..meandering

As the market meandered near the flat-line in the morning, you as a trader begin to look over the Shadowlist to see any trends developing. What you see today, is what you see many days lately and that’s pockets of strength in stocks linked to any individual news. IE., First hour of trading,MCP  >10% on an acquisition, APKT >5% on target price increases and the flip side SODA down 10% on a 5mln share offering, NVDA on price decrease.  

Unfortunately, a sidelined market consists of days like this as traders jump on anything making news, even if it is as irrelevant as a price tgt increase without an upgrade attached.  Other more important trends were visible and that’s where ‘slower’ money is going instead of ‘fast money’ looking for a quick flip in and out. (see below).  If you pick up the relative strength early on, you can dwindle your Shadowlist trading list from 60 names to maybe 10 to concentrate on intraday.

By trading close, a meandering market continued and the stocks/sec’s noted here kept outperforming and/or underperforming.  Nothing really changed all day.

The SOX once again weighted on the market as the biggest underperformer <1%.  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.

Shadowlist

■Momentum/ earnings/ winners of ’10 – Last week we noted strength in Chinese Internet related names, once again SOHU BIDU, SINA  were up 3-7%.

■Commodities  - Relative strength in Ag’s/ Chems continued to follow through post USDA report.

Update on Tuesday, April 5, 2011 at 04:59AM by Demi/ YourPersonalTrader

Apple Inc. will have its weighting
in the Nasdaq-100 Index lowered as part of changes to the gauge
by Nasdaq OMX Group Inc. to better reflect company market
capitalizations.

http://bloom.bg/gvckYr

Shake, Rattle and Roll on..

Considering the market just rebounded from SPX1250 to nearly year’s highs after an Earthquake, Tsunami, Nuclear fears, you have to believe a 7pt something magnitude quake will only Shake, Rattle and Roll the market back to it's early morning fault line.   This morning’s slide was pure ES/ SPY stuff with little reaction on individual stocks.  Stocks that fell through the crack did so on small volume as bids naturally disappear and scary pants will sell at any level to exit.  As traders, we've lived through enough turbulent moments the last few year’s to know being spooked out of positions is no way to go.  As soon as rationale set in, the market rebounded and was back to the same trends expected here entering the week (waiting on earnings to kick off).  Give shorts some credit for not laying out some conviction by pressing the market off another quake headline.

All in, not a bad day considering Financials only traded inline / SOX succumbed to a little profit taking following Samsung’s report on NAND specifiaclly that hit semi-equip linked stocks, yet SPX posted only an incremental loss.

Shadowlist

■Financials  - Not the best day for rotation to exhibit itself due to newsflow. GS  edged over 50ma as sector heads into it’s earnings. Last few Q’s it’s moved into the reports.

■Momentum/ earnings/ winners of ’10 –  TDSC,KEYN, finally broke out to NCH

”..there is plenty of money to be taken from other sectors and so it may not last long in high beta momentum because earnings are around the corner. Still, it’s best to be prudent if trying to find a buy point as money comes out faster on the way down then up in this group”.  At least it was good see a few momo names snap back, SINA, SOHU.  MCP , did as well but it was purely on newsflow (congress bill)

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.

pile up..

Hey, what’s one more negative (SP downgrade) headline to toss into the market, adding to the pile we discussed in this weekend’s DJIM #16.(escalating weekend Euro debt situation already had ES down 10pts.)

As ‘panicky’ wire headlines hit at 9am and spread into the open thanks to S&P threat to downgrade US debt in the future, most probably couldn’t decipher what it means to TSY’s/Treasuries, USD and definitely the equity market as it fell fast and furiously.

Considering a threat is just an idle threat until exercised, we followed up quite confidently 15 minutes into the trading day that if SP~1295 hit, it would likely be a buy point for today after dissemination of the downgrade.  Of course many would not suggest buying a gap down and a falling knife, but all you had to do was look at the Shadowlist components and see individual stocks were not being sold off.   This glimpse as usual allows you to make a decision even if you don’t know the consequences yet of any seemingly negative newswire that may have hit.  Can’t say we’ve seen one (outlook downgrade) to the US before to know what it may bring upon equities, so today it was best to rely on good old Shadowlist for guidance.  Besides, didn’t we all downgrade US debt long ago!  This doesn’t mean you jump and buy stocks (some names below worked) as much as it means you don’t panic and sell.   Soon after follow-up, market fell another ~10pts to 1295, a re- test and later a decent push to 1307H in the afternoon.  What the early trade demonstrated was it’s an ES/ETF trade again with investors holding on to individual stocks while fast traders play.  

*Although an important week, the holiday-shortened trading week with desks emptying by the hour as we go forward , we can expect exaggerated moves in either direction that don’t mean much as positions in all asset classes get squared away before the holiday.

Shadowlist

■Commodities – Keep seeing excellent numbers in Ag-equipment stocks recently, LNN, VMI, (TITN  initiated today in follow-up section).  So far this month not much is loved as earnings get sold off in most cases good or bad(LNN VMI) in this space, but sooner than later money flow will go into what is showing growth for rest of ’11.

■Consumers- LVMH , luxury goods out of Europe gave an upbeat report after overseas market close helping retailers here, notably LULU, but overall outperformance seen in group.

■Momentum/ earnings/ winners of ’10 –  Very nice reversals in AAPL, PCLN, each 10pts and hopefully a leading good sign.  WYNN, IPGP  as well back to high levels, while  SINA  really popped. Also, like LVMH, Infineon a chip from Europe helped earnings sentiment as it pre-announced AMC in Europe.  Unfortunately, TXN did nothing AMC as most US corps’ so far this earnings season.

Europe respects solid earnings

Heading into the trading day, cited strong European earnings from a lux retailer and a semi.  This was followed by broad range of companies today… another lux’ retailer, a beer co, a cosmetics co, a drug co powering European markets by US open.  Hum???...Gains despite an escalating European debt crisis ?    At least someone has the right sense, while here in US investors continue to fickle through reports as seen by GS blowout number. (TAG below :’fickle investors’ for more).   Europe results/reactions have probably signalled a change coming here.

As speculated sooner than later this selling phenomenon will end if solid earnings keep coming in. (outside of banks/brokers as it’s a sector ‘want’ within Financial reports that isn’t showing up and doesn’t relate to other sectors). ..”Talk about a fickle crowd again!.  What is occurring so far in earnings might be described as’ sell on the news’, but it’s not the typical we’ve seen in Q’s past.  Market should get over this phase, if earnings keep on coming with solid guidance.”

In all, a good sign was the early morning gains that disappeared, reappeared and tracked on even more in the afternoon to close at day highs..  Many of the names noted from Shadowlist yesterday exploded out of the gate and/or had significant follow through days. Even though the RUT underperformed the indices , the Shadowlist components had very good action as seen below.

Shadowlist

■Commodities –  Yesterday’s alert on Ag- equip names had a decent day adding on to yesterday gains, MOS POT~4 NEU LNN   will squeeze nicely if this group action keeps up from it’s basing here.  OSN +20%  today. After getting beat up due to all China fraud/ guilty by association, it reported nicely last week with 20% +guidance numbers.  The PE on this steel name is crazy so keep watch for bottom feeders here possibly.

■Consumers-   LULU   followed through to over $100/4% at the open,  UA  hooked on a for a ride to NCH as well/~4%., RL intraday high.  All these names fall into luxury ‘apparel’ . Burberry earnings today followed LVMH.

■Momentum/ earnings/ winners of ’10 –  Chinese internet names covered here almost daily outperformed again, SINA 12 pts intraday, SOHU, BIDU.  IPGP,  here as well yesterday tacked on 4pts/6% NCH.   As far as ’10 momo’s, there is hesitation on names like FFIV APKT VMW ahead of earnings, even after RVBD upside pre-announcement.  Most of these networking/telecom related names were down ahead of JNPR results tonight.  FNSR  was the outperformer linked name as it trades well recently eyeing gap.  QLIK- nch

Big night ahead for tech results, watch if any disappointment EPS' get bought into or we see a ‘baked in/better than feared scenario for signs of semi’ tsunami ending.  LLTC has a big Japan impact, so will watch how it reacts to what it says about the impact.

*Note : you can click TAGS below on site for '11 notes on stocks/ sectors etc.

Update on Wednesday, April 20, 2011 at 05:03AM by Demi/ YourPersonalTrader

US market finally showing 'respect' for 'solid' earnings.  Note, 1st round is going to be short covering as semi space has been in the woodshed for awhile.  We need to see conviction buying step up afterwards, something we've covered on recent upticks (short coverings) that failed due to sidelined money(conviction).  If market finds it, we will see it in a big day with last weeks SPXhighs falling first. See Friday's update.

Commodities, Autos likely will be secondary in plays for a broad move.