Cluster held..

Following 3 premature and/or botched bounces this week, the market finally found the ingredients to make a bounce last.   Why?.  Firstly, no sideline money coming back (‘No Rush’), secondly no shorts in the market to create a short covering rally of substance for those 3 earlier attempts!.   The combustion needed simply was not there, folks. Let’s get to this afternoon,  it wasn’t crudes fall as reported to ignite the move as it was falling all day off overnight $104’s and the market had done nothing except sell off more.   It was smacking 1295 SPX more than anything that set this move off. (see yesterday’s cluster note).  Afterwards > 2pm, crude fell more and that’s what got some more conviction buying / covering going.   Look at the Shadowlist (site attached) snapshot taken around 1:30 just before the market fell hard to 1295.  What do you see?... No selling in individual stocks on the Shadowlist and thus a ES sell trade.  This was not a list indicative of a market falling through Dow 12000/SPX 1300.  As the market dropped to SPX1295, our stocks didn’t budge in a seemingly panicky moment at major support.  Selling had clearly stalled this morning off Saudi Arabia sentiment of this contagion not spreading.

Looking ahead, the market broad following this afternoon is an 'Oily hostage' to the price of crude as it will dictate the broad market/SPX moves.  Likely finish the week below 20MA, so hardly out of the woods, but indvidual stocks/ sectors should have better sentiment/oppy's to trade after this weeks woodshed moments.

Shadowlist

• Momentum/earnings/“winners of ’10-   yesterday..”Hope is PCLN  EPS reaction AMC generates some buy interest on this pullback”. Clearly, this helped abate the selling and generated a bid in ’10 winners names like FFIV APKT RVBD, all >4-6% and ‘11’s  standouts like JNPR.
• Q4 earnings update – Another positive for market was the ‘v.good EPS reactions’ continuing as we had 3 DJIM stcoks report well, GTLS +>13%,  PCLN >6% , SXCI  $44 to 49’s , >6%,  all excel and produce nice runs in a selling market.  This again proves the premise of trading EPS reports this season and ignoring the broader market.

below: Intraday Shadowlist components

..another pack

It was a actually a good underlying tape to market naysayers as a few ‘defensive’ sectors led the market higher, but as far as DJIM’s underlying ‘Shadowlist’ tape, it was a second consecutive day of managers swallowing PA pills of mid/small caps as evident in the R2K's 2:1 outperformance of the major indicies. (*DJIM not liking SOX performance for a NAZ up >20pts intaday).  Yesterday’s winners rested and a fresh batch of DJIM plays took over. (see attachment on site). R2K is at 2007 levels. So all cool here today, but broad market is probably signalling a halt coming due to some internals today.

We entered the week in anticipation of …1) “…many are behind the ball on it (as in surprised).  This coming into a month end/Q end is where a PA pill (performance anxiety) will likely be swallowed by managers to play catch .. (many thought it was done with prior weeks gains because many times front running the final week occurs). 2) There’s a cluster of “R’ around 1313-1319, but once a close occurs over, the market will have higher sights in mind and it should happen this week. 3)  rally…”It could continue until Friday as investors/traders await all the data/QE2 for that day.”. 

Taking into account all 3 have taken place this week, today was another 11-12 SPX at day’s peak to March highs, so thoughts of continuation over new "R" into Friday morning is a little too much to imagine.  All in, the market has set itself up (disappointment?) Friday’s eco data, notably Global PMI’s and the effect all the Global macro issues (Libya-oil/ Japan) have had on the numbers.  The NFP# shouldn’t be as important, but if it surprises big to the upside it will likely be a negative for market as Fed comments have become more ‘ hawkish’, as some today.  Note, we are another “R” cluster to low 1330's-1335, still a break is clear sailing to years highs.