV , >6-9% on week…”..Dec 30th….” further gains likely into the front half of January with individual 'leading' equities catching up..” As far pre-announcements, no major names, but a slew of mid cap types warned.
  • Commodities- USDA reports mid-week to possibly feed Ag space some more. 
  • Consumer- WYNN >14%, LVS>8%  continued the weeks move off Friday’s Tier1 positive comments …Turning point was early in week...(Casino sub group had very good Macau numbers and WYNN finally got over 105).
  • Financials - 2 day of selling, European unresolved peripheral stresses should continue to bring money flow here.  Foreclosure noise will persist.