..ticking higher

A game of..’You go first’….’No, you go first’, characterizes the market participants (longs and shorts).  A lack of conviction on either side,  although both have reasons to make a move.   A lack of urgency is prevailing, likely due to expectation of a correction.   A correction would give investors who believe more now in a global recovery a chance to enter and the shorts some confidence to try and press the downward shift.   Luckily, we are at the peak of earnings season and all we need to do is concentrate on individual plays and nothing more.  There’s plenty of fish to trade on a one by one basis, whilst ignoring the market gibberish on Dow 12000/SPX 1300.  Eco data- Initial claims couldn't get a move started, now GDP on deck.

Shadowlist

• Momentum/earnings/“winners of ‘10 –  The Q4 earnings reactions are definitely getting better as speculated here recently as seen by NFLX  partying like it’s 2010 all over again.  Also, RVBD  basically in-line call/guide was well received and should begin to take the sting out of the space post FFIV.  (See EQIX note this week).  Importantly,TMRK ,  M&A activity is a boost for the data center related names like EQIX SVVS  etc and just the whole ‘cloud’ area.
• Commodities –  Despite a 5^thstraight down day for the USD, most spaces sold off, likely due to China New Years hikes possibility.  CRR,  a earnings addition to trading list as it continues to make solid earnings in the O&G equipment sec.
• Q4 earnings update – OPLK OPNT, mid –caps on watch for now as 4-5pt gaps are little too eager for this liking. SCSC , as well.

..joined the march?

Fittingly,  the big downside on Friday noted as purely a ES (futures) move continued its’ shenanigans overnight squarely hitting a low of ES1262 (note SPX 1060’ish technical levels here) and proceeded to crawl a total of 23 ES handles to close as Egypt was signalling some headway at least for today.  It didn't look like a ‘ million man “ES” march’ , but really more like a man or two march given the general quietness of the market.  Ahead of some important Macro data incl. US SM on deck, ECB meet-ups and jobs#,  you hope this wasn’t the bounce discussed yesterday that comes ahead of selling by the ‘man or two’, who marched it up today.  Anyways, the broad market shenanigans are not our concern as our strategy is to play individual stocks off earnings and/or sector rotations.

Shadowlist

• Momentum/earnings/“winners of ‘10 –   The ‘hiccup’ outperformance of the clouds/ momo/earnings of ’10 played out as these stocks ‘underperformed’ (CRM NFLX VMW down, others just flat), the market today.  AMC-APKT  is one to watch on Tues.
• Commodities –  The Oily (energy) space ran with ETF’s like USO OIH +2.5%  garnering most of the markets attention. CRR  hit a fresh intraday high at $117, FLS  made new intra’ hjgh before pulling back some late in the day. CLR/ CRK  are previous DJIM Haynesville plays we’re familiar with, so if this ‘energy’ streak continues we’d look for potential trades in these sorts.  Generally all cyclical sub groups (industrials, materials, energy) were helped by CHI PMI.  Note- China may not hike again into their NYears as previously thought, so commods’ should act well till the day comes shortly when we’ll know for sure.
• Q4 earnings update –  In regards to yesterday’s note, SOHU 4 point gap up and immediate loss of all the points was a little eerie, but it eventually got it all back >5% day, so earnings reactions are still okay.  The market will now become focused on CSCO  coming up for the first real ‘January Q included’ effect.  SODA  nch, OPLK were the best mid caps listed. *AMC- BIDU IRF , strong earnings to watch.

..hangin' tough

The “Bull” stomped it’s toe early morning to 9ema on the SPX and immediately was helped by dip buyers to get back on it’s course!. The markets resiliency day after day is simply impressive and why shouldn’t it be?.. Just look at today…a strengthening economy as more good Eco data came in, v..good micro # continued, an unwavering Bernanke, a less hawkish Trichet, a surprising consumer who shopped rain or sleet or snow(retail #’s), what more can you ask for?. Okay, just one thing and that is a ‘surprising upbeat NFP# and the market we’ll find itself at pre Lehman Aug ’08 highs.  It will be interesting to see what the market does at this symbolic, if not ironic juncture!

Shadowlist

• Momentum/earnings/“winners of ‘10 –   As discussed , if earnings from “cloud/data..”improve following FFIV’s disappointment, the groups share prices will improve as last Q. FFIV’s past 2-3 days are all you need to see.
• Commodities –  cyclone wavered and commods were hit early, only to make an impressive comeback!. Would not be surprised to see follow through from names like CLF, X (steel linked)
• Consumer – Was today a turning point? If so, we can look at LULU FOSL TIF RL names to trade soon.
• Q4 earnings update –  OPLK, OPNT put in 3-4% days after consolidating post-EPS. AMC, JDSU  put in one of best big beats this season.

..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.