..jinxed it

It didn’t take long for answers to the negative assertions presented in yesterday’s Journal, including somewhat rhetorical questions…”Stubborn/resilient or (dumb)? ..”How long can this (oblivious) last?....Are stronger (Ahead of) than expected earnings Q4 prints going to be enough to hold up the market?.

A fall of 20ES points from premarket, ~13 SPX /40 Naz day points and notably a ‘cloudy’ after hours session may finally awaken the shorts to participate in this market.   All in,  wish the DOW was off 300 points instead of 12 as it gives a false impression of the underlying tape.  Most of the profit taking now is earnings related, but the ‘wary’  stuff noted here, (policy tightening speculation globally) aspects of the market (inc. 2H January effect) are working themselves into the markets ‘psyche’.    Today was the first day in weeks we’ve seen profit taking pick up as investors have been willing to hold on, but days like today will wake up the complacent ones and may cause more selling down the road along with more confident ‘shorts’ coming back.  So, the strategy of hoarding cash for potential earnings plays remains to avoid any of this today and potentially more.  This also works because after today’s action in financials, tech, ’10 winners, ag’s, we’re left with little leadership to seek for a trade.  Allowing the overbought conditions to work themselves out will be in the best interest of all 2011 Bulls.  It’s been a good 6 weeks without coming close to the 20ma, the market can use a visit.   Recall a trading premise here, if intraday dip buyers do not appear as was the case today, they usually don’t come in the next day.

Technical- Support 1277' ish on a close basis, followed by 20ma pretty easily, if busted. 

Shadowlist

• Momentum/earnings/“winners of ‘10 –   discussion here of the overhang of Jobs outweighing AAPL’s excellent print played out as the stock rolled softly downwards all day from ~450’ish post earnings levels signified no follow through for itself and importantly for those hoping AAPL/IBM could pull the market higher and unfortunately answered ….”Are stronger (Ahead of) than expected earnings Q4 prints going to be enough to hold up the market?. “…But, this was hardly the reason for a 40pt fall, the real reason was..” the component stocks like CREE LLTC had disappointing inventory correction themes”. You can add WDC  to the ‘inventory’ trend (which hurts PC outlooks) and more reports tonight confirm this negative.  The ‘unfortunately’ lack of participation from the FFIV CRM RVBD types hovering at 9ema support yesterday had most breaking this support intraday only to avalanche big time post FFIV earnings AMC.   As we know from early October post EQIX preannouncement,  the whole family gets taken out to the woodshed and that’s definitely the case AMC w/ FFIV off ~30+, APKT off 7, RVBD ~6, EQIX ~5, CRM ~10 etc. 

Interestingly, go back to CSCO’s  report and see what we said may eventually show up and be a negative come January reports!

• Commodities-  the Ag’ play introduced here in December for early ’11 finally curtailed as investors used the Cargil ‘divest’ of MOS shares as an ‘excuse’ to take profits.  An’ excuse ‘ is what is, but that’s all a market needs to take profits and ask questions later.  Tightening spec. globally leaves little to trade now in commodity linked stocks.

• Financials-  ..”A ton of names to report on Wed. (inc GS WFC) to potentially (hope) negate C’s print.” . The ‘hope’  didn’t materialize one bit as GS  and many others in space disappointed with earnings and as in recent Q’s the sector runs into earnings and falters(selling) soon after.

..may start to see better EPS reactions

Once again a seemingly ‘oblivious’ US market in premarket/opening bell shrugging off a 3% decline in the Shang due to more tightening fears changed course quickly in just 2 hours.   As soon as 1277 fell, 20ma at 1271 was smacked on the head.  Yesterday.. “Technical- Support 1277 ish on a close basis, followed by 20ma pretty easily if busted”. Considering there was little premarket negativity/ no gap down indicating a shot at the 20ma this day,  the fact it happened brought in bargain hunters (see below on who moved) that would not have come otherwise.  Usually they wait for some stability following a day like Wednesday, but this time they couldn’t ignore an important ‘technical’ benchmark.  In all, it was good to see it recoup above 1277 on a closing basis, but hardly a game changer.  ..”It’s been a good 6 weeks without coming close to the 20ma, market can use a visit. ” . The fact 20ma was so easily accessible makes you think another visit is not far away.

Shadowlist

• Momentum/earnings/“winners of ‘10 –   Thanks to FFIV , many small caps took a licking and not just popular '10 momo names, but more mid cap winner stuff.  You could see this by the RUT underperformance( down 1%) to the SPX.  There was little bounce evidence and considering most have broken 9ema handily we'd only trade 'intraday'.  It’s probably better to wait for pre-earnings move on many individual names.   *Likely, FFIV has given this ‘blessing’ oppy for pre-runs and better earnings reaction as they’ve reset the bar low.
• Commodities -  All the policy/tightening, global hikes are taking it’s toll. Only coals really came off the lows, but that’s more due to fact they’ve been coming down for 5 days already.
• Financials -  After 2 days of selling, bargain hunters came in.  It’s not that MS report was great, it’s more of a function you weren’t as bad GS and C.  This is hopefully a change in earnings reaction going forward and is the same thing FFIV may have provided.  Simply, if you don’t suck as much as GS and/or FFIV, we won’t damage you too badly and if you produce, we'll thank you by buying up your stock.

..problem child....

The Shadowlist and it’s components pretty well show the footprints of the market today and what to watch for Thursday.  Market has traded pretty good on bad news, it will interesting to see how it reacts intraday to it’s problem child' CSCO.    A shallow dip to Monday’s SPX open gap (if hit) would be expectation for dip buying.

Shadowlist

• Momentum/earnings/“winners of ‘10 –   we’ve been cautious on all the ‘clouds-virts-data centers’  heading into CSCO’s and names like AKAM, EQIX for basically the same group of stocks.  AMC, CSCO, ..” The risk in CSCO’s outlook exists..”.    It seems many have forgotten this by it’s run into earnings and are now paying the price as guidance is 'weak'.   No matter if CSCO is a company specific issue or not again,  AKAM  is not doing any favours for all their peers.   Noted the ‘crumbs’ this week for the Bears relating to SOX (now 3 days down), well, now it’s a nugget for them possibly.  (Some bounce in opticals)
• Commodities –  “Under hike cloud today”..yesterday… Today, the cloud burst as this materials/commods (particularly coals, steels) were the biggest drag on the market ($CRX).
• Financials – streak halted at 2 days for now.  Okay, that makes 3 essential leadership groups off Shadowlist showing weakness.  Pretty obvious the market can’t have this continue tomorrow/short term.
• Consumer –  it’s been a good pocket to be in as it’s the only pocket of strength today again, led by a big earnings day reaction from RL, >10% intraday.  AMC , WFMI  is a good feel earnings story for sub groups.

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.

Cycle highs...

Seemingly, consolidation ahead of Bernanke lasted all of 1 day as a slew  of EPS beats/guide ups from Industrial, Materials in the pre-mkt caused some caution to come off and turn into PA (performance Anxiety) for month end.  After this morning’s results, all you are hearing is how ‘80%’ of SP is topping street estimates.  Today and tomorrow is the peak of earnings, so the 16 of 20 is growing and growing.  ..”… if 16 out of 20 surprise positively, we’ll probably see 80 out of a 100 accomplish this and so on and on it goes”… Into the trading week, earnings can keep the momentum going” (this weekend).   Importantly, trends for all sectors are pretty well known now as nearly 50% of SP has reported.  That’s enough to make investment decisions unless you think the ‘Utilities’ group (only 1/33 reported) is indicative of further global recovery or not. Included or rather not included in the move higher today was some rotation/ profit taking on the morning pop on recent winners/ high beta stocks as per follow-up today. In all, somewhat of a messy tape, but one that may bring inflows from the sidelines due to technical (indicies potential breakout) + earnings momentum in multi-nationals/industrials paving the way....”.It’s always something that supposedly keeps real buying on the sidelines before realization hits and PA (performance anxiety chase) ensues”.   Today's action might be enough as many investors/managers look for this criteria to put money to work. It looked like some cash was finally being laid out.  Days where high beta, high flyers provoke a breakout day have been far removed from the markets the past few years as they usually do their damage up to the breakout levels and some other group initiates the breakout. This why we haven’t seen a huge breakout day in months/year as it’s been a gradual and consistent bull market.

This weekend we alluded to the upcoming ‘hype’, now that we’re all at nauseating levels 48hours into the week,  the Bernanke Show is almost here.  Hopefully, it ends as a ‘non-event’ and earnings carry the momentum.

Update on Wednesday, April 27, 2011 at 09:28AM by Demi/ YourPersonalTrader

Hype is too funny. Seems expectation is as if Bernanke will answer, if he wears Boxers or Briefs?. Every answer will be 'commitee' based.

..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.