Oily patch

Once again buyers showed their new found disdain for stocks as the selling picked up in individual stocks.  Our Shadowlist has provided all the clues since intraday Monday to this continuing as it showed in an uptick in individual stock selling unlike the Egypt sell off which was purely ES driven.  Anything high beta (momo), anything with healthy earnings this Q is seeing money being pulled out slowly generating >5% daily losses across the board.

Yesterday, noted the sell off was only half of the 3% dip in January.  Well, today that was quickly matched as supports fell quite easily and brings up the possibility of 50MA as buyers are in ‘No Rush’ as titled yesterday.  This dip is looking more like the November one to 50ma eventually instead of the January one.  Short term- Saudi Arabia is the wildcard noisemaker here, if this turmoil doesn't spread there, SPX 1295-1300 cluster of support may hold.

Shadowlist

• Commodities –  Since noise is around $100 crude, it is surprising plays around coal are not being used.   Look for trading opportunities here on the energy play as this quiet reaction should change. (CLF, WLT, ANR ).  After peeling back sharply since mid-Feb, Ag’s Ferts were the first to see a buy interest reversal.
• Momentum/earnings/“winners of ’10-   Last week…".While some momo’10 names notably lag today in a melting up market, (maybe something to monitor for broader mkt)".  This has turned to not only lagging, but selling in 2010 ‘winners’ this week and now this Q’s winners are hitching a ride.  Hope is PCLN  EPS reaction AMC generates some buy interest on this pullback.

Gased out..

Guess,  you’d have to say Monday’s ‘hardly clean day’  tape didn’t lie as the 1^st of the month green day streak came to a screeching halt!.  The market tried early (up another 5pts), but you can see same underlying stock/sector discrepancies noted yesterday at work very early on.  All it took was for crude price to stop easing and bounce.   As said to start the week..”belief is this bounce will peter out ….the consequences of this Oily patch are not going to go away overnight”.. ..“Oily hostage' to the price of crude as it will dictate the broad market/SPX moves.”(Friday).   It might have seemed DJIM premise of a November type action was in jeopardy by SPX 1332 this morning, but a close of 1306 puts it right back in focus with the 50ma also creeping higher these past few days to 1292.  This also coincides with last weeks low levels to watch (TRANS broke it already). Considering very good global eco data (US ISM, SAAR) is irrelevant as today showcased, anything more than a bounce into a probable good NFP# shouldn’t be expected.

Shadowlist

Pointless to update , today every equity sector, including the ‘safety’,(ex,precious mets') and even ‘energy’ despite higher crude succumbed to selling and a red finish.

DJIM #15 2011

Market waited nearly 5 full trading days before making a mild move in either direction.  As expected here, it was a week of no conviction from the longs and/or shorts with no catalytic eco/earnings on the schedule.

Halleluiah!!., earnings season is upon us as trading has resembled summer doldrums.  The game last week was simply in other large asset classes, USD hits 52 wk low, commods’- metals surged, TSY’s.    Although SPX was pretty flat for the week, we did see profit taking and/or some rotation from Industrials, Transports, HMO’s, all off  2-3% , as sentiment changed for the better in Financials, Retailers, Semi’s.  As cited, both sides are/were hesitant to get in front of earnings and so US market's drifted all week, while Europe and China with earnings coming later outperformed with 2% gains.  That sums up the uncertainties and question marks felt for US corporation’s reports.  It’s a mixed bag for expectations as we’ve had pre-announced blow ups in mid-small names, but none in big influential names.  Tech data points add to the confusion, it changes daily to know really what is going on out there.  The trading outcome in Opticals  covered here this week is a possible light at the end of the tunnel (baked in note) for tech in general as reports start coming in, good/or bad.   This is one Q, you don’t want to be in a tech linked stock heading into an EPS report after a few Q’s where it wasn’t all that dangerous to do so.  

All in, earnings need to come through on the upbeat side to keep the broad momentum going as the market sentiment is waning with tightening sounds picking up /crude price accelerating (can’t keep doing more $5 jumps a week) as it will certainly dampen consumer spending/ growth.   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!

Earnings this week.(click below on site)