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Entries in RVBD (7)

Tuesday
Jan042011

Back door

A nice way to kick off ’11, but still something to be wary of as the 1st trading day in 09/’10 produced even better results.  Still, despite the >6% rally of December the market hadn’t seen a >1% day since the first days of that month.  As pointed out last week, all the ‘illiquid’ action was irrelevant in respect to inability to cross SPX 1260 “R” and not seeing conviction off eco data to help for that to occur. Today, 1260 was crossed easily as the market rode to 1276 highs until volumes fell off later in the day.

  • Catalysts- as noted last week watch for a China PMI, if lower M/M it may wake up the market on ‘coolin’ factors. Importantly, inflation sub group of number fell 7 pts.  Also, Euro/US ISM came in strong signalling a synchronized global acceleration.  The ‘back door’ flow helped as well with most global markets closed.

Shadowlist

  • Momentum/earnings/ winners of ‘10 – woke up,  led by an article saying FFIV >3%  RVBD >7% APKT >9% were M&A targets spread to traders chasing other higher beta names for first time in a month.
  • Commodities-   Although Ag’s links lost steam after 3 days late in the day, the analysts are raising estimates/tgts on names as we had been looking for.  AGU  on Friday, today MOS (reports Tues.).  Coals , WLT, CLF >4% outperforming on Australian floods.  Steels  should also benefit from floods.  Precious metals, copper rolled over in PM. The ‘rare’ metals stepped up again as Dahlman Rose following in their own footsteps with another outrageous target of >80 on MCP >15%(did this with AUMN late last year, a gold stock we had up). AVL up >20%, REE >6%.   Looking further into OSN, it’s actually a nice growth stock with a ‘Rare’ connection, but notably a ‘steel’ stock that has to do with every China infrastructure aspect from highways to railways etc.  It’s also cheap and a fresh IPO importantly.  Still, it has issues as little China co’ are being exposed to fraud noise since December.  Everything else like CHGS CDII is definitely considered ‘junkyard dogs’ stuff here. 
  • NCH's- GTLS, JOYG, VMW, ROVI, HOLI, QLIK, ARB ARUN are just more Shadows putting in new highs intraday.
  • Financials- continuing December streak into earnings,  GS  breaking out
  • Consumer- Casino  sub group had very good Macau numbers and WYNN  finally got over 105.

Don’t pay much attention / trading decisions based on Global markets, thus the ES to start the day as most markets will be playing ‘catch –up’.  SPX 1280 as next ‘R”

Monday
Jan102011

DJIM #2  2011

As 1280 invokes ‘R’ for the past week, the market impulsively sells off here and will continue to find an excuse to take some profits.   On Friday, it was something completely immaterial in the ‘big picture’.(Mass. Foreclosure ruling).  Does any investor in Europe/ China give a damn and/or make an investing decision based on such with Sovereign debt/Inflation questions unresolved, respectively?  The answer is definite no-no, but in the US markets it’s reason enough to test 1260 support again!.    What was relevant and material was a weaker than hoped for NFP# , but a justifying Bernanke keeping QE2 ‘ alive and on track’  was much more important and offset the #.  If anything, the jobs number calls for QE3.  As far as the tape during the midday antics, it looked more ETF/ES driven as single stocks (exc. Financials/Banks), hardly twitched in either direction.  Indication is holders of stock are reluctant to sell as much as they are reluctant to buy more. 

Technical-  1256SPX 20ma (DJIM Benchmark for a few years now) is in focus and if broken will likely lead to a correction as shorts may finally lay out some exposure.  As per ‘RUT’ of a day'  post last week, the RUT has now lagged the SPX for consecutive weeks and could be foreshadowing ‘tiredness’ for the rest of the market.

Tailwinds(potential) Q4 earnings should come in better than Q3.  Shorts are not laying out positions ahead of potential train/ minimizing downside for now.

Headwinds- wary- (potential) US markets oblivious to rising Contagion noise again.  A case of shrugging it off or complacency at work?.  Looks like complacency in this view.

Shadowlist

  • Momentum/earnings/“winners of ‘10–   Entered the week looking for newsflow from CES Vegas and it definitely was the ‘Buzz’ of the week.(SOX >3%). Leading stocks CRM ARUN RVBD FFIV , >6-9% on week…”..Dec 30th….” further gains likely into the front half of January with individual 'leading' equities catching up..” As far pre-announcements, no major names, but a slew of mid cap types warned.
  • Commodities- USDA reports mid-week to possibly feed Ag space some more. 
  • Consumer- WYNN >14%, LVS>8%  continued the weeks move off Friday’s Tier1 positive comments …Turning point was early in week...(Casino sub group had very good Macau numbers and WYNN finally got over 105).
  • Financials - 2 day of selling, European unresolved peripheral stresses should continue to bring money flow here.  Foreclosure noise will persist.
Wednesday
Jan262011

..out of sync

 Any other day/ week/year to date,  market gives the impression of resiliency, but with China down 4%, India down 7%,  inflation hedging commodities (precious metals, copper) beaten up in a global inflationary landscape, UK double dip possibility GDP out today, you really have to wonder if a US rotation to IBM,GE, WMT and away from smaller higher multiple stocks can carry the load for US markets to keep rolling higher?. 

As far as today’s late reversal, it is nothing more than short covering driven by ES into the State of the Union with little individual stock participation, but given the upbeat pump job by Obama, we may have some follow through with risk assets (commodity linked stocks, growth stocks) playing some catch up.  Still overall, the market and it’s indicies are not in sync suggesting any move would be short lived.

Shadowlist

  • Momentum/earnings/“winners of ‘10 –   Selling continues (RVBD,CTXS etc.) post VMW earnings, but if there is a positive takeaway it was FFIV’s reversal from $102 -$107 in the green.  Still, considering 9 ema broken on most,  we’d wait only consider a dead cat bounce intraday trade until a definite shift occurs like last time (post EQIX sell off) that was produced as earnings started to come in better.  Earnings positive was an upbeat JNPR.
  • Commodities – Again weak dollar doing little to offset China worries as the groups get pounded. Another dead cat bounce may be in order in this sector soon.  Those inconsistent Solars reversed hard in afternoon as a preview of Obama’s speech was released, simply  a sell on the news occurred after run upSteels (X)  is the likely short term trade possibility.
  • Miscellaneous-  As some defensive posturing is going around, HTWR produced a nice reversal day off 9ema.
Friday
Jan282011

..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 5thstraight 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 updateOPLK OPNT, mid –caps on watch for now as 4-5pt gaps are little too eager for this liking. SCSC , as well.
Wednesday
Apr132011

..headwinds headlines

Despite Global markets weakness (>1+% off) overnight, markets here opened only a few pts lower at the higher end of the gap at SPX1321.   It was just a matter of time before a catch up to the world would ensue and the ‘cluster’of “S” would be tested.   Soon after the Bears got the upper hand as ‘demand destruction’ headlines from IEA,  SaudI Arabia weak demand comment and GS follow up to their basket commodity long trade close’ yesterday, adding crude to experience pullback to $105 was too much too handle for the Bulls.   Most of the emphasis was placed on GS’s call in the media, but in reality the steep selling should have occurred on Tuesday when the first commodity basket close hit the wires. In this view, it was the ‘destruction’ headlines that spooked investors, not GS, which is infamous for their direction call shenanigans as they change course quite quickly.

A few probably scratched their heads as to why a lower crude would not be beneficial to the broad market at this point.  The key is simply ‘demand destruction’, which is goes beyond the shopper pumping gas to go the mall. Only airlines/retailers benefited today.  The commodities deteriorated late Monday off the GS note and the selling just picked up steam as ‘destruction’ headlines hit.   Add, below par AA earnings, a bunch of tech linked mid caps earnings giving poor outlooks and the Bulls had a lot of headwinds to overcome today.  Techincally.. SPX1310  was about all the Bulls had left today as 20Ma was hit early and market stabilized intraday  As usual in the marketplace, an important technical level is compromised with a ‘catalytic’ event of some sort, this time we know what's ahead and that is earnings with JPM and a few notable Naz/tech links reporting shortly.

In all, considering all the negative’s above and below in Shadowlist components, add the fact Washington (debt ceiling) is a tailwind as well, it wasn’t that bad a final boxscore today for the Bulls. Any good news now will likely have the market continue the bounce off ~ 1310.

Shadowlist

Commodities – A sizable ~3% shellacking with XLE, OIH breaking below the bottom of a trendline that starts from September’10.. Entering April 4th trading day,”….. As the coal trade here likely cools off shortly,…”, Since WLT,CLF  faves here off 10% and a victim today of being a high beta energy trade casualty. Not much in commodity linked space to consider in the very short term.

Financials  -  Wednesday’s start to financial earnings will likely decide if 20ma holds tomorrow, banks/brokers held up today despite GS cutting a few names, primarily holding due to JPM’s EPS hours away.

Momentum/ earnings/ winners of ’10 –  It’s not a surprise the ‘smells like rotation’ from early last week didn’t materialize to anything but a bad odour... “ AMC, TXN bought a grandfather of a semi stock for a huge premium.  It will likely be a very temporary boost as pre-announcements possibilities are first and foremost in investor’s minds”.   The SOX  (off ~2% today) rally fizzled and today hit multi week fresh lows proving it was nothing more than short covering …” The initial ramp in Naz, semi’s was pure good old fashioned short covering as their semi home got raided.  Post-short covering, the conviction buyers simply stayed away despite all the upgrades in semi’s”.  

Mid caps earnings so far continue to be a headwind (MCRL latest relates to Samsung) and therefore anything wireless related gets hit today.  Coupled with Japan uncertainties on outlook weighing on group and the tech sector is in need of some good news. Bigger names, ASML/ADTN reports will be watched BMO.

Still ,some pockets of life today  in NVDA/ Networking/optical were not bad today as the well known opticals names like ALU CIEN did alright, while RVBD, which has been smoked for the last month put water on Wells Fargo negative preview of it's EPS after market closed.  

Thursday
Apr142011

Up in the air (earnings)...

The immediate morning question was can the market build on the premarket pop and Global rebound occurring overnight. The problem premise here recently is that besides no conviction buying stepping up when we need it, we don’t have shorts laying out exposure in this recent melt up or on this downturn to 20ma to make a move sustainable higher.   So following this idea, logical expectation was once again some short covering early followed by little or no buy conviction at all coming off the sidelines. Therefore, a short covering would only be short lived because there are not enough shorts in the market, no longs to buy, so the bounce would peter out.  An hour into the trading day this was evident as SPX gains were erased, by close it was even more clear the premise once again worked itself out.

In all, not sure who won today!. The Bears should have closed the market lower if you look at JPM, ASML, ADTN earnings reactions (more on this below).  On the other hand, Bulls didn’t get positive reactions off headline #’s which were solid, yet finished at par in the broad market with earnings supposedly disappointing.  Screwy day as cautiousness towards earnings is still prevalent on investors minds, so they wait for more reports to make investing decisions.  Today's results left it up in the air.

Shadowlist

Momentum/ earnings/ winners of ’10 –  , Yesterday it was noted the tech group needs some good news.  All the market got was more mixed signals it seems.  Solid beats and/or guides were ignored and fickle investors found ‘ softness’ somewhere within a report and/or during CCalls. (ADTN was up 5% premkt/ ASML).  Earnings luckily started w/ RVBD  pre-announcement, but ADTN/ASML (noted coming into trading day to watch) couldn’t built on the support for the group.  Tech did get some short covering just as in TXN/SOX bump noted gain yesterday), but that was it as the Nasdaq, peak to trough dropped 28 intraday points midday.

Yesterday….“Still ,some pockets of life today  in NVDA/ Networking/optical were not bad today as the well know names like ALU CIEN did alright …”.  Some of the best tech strength was in these names today, (optical/networking) ALU  >8%, CIEN >4% up , FNSR >3%, along with our closely followed Chinese internet linked names,  SINA  SOHU  BIDU again 3-7% up.

Financials  -  In respect to earnings, same goes with JPM  as with tech reports. It seemed like a solid report for the financials, based on a headline Rev/EPS, but the underlying mortgage repurchase expenses up attracted the negativity and spread to peers.

 

Monday
Apr252011

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.