..ticking higher

A game of..’You go first’….’No, you go first’, characterizes the market participants (longs and shorts).  A lack of conviction on either side,  although both have reasons to make a move.   A lack of urgency is prevailing, likely due to expectation of a correction.   A correction would give investors who believe more now in a global recovery a chance to enter and the shorts some confidence to try and press the downward shift.   Luckily, we are at the peak of earnings season and all we need to do is concentrate on individual plays and nothing more.  There’s plenty of fish to trade on a one by one basis, whilst ignoring the market gibberish on Dow 12000/SPX 1300.  Eco data- Initial claims couldn't get a move started, now GDP on deck.

Shadowlist

• Momentum/earnings/“winners of ‘10 –  The Q4 earnings reactions are definitely getting better as speculated here recently as seen by NFLX  partying like it’s 2010 all over again.  Also, RVBD  basically in-line call/guide was well received and should begin to take the sting out of the space post FFIV.  (See EQIX note this week).  Importantly,TMRK ,  M&A activity is a boost for the data center related names like EQIX SVVS  etc and just the whole ‘cloud’ area.
• Commodities –  Despite a 5^thstraight down day for the USD, most spaces sold off, likely due to China New Years hikes possibility.  CRR,  a earnings addition to trading list as it continues to make solid earnings in the O&G equipment sec.
• Q4 earnings update – OPLK OPNT, mid –caps on watch for now as 4-5pt gaps are little too eager for this liking. SCSC , as well.

DJIM #5 2011

“… The question is will it be a standalone technical correction for the right reason (consolidation) or will it be accompanied by ‘ bad news’.   This will determine the scope of the correction….shallow or deep.   In other words, consolidation or correction?.  (Entering last week’s trading). 

Well,  less than a week later investors are asking this same question!.   DJIM’s view is this Friday’s sell off is very welcomed  by both sides ’expectation of a correction’, as discussed in the Journal trading lead into Friday’s trade.  SPX is now a grand total of 9 points higher in a strong earnings season.   That’s good for longer term view as there is room for those underinvested looking from the outside into this market for 2011.

As traders we’re all used to ‘sell on the news’ last few Q’s after INTC earnings.  This Q it took a little longer as in ‘peak’ earnings hitting Thurs night/Friday BMO and used Egypt’s misery to ‘excuse ‘ a sell off and rid of the market ‘froth’.  The market knows all it needs to know as the bulk of earnings were in on the important,  “BIG’ banks BIG industrials, BIG techs.   The end result has been a ‘strong EPS Q.   Investors/ managers know the trends, so it’s time to take the froth off.   That’s the broad market, it has nothing to do with ‘individual stocks we are looking for in the upcoming days/weeks to play, so trading life goes on.    Also, playing a part is what was touched on late last week after a good market day,  simply it is very much technical related… “All in, the RUT excelled, but this is only a dead cat bounce until it at least makes it back into the Sept – Jan TL closed at ‘R’).  The NAZ faces the same ‘R” in its chart and both are hovering around 20ma.“ .    Basically all the ingredients have been in the market for days.  Friday the ‘soup’ of all these prevailing issues just boiled over.   As SPX made fresh highs, the transports / RUT were not participating signalling divergences once again.     We’ve been talking discrepancies in the indicies consistently.  

In all, as alerted late Friday as a precursor to the weekend Journal, the supposed ‘panic’ was not in individual stocks and definitely not in the recent emphasis of stocks/ groups from the Shadowlist, but in the ES ETF scene.  Therefore, it’s not real panic as investors held long positions.   If we breakdown the lists…the momo clouds were all green on the day, the Ag’s and coals were also predominately green.    Anything down was more of an individual issue like AMZN related to earnings and not ‘Egypt’.    Of course,  if things escalate and investors get nervous in days to come, we will likely see this spread to single stocks.   Today, if you wanted to get out, you could have done it in one piece as most Shadowlist were hardly touched.  Of course, we don’t want tensions to heat up in the Middle East,  but if this is quickly resolved the market will unfortunately (yes, unfortunately) bounce (probably ES ETF mostly) and smart money will sell into the strength and into singles stocks.   This will show it wasn’t geopolitical tensions that caused the 2% sell off, but all the underlying issues that were already present.   Also, it will show the market made a short term top on 01/28.

• Technical – as noted in last alert, SPX 1260 is a high possibility in days to come.  This would represent a ‘shallow’  correction and therefore ‘consolidation.’  If 1260’ish taken out, we’re looking at a long term trendline break from Sept break and the likelihood of December gains evaporation (deep correction).

Shadowlist

• Momentum/earnings/“winners of ‘10 –  The ‘cloud/data and momo earnings scene was immune to the Naz 70pt/ >2.5% sell of as the M&A activity(TMRK) trumped.  If this restless environment continues this may have only been a hiccup day as  shorts may look to take high beta down as (it’s the easiest.)
• Commodities –  As noted above, the Ag’s ferts/coals also outperformed and a rescue of MEE by ANR(speculated for weeks) finally occurred this weekend and shouldn’t dampen the coal space heading into the trading week and more cyclones (AUS).   Of course, the notable trade off Egypt was a rush into Gold/Oil.  We’d stick to oily related ETF’s , if the situation escalates, but a few single stocks may work for other reasons as well.   CRR,  gained up to 4 points intraday, ( a earnings addition to trading list as it continues to make solid earnings in the O&G equipment sec.( previous day). FLS, an old DJIM play is one to look at from a chart perspective.
• Q4 earnings update – What we want to look for early this week is if excellent reports get bought or if this trade dies short term?.   In other words protect yourself from gunning what look like good reports early and risk being a new holder at the days early highs off a report until we see the markets mood.  If earnings are no longer bought, it likely signal more downside in the broad markets.  This relates to ‘earnings sell on the news’ premise above and would indicte a shift from MICRO to MACRO  for the markets ahead.

..joined the march?

Fittingly,  the big downside on Friday noted as purely a ES (futures) move continued its’ shenanigans overnight squarely hitting a low of ES1262 (note SPX 1060’ish technical levels here) and proceeded to crawl a total of 23 ES handles to close as Egypt was signalling some headway at least for today.  It didn't look like a ‘ million man “ES” march’ , but really more like a man or two march given the general quietness of the market.  Ahead of some important Macro data incl. US SM on deck, ECB meet-ups and jobs#,  you hope this wasn’t the bounce discussed yesterday that comes ahead of selling by the ‘man or two’, who marched it up today.  Anyways, the broad market shenanigans are not our concern as our strategy is to play individual stocks off earnings and/or sector rotations.

Shadowlist

• Momentum/earnings/“winners of ‘10 –   The ‘hiccup’ outperformance of the clouds/ momo/earnings of ’10 played out as these stocks ‘underperformed’ (CRM NFLX VMW down, others just flat), the market today.  AMC-APKT  is one to watch on Tues.
• Commodities –  The Oily (energy) space ran with ETF’s like USO OIH +2.5%  garnering most of the markets attention. CRR  hit a fresh intraday high at $117, FLS  made new intra’ hjgh before pulling back some late in the day. CLR/ CRK  are previous DJIM Haynesville plays we’re familiar with, so if this ‘energy’ streak continues we’d look for potential trades in these sorts.  Generally all cyclical sub groups (industrials, materials, energy) were helped by CHI PMI.  Note- China may not hike again into their NYears as previously thought, so commods’ should act well till the day comes shortly when we’ll know for sure.
• Q4 earnings update –  In regards to yesterday’s note, SOHU 4 point gap up and immediate loss of all the points was a little eerie, but it eventually got it all back >5% day, so earnings reactions are still okay.  The market will now become focused on CSCO  coming up for the first real ‘January Q included’ effect.  SODA  nch, OPLK were the best mid caps listed. *AMC- BIDU IRF , strong earnings to watch.

..and up it melts

Seemingly after weeks of noting SPX 1307’ish as ‘R” resistance, the market opened firmly on M&A Monday (3 deals) and overshot to 1320 with an eye on 1333 (666X2).  Yep, that’s 2x from what we called the ‘Mark of the beast’ , March 10^th,2009…

”Usually,  we have a case of mouths calling the market bottoms, nobody is doing that now at this level and instead calls for 500-600 gravity pulls are all over the place.    We like this as well for a better chance to get a meaningful bounce from the 'Mark of the Beast' 666 level”.  

A devil of a rally proceeded at that time and after a few hiccups along the way, the market finds itself in a midst of a continuous gradual melt up 2 years later.   The headwinds  of economic data, corporate earnings, money flow away from emerging markets/ bonds, Easy Ben..(Today M&A) outweigh any single ‘day event ‘ tailwind  in the Bulls favour.   There is absolutely no reason for the shorts to step up and risk being thrown under the bus as per recent ‘Egypt’ situation again.  The same premise exists here as it has for months.  As long as this lack of tailwinds persists, any pullback will be shallow as dip buyers will come in.

Shadowlist

• Momentum/earnings/“winners of ‘10 –   Besides AAPL  making fresh highs, most winners/momo’s couldn’t be found in the top SP tech performers on the day as it’s pretty quiet following a nice week.  As said, CSCO earnings are ahead and are being waited in as are some notable ‘cloud, data center’ names for direction. *SOX was a notable underperformer, it’s been a leader, so it’s lack of participation in market making new highs is some crumbs for the Bears.
• Commodities –  mostly mixed, DJIM oily/energy linked plays  FLS, CRR  are holding up well, (GTLS  got a pump Cramer job), LNN  part of our Ag’/fert rotation play since late Dec hit fresh highs while CLF (steel/coal) keeps hovering around new highs.
• Consumer – Our retailer names  LULU, FOSL, RL  continue to trade well /inline with broader tape. SODA,  a Jan alert preceeding its big day from $33 made NCH >$44(new closing high) on addition to IBD 50.
• Financials–  After flat lining all earnings season was today a wake up? $BKX.   Well, a history of headfakes is in it’s blood, so no telling from one day.  It is European bank reporting time, so they will likely feed of their reports.

..maybe a start to a sentiment change..

As the market meandered in consolidation mode in the ‘red’ all morning (SPX -5pts at noon),the ‘missing link’ noted here was outperforming with JNPR  (networking) and FFIV  (best on SP 500 tech) were coming out of the doldrums and leading the way.  As the day progressed more and more past leaders joined and a broad market move higher ensued.  The hope is this the beginning of what has been discussed here this week in respect to Japan tech worries being overblown and close to being priced in.  JBL’s  report negated some of the fears for EMS, Comm.equip, optical stocks and late in the afternoon TXN’s CEO said the company would come close hitting street estimates despite Japan.  AMC, RHT and MU  put in strong reports to help the cause and an important day is ahead in earnings tomorrow with ORCL,BBY, RIMM.  Note today’s action took place amid a bunch of negative bits that the market shook off.

Shadowlist

• Momentum/ earnings/ winners of ’10-   JBL helped sentiment overall in this space.  FFIV, RVBD, APKT  all >3-4%. Opticals like OPLK  and notably IPGP , +10% and a NCH.  Also, momo names like BIDU, NFLX do well.
• Commodities-  The coal trade continues for a 6^th or 7^th consecutive day.  GTLS,  continues to be a stand out putting in another NCH along with CRR, another EPS winner here this past Q.

DJIM #13 2011

Last week's 2.74% SPX recovery rise is pretty well summarized last Journal.  Friday’s action did not nothing to deter from the trading premise here with tech earnings being the missing link in a move higher post consolidation early in the week.  The ease the market broke through 1314 ‘R’ in early trading  before wavering some in the afternoon makes you think it’s just a question of time before we test February highs. 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.  Simply, the recovery reversal of nearly 70pts trough to peak is only 7-8 days old and 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 up.  This non-participation is also evident in the rally’s volume, this negative may turn into a positive as some larger managers may chase.  As Traders you can’t predict any further macro shocks, so you work with what’s in front of you and window dressing is it as we enter a corporate quiet period before next Q earnings.  A few notable eco data points Friday (Global PMI’s,NFP#) coinciding with QE2 hitting the street.

Shadowlist

• Momentum/ earnings/ winners of ’10-   The Nazzy/ R2K outperformed the SP by a full 1% this week, this sums up this Shadowlist group as corporate profits led the way, so plenty of linked names from leaders and oversold opticals to look at for more trading. Networking related names were weak post AT&T-T-Mob deal, but private Lightsquared is drawing attention as it makes deal after deal .  This equals more network build up, not less.
• Commodities- as per recent activity, coals,  GTLS, CRR,  MCP, names noted most here keep on trading well.
• Consumer- retail/lux DJIM names hanging in well, FOSL  keeps making new highs.  Some rotation late in the week into our casino names (WYNN, LVS)  to watch further.

..still ignoring negative tilted newsflow

A seemingly directionless (sector wise), a lagging tech/naz trade still had the market surprisingly pushing to last week’s highs in the first hour.  The next few hours were going to rest on tech shoulders for the broad market as it was still .5% off its highs of last week.  You always want lagging indicies to confirm a further move by following. ( ie. follow SPX highs today).  As it played out with tech still the sidelines by midday, it was no surprise to find the tape wavering slowly throughout the day, closing at lows after being stopped at the top of noted cluster of “R”.

In all, no catalyst for morning move higher and no catalyst for late slippage. (a Roubini downside risk update hit wires might have been culprit). 

Shadowlist

• Momentum/ earnings/ winners of ’10-   Spotty mixed performance among networking/equip comm’/ momo’s, some networks linked names like APKT, (around down trendline March break) and ALU were outperforming peers by wide margin.
• Commodities – Once again coals here (WLT CLF)  did well, GS helped with an upgrade of WLT. Intraday, MCP , hit 2 month high, CRR a nch and now up ~25% since a DJIM earning addition in late Jan.  Late day broad market selling took most of the above down to trade more inline w/SP for the day, but overall these names still act well day after day.
• Consumer-  MAR’s #’s weighted on the leisure sector (a upcoming earnings question mark now ) and therefore, no follow through for casinos.  Retail was fine,  LULU  breaking out to a NCH by midday.

leaders 'lead'

One again anything that can be construed as negative tilted news was brushed aside by US markets (globally it wasn’t).  We’ve discussed this since the middle of last week as market turns a blind eye, now it’s continuing the trend at window dress up time and ahead of earnings season.  This is same factor at work as when alerted at SPX1250 and said to watch for negative ‘nuke’ news not get sold off any longer, which would be a positive going forward.  Every bit of negative newsflow is seemingly ignored now as investors tolerance has been built up with Macro global issues.  It's perplexing to many.  It could continue until Friday as investors/traders await all the data/QE2 for that day.

The morning ramp can be attributed in part to nobody finding a catalyst overnight (see yesterday's closing note) to close market below the pivotal SPX 1314.  There was no positive catalyst out there this morning.   It was a matter of Performance Anxiety (PA) setting in as managers went after growth/ momentum names.  Remember, these names didn’t participate in the first leg off 1250SPX and really haven’t played a big part of the ‘missing link’ tech (mostly SOX) rush that ensued afterwards.   Momo-linked stocks like FFIV APKT AMZN SOHU and many more simply caught a bid.  As 2pm approached many probably thought the market may repeat Monday’ s late selling due to no positive newsflow, but ‘leaders’ were at work this time with PA being enough of a catalyst and so chance of sticking the SPX gains was a high possibility unlike Monday.  Technically, it was important to get back over SPX 1314 quickly and the icing is a close of 1319, which could be enough for more points as noted in weekend Journal.

Shadowlist

A stack of DJIM names +>3pts as growth/leaders lead the way today.

• Momentum/ earnings/ winners of ’10-    SOHU +7, PCLN +7, AMZN +5, FFIV +4, (NCH's- SFLY  OTEX)  APKT +3pts  broke trendline.  SOHU, unleashed a huge move, saw no news, only idea of why is…China Unicom's results point to a strong mobile internet ramp in 2011, as BIDU SINA  act well too.
• Commodities – WLT +4pts, MCP +4, CRR nch,
• Consumer-  noted Retail was fine yesterday despite leisure selling,  LULU nch , RL, UA all +3-4pts off recent DJIM PVH +5pt on earnings.

DJIM #16 2011

Heading into DJIM #15 week, it was noted the market didn’t really know what's going on the corporate front (earnings) from recent indicators (Japan impact/ some smaller co’s earnings/ data points).  

A week later and disappointments from AA JPM GOOG BACK INFY , hardly resolved anything, although just looking back at those pretty big names covering a broad view of sectors, many are left scratching their heads as to how the market didn’t resolve itself more than .5% to the downside by week close. (Unfortunately, single stocks didn’t find ‘elusive bid’ to close above 1321 as per follow up Fri.morning comment).  

Add, big Washington question marks (debt ceiling), Euro debt déjà vu and Bears must be thinking what's it going to take to get longs to sell holdings?.  They already know their comrades are incapable of pressing as the market just tested a cluster of support this week and instead bounced.  Also for good measure, let’s note the fact 4 of above corporations announced just in the last 24 trading hours and the market still managed to rally some ~12 SPX pts from overnight lows.  Okay, let’s also add ‘safety' sectors outperforming and most likely go ‘Huh’?. 

Is it just the same Bull market resiliency we’ve discussed for 2 years now or is this market just waiting to reach a crescendo of headwinds and buckle its knees in a late April correction (..As said last week, investors need to see value in stocks to keep the trend in tact for Q2 or market risks a correction later this month, earnings are the big key to that”,  early April.  Also, recall, post- Japan/surging oil, Global ISM’s pleasantly held up, but it was noted here they could just be delayed and be terrible once April #’s released.  Question is, what if they aren’t terrible?. What if Washington makes headway during it’s recess on debt ceiling legislation? (which it still can prior to May 1).  What if earnings/outlooks start to come through as we hit the majority of SP500 co’s in the next 2 weeks?.   Well, folks..'what if's' in this business is called “UPSIDE RISK”.  Shorts fear it and the big money knows it can rally the market, so they wait on the sidelines for any of these potential catalytic events.  

All in, murky broad market waters, but DJIM emphasis has always been on single stock selection linked to earnings and as we head into the eye of earnings season, we’ll concentrate on building on fresh and/or re- initiations of successful Q1 names off earnings and not worry so much about the big picture, ie,  TDSC  CRR  IPGP  MSTR  WTW TBL /  http://www.djimstocks.com/1st-q-2011/2011/4/5/djim-plays-1st-q-spx-1250-call-mcp-soda-tdsc-crr-ipgp-tbl-ms.html 

..and others like, GTLS SXCI SFLY WFMI ININ OPNT KEYN  (you can click highlighted symbol on site for charts)

NCH-new closing highs: WTW SFLY WYNN  MCP SINA  KEYN (Shadowlisted)

Update on Monday, April 18, 2011 at 09:47AM by Demi/ YourPersonalTrader

TITN , Titan Machinery, Inc.

blow out EPS, will get a look back to Ag' -equip sec', VMI strong EPS outlook last week.

ie LNN AGU POT MOS

SPX , approx.~1295 off SP downgrade news likely a buy.

..may they all be like CRR, FTNT,SFLY,N!

A day of digestion as the market rests on support provided by a ‘positive’ earnings season and a FED that gives and gives.  Most of the incremental gains for the market today are due to managers going after the lagging groups  as is always the case.  Thus, leading sectors in the market today are the Black Sheep groups, while the Nasdaq lags.   This also relates to a note a few days ago…”.bring inflows from the sidelines due to technical (indicies potential breakout)..” . Combined, it is all ‘PA’, performance anxiety into month end.  If the breakout the other day isn’t enough, today the TRANS were making fresh highs, which garners support from the Dow Theory cult. 

Another quiet day tomorrow likely, next week as discussed we will find how long the market can rest on it’s laurels. (earnings / FED).  There is no sign of shorts in the market and it’s hard for the market to go much higher without them being around to get squeezed.  The market would need a lot of money to come in the market to offset their absence.  Maybe, eco data will wake them up next week and/or wake up complacent longs.  Recall, what we said about April PMI's (tagged) showing what March PMI's didn't ( post Japan/Crude price escalation). 

Considering, DJIM has always been an earnings/small cap orientated place,  we still have something to look for as R2K earnings take over from the mega caps.  If today is any indication from Shadowlist (tagged to locate) earning linked plays, we’ll have something to look forward to and initiate new stocks. CRR, initiated last Q at $110, hit $169 today, SFLY, also last Q addition at $40 to $67 today and FTNT  from August at $18 to $48.  All were  >15% pops today off another round of excellent earnings. Makes you wish you were just a buy and hold investor....

Update on Friday, April 29, 2011 at 02:36PM by Demi/ YourPersonalTrader

Nice earnings from small caps, QLIK  play here and others like ACOM (now at of hand), ARBA , but one we played as an IPO in software Netsuite is best, N, headline is nothing # special, but inside is great 'billings growth') and definitely an add to Shadowlist.