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.

..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.

Quiet bunch

Quiet day on the geopolitical front allowed the market to digest previous day’s big losses and start to look forward to NFP# on Friday.   A combination of a big sell off just prior to a NFP# seemingly always allows the market a few days to position back for a bounce of sorts.  A big gain $>2 today allows for some easing tomorrow and thus market could play right into the bounce idea.  Many are citing this divergence today as a victory for the Bulls, but it’s probably nothing more than a breather following a sell off and the jobs# factor ahead.  Maybe the market was saying it could live with $100 crude, but it better be sure it doesn’t go much higher before putting all it’s chips into that belief today.  (A JPM note on semi’s and GS’ on steel provided the market with something else to talk about and trade). ECB commentary in the morning on watch by markets.

Shadowlist

• Commodities –  The steadiest bunch continues to be the coals, the GS steel note helps out fave’ CLF  here as well.
• Momentum/earnings/“winners of ’10-   JPM note generated a bid in semi’s and AAPL launch did more to hurt to NVDA / competitors than help it's stock price for today.  Other than that high growth linked stocks are seeing no conviction buying even though the Nazzy and small caps outperformed the big caps today.  Going to look at Opticals  again as next trading oppy’ (ALU  hit NCH), whilst the momo’s de-momo.
• Consumer-  The post EPS sell off in SODA ~$40 allows for upside here as there is really nothing wrong with the report that came out on a mkt sell off day.

Finally..some volatility

It’s definitely getting a little more volatile this month, a 3^rd consecutive day where the intraday peak to trough is 200pts on the DJIA and ~20pts on the SPX.   Despite a decent open, the market pretty well picked up where it left off last week (selling) , but hitting more sec’s/individual stocks unlike Friday.

The finger pointing is on the Nazzy today courtesy of WFargo downgrade of the semi’s ( down>3% intraday), but in reality this is just more de-risking  in the marketplace taking place.  Firstly, WF didn’t downgrade any individual names (actually raised some names),  secondly, JPM, released a 2^nd positive note in less than a week on the semi’s citing SIA #’s released March 2nd and thirdly, GS raised $ targets on at least 10 Naz stocks incl. high growth FFIV,APKT,RVBD, yet these high growth names were also off 3-4%.  These reco’s should not be responsible for a 70pts intraday loss on the Nazz and so it has to be some other factors at play.(ie. de-risk).

Any further broad market damage was averted by a technical bounce off last week’s lows.  Recall recent notes on 50ma, its crept higher, now at 1297.

Shadowlist

• Consumer-  SODA, last week alerted following sell off on EPS,  exploded 7% early and held on to most gains by close.  Noted last week..”life coming back here today and maybe a good sign forward”, today Euro M&A activity gave high end a lift TIF.  FOSL, had a good afternoon, UA  drifting higher.
• Momentum/ earnings/ winners of ’10-   We’ve talked of the sloppy trading in high growth names, today we saw money flow from the best percentage gainer group since September as well. (SMH).   The Opticals got hit on CIEN  weak guidance.  Likely an overreaction as this could be more of a company specific (intergration issue) than a show of less than robust optical demand ( eyes on FNSR Tues. AMC now)  Networking  JNPR  holding in well,  APKT  may benefit from  BSFT, (+20% AMC rise following earnings).  NVDA, analyst day (Tues.) may bottom the stock.

DJIM #11 2011

Due to the earthquake Friday, the markets were secondary and if not irrelevant.  As witnessed all weekend the implications and fallout will remain an unknown.  We started early last week talking of the volatility back in the market and it picked up steam in one of the worst days in the markets in months and lead to our early premise in late February of this playing out like out like November instead of another quick snapback… February 24th”..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.”.   Unforunately, the market got a few unexpected wildcards (optical earnings induced slide, china import/export, US trade #’s & Earthquake to lessen the positive developments out of Saudi Arabia (non-event) by Friday.).  Heading into the week a ‘bleak mood’ will likely persist, but the market did defend the SPX 1294 level discussed and the sideways trade may continue if it continues to hold.

Shadowlist

• Commodities-   The fallout from earthquake to start was the ‘rebuilding ’ trade in steel  related names.  Another will likely be solar  due to the nuke issue at hand. (Barron's was positive on our 2 names TSL,FSLR  based on valuation). As far as China trade #’s, it is likely an aberration due to seasonal factors as January was extremely strong and February very weak.  A very possible wash in the end, but market is not drawing this conclusion yet and will likely wait till March’s # come out.
• Consumer-  Retailers in list acted okay and are near highs late last week, RL, FOSL(IBD50 addition) TBL etc.  SODA continues to trade well.
• Momentum/ earnings/ winners of ’10-   some better signs last few days as high growth names bounce ie. NFLX, FFIV.
• Financials-  early in the week talk of rotation into financials was discounted here (needed more than BAC meeting) and this proved right as once again they faltered.

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.

Not everything a drift...

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Late weekend newsflow out of China,’China to switch some FX into precious metals and energy’, had the PM bugs touting the end of USD.   An hour into the open, the herd jumping on this wire fell off as the trade backfired in most hard commodities with USD, even treasuries lifting.   A symptom of Europe closed for business equals an illiquid FX market, add the fact commodity linked stocks were off very little signalled the markets are really waiting for Bernanke on Wednesday (the decision will hit at 12:30pm/Bernanke hosts a press conf. at 2:15pm). That was the first hour and nothing changed by close, including shares not changing hands.

Consolidation was what we were looking for heading into the mid-week and this was just some of it playing out today with no hard eco’data and earnings taking a backseat to Bernanke.  Tuesday will likely be more of the same.

In all, trading days like this you don’t need to peruse the market drift for stocks to trade.  A glimpse onto the Shadowlist  early reveals enough action to possibly trade just off earnings related information.

ALB , initiated last week off earnings popped ~5pts/7%,  SOHU  had good earnings +8pts, SODA  a price target increase  to $50 /+8%, TZOO +7% on momo from earnings and price target increases. 

EPS reports in the next 24hrs off our list include,  APKT,CMI, ININ, UA, KEYN,ILMN

Update on Tuesday, April 26, 2011 at 01:29PM by Demi/ YourPersonalTrader

Messy tape: Looks like the bunch of industrial/material EPS beats/guide ups got some PA going into month end, unfortuantely at the expense of momo's/growth stocks who were used to take profits off on the pop. 

Probably best to look at those hit most %/or pts off ist, (ININ, UA silly off reports), China's, TZOO,PCLN

linear move...

Another day, another rally as the rocket surge continues this week off the ‘feelin’ comfy’ sentiment expressed here to lead into the trading week.  In this premise, we avoided techncials-“resistance’ talk and the week has blown out every ‘R' discussed out there…(Head & Shoulders,1339 April 8 high, 1344 Feb 18 high, Feb-June highs and many more.  

A day after shrugging off negative news, the market buoyed off positive US ‘macro’ news (ADP,Jobs claims, June surprise retail #’s) tossing in some Global positives as well (Japan, China). In all, 'transitory’  is winning out!.

There is not much the Bears can do when it’s a 2 headed ‘bull’ coin being flipped day after day!.  All they can do is wait for the overdue profit taking, today’s rally into Friday’s NFP# may have played right into this.  It’s inconceivable this straight up rally won’t succumb to profit taking, but we’d expect it to be shallow with dip buying format to return.  Whisper #’s are now close to 200k, so hope ADP was not another headfake. 

*Note, some ugly 6-10pt intraday reversals in SODA ~$70's, TZOO, CRR  (precursor to broad market profit taking).  Also, a few mid-caps tech ‘blow ups’ AMC, but they might be looked upon as ‘company’ specific  items (and mostly handset related) and thankfully not ‘bigger’ cap pre-announcements, which was the worry.