Fizz'

“It’s hardly a touchdown’, played out all day as the markets breakout was put under ‘review’ and thus spent the entire day in the red.   A pullback into the ‘red zone’ (1280-1260) was negated (possibly only for today) by the special teams (dip buyers) coming in near the close.   Until earnings flow picks up, the market will remain in conundrum.

Wary -  Today’s was something discussed here recently…”… inflation number this week as it raised concerns of ECB hiking before Q4.”. 01/07.  At that time we were also watching if Bernanke signalled ‘hawkish’.  Today it was Trichet/ECB making a ‘hawkish’ turn and soaring the Euro and making the markets think a hike before Q4. 

As it’s shaping up, earnings season will have many ups and downs.  Although the lack of pre-announcements this Q should signal a better Q4 over Q3,  it’s really a mixed bag so far with CSTR, INFY  big disappointments and a SAP (Software) upside surprise.  Considering, SPX ~1280 has been an excuse to take some profits, (watch for) don’t be surprised to see this pass to stocks and a sell on the news earnings reaction.

Shadowlist

• Momentum/earnings/“winners of ‘10 –   These linked stocks are waiting on earnings as they are not being chased higher and instead the way to make a point or two off them is to buy an early dip if it presents itself on most days .  INTC  earnings are becoming less relevant as they are behind in the ‘hot’ mobile chip story with NVDA/ARMH  since CES Vegas.   A dinosaur won’t generate excitement off its decent report. CSTR  negative pre-announcement does nothing good for the momo names.
• Commodities-  Yesterday,  we basically left only the Ag’Fert trade on the table short term post ACI (coal) earnings note. Today, even with a weak USD, commodity linked stocks decoupled.
• Consumer -  Shadowlist addition: SODA, was the good market fizz today heading 15%/5 pts higher post -alert and is a reminder of why we want to have cash on hand if this was an earnings report to jump on and also why we don’t want to be holding into earnings in fear of a CSTR.

..now just repeat

As if on cue (DJIM's ;), despite a very ordinary flat open,  the market roared soon afterwards for the first hour…”we may have some follow through with risk assets (commodity linked stocks, growth stocks) playing some catch up.”. After days of underperformance, it was the RUT~2%, not the DJIA that pushed the market to SPX 1300 as ‘ dead cat bounces’ just discussed in our ‘momentum and commodities' section updates ensued.  Rotation occurred as the materials/ tech(momo) led the way.   All in,  the RUT excelled, but this is only a dead cat bounce until it at least makes it back into the Sept – Jan channel (closed at ‘R’).   The NAZ faces the same 'R' in its chart and both are hovering around 20ma.  It was nice to see short covering (mostly) in the first hour come into ‘indvidual stocks’,  but the lack of conviction for further gains is still evident as the market flaltlines rest of the day.  On the SPX look to 1307’ish for “R”, not 1300 as an Initial claims under 400k should spur a move.

Shadowlist

• Momentum/earnings/“winners of ‘10 –  The flyers, CRM RVBD NVDA RHT etc.’ finally caught a bid due to…”positive takeaway it was FFIV’s reversal from $102 -$107 in the green. ….Earnings positive was an upbeat JNPR”.   JNPR, ^1.50 /4% off premarket price after a subtle earnings reaction, it speaks volumes for many techs’/ clouds so it definitely helped the sector mood. 
• Q4 earnings update - we’ve been anticipating better EPS reactions post FFIV AAPL GOOG due to bar being lowered and today small caps were prime examples of this occurring from JNPR, FNET, MSTR, KEYN.   AMC, NFLX  fits into this premise as do a bunch of strong tech earnings with favourable reactions. (QCOM TER etc.)
• Commodities –  Materials, one of the top sectors today climbing ~2%.  Steels, (X)  led early, related name CLF  and WLT  joined in with nice days.