Keeping the 'beat'...

Just as the playbook had it written up, the Bulls punt return team was ready to go…”A shallow dip to Monday’s SPX open gap (if hit) would be expectation for dip buying.” . Once again dip buyers see the market through rose coloured glasses and shrug of CSCO as company specific to close flat.  Same premise exists within the broad market discussed, more importantly, there is plenty of earnings stuff to trade away.  If you’re an investor in cash, you are literally short the market.

Shadowlist

• Momentum/earnings/“winners of ‘10 –   2 of the EPS play stocks noted in Journal this Q,  JDSU >3%, JNPR >7% negated CSCO’s abysmal guidance and helped other networking stocks APQT/ BSFT  ~4% each within DJIM’s list.  This was helped by Alcatel-Lucent earnings and a 2007 IPO at DJIM, IPGP (use DJIM search for more on co’), an optical laser play that guided up big time. Timing couldn’t have been better as we’ve talked a trade back here the past 2 sessions.  Also, good to see is even AKAM  did not drag others in ‘sympathy’ as this group has been prone to in the past.
• Commodities –  Mildly better action in Steel, coal linked names, but overhang exists following hike/ Brazil.
• Financials – quiet in space.
• Consumer/Q4 Earnings –  added WFMI on Journal yesterday and it continues to show earning winners are getting ‘v.positive ‘ reactions.    This is something we discussed (below link) post bad reactions in mega names and thus bar being lowered etc. early in the season.   Also, if a stock gaps 5-10%, it is still possible to get in and make points as in WFMI  $58’s-61 today, RL  yesterday,  APKT  and many more have demonstrated.  IPGP   was a little crazy much. Excellent earnings are being rewarded,  it’s as simple as that.

http://www.djimstocks.com/djim-journal-1h-2011/2011/1/21/may-start-to-see-better-eps-reactions.html

nothing wrong with quiet..

As the bulk of significant earnings has passed, the market shifts to Macro (notably inflation) away Micro.   A busy schedule kicked off with China’s ‘newly adjusted’ CPI being leaked and coming in at less than feared.  Importantly, (alerted) import data came in surprisingly stronger than anticipated (iron ore >18%, steel >16%,copper >5.7% month over month) and got the ‘commodity’ sub group of our Shadowlist moving.  In all, the color of the tape remains consistent with nothing substantial ‘catalytic’ to cause a stir in either direction, so trade away.

Shadowlist

Momentum/earnings/“winners of ’10-   pretty quiet with some names taking breather (as in some Opticals after last weeks run) while others get a bid (IPGP).  Still, SOX,RUT supporting the market, which gives all our names a chance to move.

Commodities –  Due to inflation fears being curbed by emerging market data focus turns to stocks linked like CLF-WLT(EPS- AMC)  and X, FCX.

thank..Jennifer Hudson's waistline..

..for WTW and/ or my recent TBL' (Earthkeepers) purchase to get through another winter!

Coming into the week we noted ‘inflation’ would be the key ‘word’ and it has proven to be as all the market noise is related it.  Everything else, including Iranian boats and some overnight ECB buying (fat finger?), the market is turning a blind eye to as we see by recent trading day's 'green' closes.  Note, if Journals do not contain mentions of eg. boats, Middle east tensions or whatever heading into a trading day as every other media outlet,  it’s because we’ve turned a blind eye to it and are trading away the Shadowlist components.

A simple question now is does the US /global have an inflation problem?.  Okay, if so, why are the emerging markets on fire this week (>3%)?.   Sure, they’ve have beaten up so far in ‘11, but you can beat them up more on inflation fears!.   Yesterday, FOMC related forecasts didn’t change (positive)   So, this is the noise, the fear mongering, but what do you do as a trader?.  Consider this…What if inflation points ease down the road, you’ll beat yourself for not using your cash this EPS season!. That's as simple as it gets.  What we’ve been saying this Q (if not years now) is trade the earnings stories/ rotations and ignore almost everything else.   

Shadowlist

• Q4 Earnings update-  Look at today’s ~40% pops, WTW TDSC TLB, (picked TBL to alert today, but you can add all 3 to Shadowlist for now).  These are almost historical earning reaction gaps and incredibly there is more follow through intraday (see IPGP  comments recently).

• Momentum/earnings/“winners of ’10-   While some momo’10 names notably lag today in a melting up market (maybe something to monitor for broader mkt),  this year’s inclusions  to DJIM consisting of opticals/ EPS’/ new potential momo’s carry on.  NPTN, FN  alerted here at ~ $14/ $25, respectively are near highs of $21/$32.   When you catch momo, you really catch it!.  Buyers who missed the ride earlier got on board of NVDA (up >10% from red lows), despite many bearish analyst comments.   AZPN  got a $22 price tgt.

Pockets..

The only approach following a wild overnight panic in global markets was to gauge to the Futures(ES) decline vs.our Shadowlist as we often do.  The strategy was to watch for..”Dip buyers have been on strike…will they come out on ES overnight panic and buy the early selling pressure in individual stocks (not directly related to Japan and events?). Is this the point (SPX 1262 -December high/early Jan low) SPX 1270-1279 Pivot point support.”.   It was evident in the first hour investors were not fleeing individual stocks in our list.   The losses simply were not on par to the ES and the fact we fell sharply to the SPX 1262 off the open, exemplified the possibility of dip buyers coming off the picket line.   Having a plan and seeing what ensues in relation to it,  allows you the trader to decide what you should do.  If you had sold out premkt/ open, you regretted it by close today.  If you bought something that was down more than you thought it should be off the morning sell off, you made a nice trade (see below for some nice reversals).  Interestingly the 1279 point became resistance from noon until the inline FOMC (w some economy ‘firmer footing’ words) finally pushed the market through this zone.  Of course, if we had a ‘meltdown’ who knows what would’ve happened.. (or will happen), if the nuke situation worsened.

All in, we’re still on shaky ground (have to deal w violence escalation in Bahrain as well), but there are pockets to trade as below illustrates.

Shadowlist

• Commodities-   The solar nuke trade (FSLR,TSL ) introduced here coming into Monday’s trade continued to work and steels links outperformed(although X was sidelined). CMI,FCX  reversed very nicely.  Surprised coal stocks not benefiting yet as coal prices shoot higher last few days.
• Momentum/ earnings/ winners of ’10-   Also entering the week off brutal headlines, we still noted to watch….”some better signs last few days as high growth names bounce NFLX, FFIV.”.  This was the best sign as FFIV  made a big reversal and NFLX  was the star off a GS upgrade note, but this outperformance was evident in many other names such as RVBD, BSFT, IPGP.  APKT continues to find a bid.  JNPR  another networking stock has as well. All in, momo’s acted very well again as bids come in on dips.

heavy dosage of headlines..

This had to be one of the most memorable trading days, one that reminds you of past crisis days in case you’ve forgotten the sea sickness feeling off every ominous headline.

Although the broad indicies were in the red in early trading, a good sign was our Shadowlist was outperforming once again in a big way.  This relates directly to the outperformance of the RUT and gradually through the day this phenomenon was picked up by the media.   As noted past few days, “Pockets”  of strength are visible.  Unfortunately, even this group couldn’t fight off the bombardment of negative headlines that ensued.  All in, it didn’t resemble a minus 25 SP handle day shellacking by close, maybe that’s because most of the action is in the ES/ETF-SPT trading with investors holding tight in certain sectors.  Unfortunately as a bounce ensued from SP1250 late in the day(see SP1250 alert), buyers were noise exhausted and remained sidelined not chasing individual stocks for now. 

Shadowlist

• Commodities-   Yesterday, noted the surprising inactivity in coal stocks, today it was the one commodity linked group that was talked about most as buyers came into the related names.
• Momentum/ earnings/ winners of ’10-   Most of the names noted yesterday led the morning move, APKT  was up 3+ before relinquishing gains, BSFT, IPGP  were strong as well.  Opticals had a bid as well, but came off highs.  Considering most mega/big caps (AAPL ,IBM, ORCL, MSFT) were hit hard,(tech off 2.7%), its good see some tech working.

..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.

..in techs hands to continue..

Clearly, Tech is showing relative strength and leading the way as the next leg in the recovery from 1250SPX. The DJIM premise entering the week,…”we are watching for corporate earnings to better the situation for high beta/ tech anxieties to possibly dampen the negative sentiment.  This is likely to be the focus and most important factor in continuing this reversal”.   The dominos have fallen in sync to what has been cited this week..”we need to see some comforting tech words ahead this week so investors see value oppy' here next.  Simply, this where we'd look now for a long trade to materialize.” (pre-Tuesday trade).  JBL initiating the better sentiment followed by RHT,MU and tonight ORCL/ACN paving the way as the Japan overhang has began to recede.  Also, as noted yesterday market shrugs off negative newsflow once again today, always a good sign.

Shadowlist

• Momentum/ earnings/ winners of ’10 -  Cited the the damage from SANM, naturally JBL report has reversed this as Opticals had a 2^nd good day as FNSR, JDSU  +5% days on the heels of IPGP  big day yesterday. Although, previous days leaders APKT RVBD  etc lagged today, others momo’ likes CRM VMW  and even '11 momo' NVDA took over with ~6% gains.  Simply, the earnings and what management is saying on the little material impact it sees in regards to Japan tech worries is causing collateral bids in tech linked names. 

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.

pile up..

Hey, what’s one more negative (SP downgrade) headline to toss into the market, adding to the pile we discussed in this weekend’s DJIM #16.(escalating weekend Euro debt situation already had ES down 10pts.)

As ‘panicky’ wire headlines hit at 9am and spread into the open thanks to S&P threat to downgrade US debt in the future, most probably couldn’t decipher what it means to TSY’s/Treasuries, USD and definitely the equity market as it fell fast and furiously.

Considering a threat is just an idle threat until exercised, we followed up quite confidently 15 minutes into the trading day that if SP~1295 hit, it would likely be a buy point for today after dissemination of the downgrade.  Of course many would not suggest buying a gap down and a falling knife, but all you had to do was look at the Shadowlist components and see individual stocks were not being sold off.   This glimpse as usual allows you to make a decision even if you don’t know the consequences yet of any seemingly negative newswire that may have hit.  Can’t say we’ve seen one (outlook downgrade) to the US before to know what it may bring upon equities, so today it was best to rely on good old Shadowlist for guidance.  Besides, didn’t we all downgrade US debt long ago!  This doesn’t mean you jump and buy stocks (some names below worked) as much as it means you don’t panic and sell.   Soon after follow-up, market fell another ~10pts to 1295, a re- test and later a decent push to 1307H in the afternoon.  What the early trade demonstrated was it’s an ES/ETF trade again with investors holding on to individual stocks while fast traders play.  

*Although an important week, the holiday-shortened trading week with desks emptying by the hour as we go forward , we can expect exaggerated moves in either direction that don’t mean much as positions in all asset classes get squared away before the holiday.

Shadowlist

■Commodities – Keep seeing excellent numbers in Ag-equipment stocks recently, LNN, VMI, (TITN  initiated today in follow-up section).  So far this month not much is loved as earnings get sold off in most cases good or bad(LNN VMI) in this space, but sooner than later money flow will go into what is showing growth for rest of ’11.

■Consumers- LVMH , luxury goods out of Europe gave an upbeat report after overseas market close helping retailers here, notably LULU, but overall outperformance seen in group.

■Momentum/ earnings/ winners of ’10 –  Very nice reversals in AAPL, PCLN, each 10pts and hopefully a leading good sign.  WYNN, IPGP  as well back to high levels, while  SINA  really popped. Also, like LVMH, Infineon a chip from Europe helped earnings sentiment as it pre-announced AMC in Europe.  Unfortunately, TXN did nothing AMC as most US corps’ so far this earnings season.

Europe respects solid earnings

Heading into the trading day, cited strong European earnings from a lux retailer and a semi.  This was followed by broad range of companies today… another lux’ retailer, a beer co, a cosmetics co, a drug co powering European markets by US open.  Hum???...Gains despite an escalating European debt crisis ?    At least someone has the right sense, while here in US investors continue to fickle through reports as seen by GS blowout number. (TAG below :’fickle investors’ for more).   Europe results/reactions have probably signalled a change coming here.

As speculated sooner than later this selling phenomenon will end if solid earnings keep coming in. (outside of banks/brokers as it’s a sector ‘want’ within Financial reports that isn’t showing up and doesn’t relate to other sectors). ..”Talk about a fickle crowd again!.  What is occurring so far in earnings might be described as’ sell on the news’, but it’s not the typical we’ve seen in Q’s past.  Market should get over this phase, if earnings keep on coming with solid guidance.”

In all, a good sign was the early morning gains that disappeared, reappeared and tracked on even more in the afternoon to close at day highs..  Many of the names noted from Shadowlist yesterday exploded out of the gate and/or had significant follow through days. Even though the RUT underperformed the indices , the Shadowlist components had very good action as seen below.

Shadowlist

■Commodities –  Yesterday’s alert on Ag- equip names had a decent day adding on to yesterday gains, MOS POT~4 NEU LNN   will squeeze nicely if this group action keeps up from it’s basing here.  OSN +20%  today. After getting beat up due to all China fraud/ guilty by association, it reported nicely last week with 20% +guidance numbers.  The PE on this steel name is crazy so keep watch for bottom feeders here possibly.

■Consumers-   LULU   followed through to over $100/4% at the open,  UA  hooked on a for a ride to NCH as well/~4%., RL intraday high.  All these names fall into luxury ‘apparel’ . Burberry earnings today followed LVMH.

■Momentum/ earnings/ winners of ’10 –  Chinese internet names covered here almost daily outperformed again, SINA 12 pts intraday, SOHU, BIDU.  IPGP,  here as well yesterday tacked on 4pts/6% NCH.   As far as ’10 momo’s, there is hesitation on names like FFIV APKT VMW ahead of earnings, even after RVBD upside pre-announcement.  Most of these networking/telecom related names were down ahead of JNPR results tonight.  FNSR  was the outperformer linked name as it trades well recently eyeing gap.  QLIK- nch

Big night ahead for tech results, watch if any disappointment EPS' get bought into or we see a ‘baked in/better than feared scenario for signs of semi’ tsunami ending.  LLTC has a big Japan impact, so will watch how it reacts to what it says about the impact.

*Note : you can click TAGS below on site for '11 notes on stocks/ sectors etc.

Update on Wednesday, April 20, 2011 at 05:03AM by Demi/ YourPersonalTrader

US market finally showing 'respect' for 'solid' earnings.  Note, 1st round is going to be short covering as semi space has been in the woodshed for awhile.  We need to see conviction buying step up afterwards, something we've covered on recent upticks (short coverings) that failed due to sidelined money(conviction).  If market finds it, we will see it in a big day with last weeks SPXhighs falling first. See Friday's update.

Commodities, Autos likely will be secondary in plays for a broad move.