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.