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

..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.

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.

Smoke... but where's the fire?

It seems every asset class had had a major reversal recently, USD, commodities and even TSY’s are on the cusp of saying something is wrong in the economy with yields at recent lows.  You can throw in weaker Global equity markets w/ China recently, Russia down 10% =correction territory and even today as example, Europe was comparatively weak vs. US markets.  Still, US equities clings range bound since early last week.

Take into account the 'red flags'...the poor GDP, more GDP downgrades, Jobless claims, non-manufacturing data for the US economy recently and you seriously have to wonder how the equity market is hanging in Q2!.  It’s hard to sit by idle at this point as it looks like the market will show it’s resiliency once more as we’ve pointed out month after month since ‘09.  But note, every correction since the rally began has been a one-time event and/or natural disaster that you know the market will reverse soon as history proves.  This is why shorts have been gun shy to press as they’ve been burnt time and time again.  This time may prove otherwise as a greater question mark lurks and that’s the ‘economy’, transitory or not. Market is literally hanging on a thread (our health  20MA benchmark) and one more ominous  headline and it could be a slippery slope due to all things already coming up as ‘red flags’.

In all, as far as today, it was bounce day for commodities off a USD decline post 99bln market value beating last week. It wasn’t much of a surprise as all major players pumped commodities to recoup some of the huge losses.  The strength in the market was ‘narrow’ as the majority SPX top gainers were all commodity linked. (Transports/Financials/SOX) all underperformed the tape showing how narrow the strength was.

Nice to see RUT outperform for Shadowlist as some went after real beaten down ones like CRR WTW  and others in our retail composite ie LULU ACOM GTLS QLIK AZPN  look decent overall.