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

..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 #17 2011

Kept hearing late in the week,” what a rollercoaster of a week!”.  Well, we’re not sure what all the fuss is about as it’s been straight up ~40 SP handles/ >+3%  since 15 minutes into Mondays’ trading,.. “SPX , approx.~1295 off SP downgrade news likely a buy”.   Must be the dying words of all the naysayer social media guru carcasses seen sprawled out by Friday’s close!.  Of course, majority of the move wouldn’t have happened if it wasn’t for earnings and the reactions changing and coming in ‘solid’ after a disappointing week 1. A big part of trading is preparedness and coming into week we were citing one of the ‘what if’s’  to rally the market laying out the steps ie.....Solid broad Europe earnings, US market sell off reactions would change,etc. to get the rally.  You can’t have the poor reactions we saw early keep coming in, if you have something like 80% of the corporations reporting positively and/or surprising. The averages were unlikely to change as the market went forward, 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.   

Recall,  a big key to keep the upside going and going is for investors to continue and see ‘value’ in stocks as we’ve been saying all month…..”… 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!”.   Okay, so far so good, but the market did generate some fresh headwinds, eg renewed Sovereign debt tension, even Financial links falling off earnings is a fresh concern along with rails/transports lagging the tape. It’s no surprise most investors were caught snoozing on the rip higher with all the negativity around. 

Now the excuse for many will probably be 'technical’  as we close at a cluster of SPX “R” resistance. It’s an endless circle of pessimism regurgitating through the market the last few years.  It’s always something that supposedly keeps real buying on the sidelines before realization hits and PA (performance anxiety chase) ensues.

Into the trading week, earnings can keep the momentum going, but some caution will be ahead of Bernanke’s ‘big day’, which will likely lead the market to consolidate.  The ‘Super Bowl’ hype over his first post-FOMC press conference will likely turn into a non-event with Will and Kate’s wedding likely offering more exciting.

Shadowlist

Broad range of Shadowlist linked stocks performed relatively well intraday, despite market not passing overnight highs as speculated post-AAPL exuberance in AMC.  Names with >3% gains are tagged on site.