Although major indices (DJIA,NASD) seemed stagnant throughout the day, the underlying tape showed squeeze promise as an allocation switch into higher beta (RUT outperformed) was evident. Many stocks off the Shadowlist confirmed such a move (ie IPGP, LVS, GWRE, SODA, MCP >5-7% gains). Naturally, if playing a squeeze/bounce trade, you go after the most beaten down areas of the market (also fins’/banks today) and not the big caps. Big cap loved techs did nothing today.(ie AAPL,IBM.)
The G7 turned into a non-event, but it was offset by more ‘policy intervention’ headlines ahead of ECB, Fed speak Yellen/Bernanke (dovish?) in the next few days and a few proposals of assistance to Spain the sovereign (not its banks directly). Also, a step towards European ‘bank union’ was making the rounds. In all, the “..wish ‘play’ now, a squeeze from oversold conditions off intervention speculation”, was winning out as the SP pushed 5 handles higher. (You know (cough, cough), if all these dreams come to fruition the market might be at SP 1400 this week, not just 1300.)
Now the actions to the speculation begin. The morning will be interesting to see market reaction to ECB decisions and/or framework for later ( if any), in both directions. Expectations are growing on all fronts setting up for disappointments. The view expressed recently here is the ECB doesn’t want to do anything material before elections so not to take pressure off politicians and the FED is unlikely to sound to dovish to drive stimuli hopes as it's not justified yet.(Bullard didn’t today).
Added to WPRT to list off CAT alliance, ULTA, GWRE off list put in good reports, but EPS trades are not in vogue this Q as growth stocks have been undergoing ‘re-valuations’.
Article originally appeared on Your Personal Trader (http://www.yourpersonaltrader.com/).
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