Ahead of the open, (18-1)

The positive sentiment from China’s >4% market surge, Europe’s up sessions since Monday carried the bullish tone into the first U.S market open of the week.  The circumstances were somewhat reminiscent of the Global melt up that US markets jumped on to start the year, maybe that’s why all disappointment with the market inability to break and hold SP 1300 resistance level today.  Just like upbeat Global PMIs’ to kick off the year, today’s eco data was upbeat from ‘better than expected’, China (PI, retail#’s) to a much better German ZEW confidence # to a solid U.S empire #.

The ones complaining on days like this, where the SP adds 45bps to 1294 are generally those who are still questioning the broad rally, not only January’s but the >20% run since October.  These traders/investors are the same ones who want a dip to buy and enter the market.  This relates directly to the Financial sector, which is down a second straight day signalling to many the rally has petered out.  How about just a breather?.  As said yesterday and now today, the pullback doesn’t take recent trade upward bias off the table.  In all, consider that despite consecutive down days in financials, the market is flirting with highs not seen for months.

Earnings- A possible weight is the start Q4EPS as 35% of SP 500 has reported negative surprises, but, so far it’s a small pot of only ~35 co’s.  

• CHKP  solid earnings are a positive to a peer covered here like FIRE FTNT.  Semi earnings are coming in and are overall upbeat (LLTC ASML) for the SOX .  LLTC, management said Dec bookings strengthened and its continuing into January.  Remember it’s what they say on the outlook this Q.

Ahead of the open, (03-02)

Post Wednesday’s close, noted the very broad based rally that touched even the 'safety' sectors.  The consensus view into the overnight markets was for a follow through day based on the PMI's and Financial leadership (Wednesday) touched on here.  This stretched out to chartists due to RUT, SMH outperformance 2:1 vs. DJIA, SPX , to fresh high's and overall volume pick up indicating accumulation.  The runway was clear for an upwards move.  Yes, these indicators (above) are the usual suspects we’d usually like to see and/or usually see create a breakout (eventually to SPX 1350’s this time, if it occurs).  But, as pointed out since 1333 SPX was hit last Thursday morning and yesterday, the market is in a range tug of war and churning away.  (Do note 1333 trend-line has inched down to 1327’ish), so a take -off seemed imminent, but instead the market decided to take another pause.(ES volume was well below average).   Still, sometimes too much digestion /consolidation leads to fatigue setting in after an elongated range trade.  We could be coming up to that with Friday’s NFP# serving as a catalyst, although it’s not a critical number.  Also, despite evidence of fresh money coming into market yesterday at the beginning of the new month as discussed, it is not necessarily an indication this is the same money that will chase another potential leg up, but instead one that just wants be in the game and live with the little risk in the market.  This type of money also prefers to buy the dips to add.  Considering no market day has had more than a half percent SP downside since December, it’s been a pretty safe environment in 2011, so why not be invested is what that money was likely thinking.  Also, as discussed in early January, it’s best to be invested or miss any good day now as most of market day gains are from morning ‘gap ups’ with little action afterwards like yesterday showed again.   Although, belief is we will break out eventually, it would be healthy if it was later after a correction and not just a shallow pullback (~1.5%) like we’ve seen to the 20ma/1300SPX. 

A few things have played out since 1333 was hit a week ago and the noted top chance:

• Jan24: “..pullbacks will be shallow and will be bought..” (we hit 1300/20MA),..Jan 26, “…SP 1315 close becomes support”..(mkt never closed 1-2pt lower…”closing at ~1315 level negating any real technical damage”..Jan31);. Into Jan 30, “pullback depends if 1306 is defended”..(it’s bounced a few times off this level this week).  These market actions just confirm the markets resilience and presence of dip buyers, also we’ve added 8-9 stocks off earnings to trade off during this range as was the idea until the broad market settles itself…”In this environment, it is probably best to lessen exposure if holding all month and concentrate on single stocks coming out with earnings going forward.”. Jan25.

So while the broad market deliberates, we comprise a list of stocks to trade based on individual earnings in the 1st Q .  We can trade the names now and with confidence further into the year and not worry if the broad market breaks out or not here.  Names accumulated this Q off earnings are mostly previous inclusions; (IACI AZPN  FTNT  LQDT  MKSI  FIRE PMTC  URI  LULU etc.),  while other names just confirmed they should remain on the list for yet another year, if this Q’s # is any indication, ie: (WYNN  LVS  PII  FFIV  FOSL  UA  CRM  VMI MA OTEX  DDD etc.).

As said recently, ‘all good’ seems to be priced in from recent eco’ data exuberance to what was a mediocre earnings season at best to a Eurozone coming out of the hospital.  Another way to look at it is it will be hard for economic data points to surprise  as the bar has been set high, earning trends are known from this Q and we’re a Q away from next and there is more chance of a surprise Eurozone bomb then more morphine to be given out. (We’ll cover the morphine angle with another round of LTRO end of February and ECB’s Super Mario conference next week at a later time).  

If evidence intraday of a 1330+ close post NFP#(150-160k private), we’d add some exposure into weekekend, (*upside surprise could be faded), otherwise keep the top idea in play by concentrating on single stocks coming out of earnings. 

• N, TRMB, SIMO, THO are some to watch early following earnings.  N,SIMO are familiar here, others like TRMB, THO are to spread a trading list into more cyclical plays this year.

Ahead of the open, (10-02)

Anyone expecting a ‘supposed’ Greece agreement to be a market mover was disappointed. Anyone expecting ECB to hint on long term liquidity operations was marginally disappointed as well; Draghi kept it all under his vest, but you’d do the same not to screw up demand for the 36month LTRO on 02/29, (so, it’s not really a surprise).  In all, Draghi was more positive on associated Eurozone risks, which could have been good enough for the market sentiment now, but it wasn’t.  Only thing to materialize was more of the same as another morning dip was bought, swinging the SP a few points above previous days close.(Can you say.. all AAPL!).  Tape gets thinner as R2K slightly underperforms again and in this view CSCO demonstrated the fatigue angle noted to watch off earnings yesterday.  Last week’s note of high expectations bar set: eco’/earnings/ Eurozone possibly being priced in reared its head today with Initial claims/ CSCO/ Greece/ECB being the role players.

Still, although the tape is seemingly going sideways, it’s really gliding and can move into SP1370 this month after hitting our 1350’s target on a breakout from 1327.  The market may have hit July ’11 highs today and a few other possible technical points are inches away for resistance, (but, feels in many ways like it did preceding last week’s breakout, including the negative feeling tired).  Considering the magnitude of the technical breakout that followed last week, which includes many other factors beyond ’07-’10 trend-line break (ie, #of new highs noted) confirming the move, it wouldn’t surprise to tack on more SP points down the road,(Bernanke may/may not help some Friday?).  All in, due to the factors noted above, it just may take more than the very shallow dips we’ve seen this week for this to occur.

Software gave tech/ Nasdaq a bid off the TLEO deal (SABA >6%) and AKAM earnings. Aided softies FTNT FIRE CVLT  here to fresh highs.

In all, stocks Shadowed’ prior to July crash are once again reporting excellent results. (latest ie. RL  WFM  V.)  Also, names like AKAM  have been rebooted by earnings after falling off the list early last year.

Ahead of the open, (14-02)

Market simply reverted back to its 2012 ‘in the game’ ways.  If the investor doesn’t hold overnight, the investor misses on most of the day’s rally as it’s usually all in the morning gap.  If one doesn’t buy the shallow dips, one misses more opportunities to be ‘in the game’.  Although momentum always stalls after gaps, the market feels like SP 1370’s has a magnet attached to it pulling stocks back up from very shallow dips.

As the market retraced all it’s losses from Friday, you have ask what all the noise was about on Friday.  The austerity package passed this weekend as speculated.  All the Euro group wanted on Friday was for this occur to kick off negotiations.  All in, the noise will likely pick up with ‘negotiations’ as soon as Wednesday (finance ministers meet) and last till late (redemption date) March!.

As far as the underlying sectors, all the right groups led on the upside and single stock action from earnings related names this Q continues to be favorable with many new names hitting fresh highs. Names noted include:

...TDG, HAR, TRMB, THO… (IACI AZPN  FTNT FIRE  LQDT  MKSI  N PMTC  URI  LULU etc.),  while other names just confirmed they should remain on the list for yet another year, if this Q’s # is any indication, ie: (WYNN  LVS  PII  FFIV  FOSL  UA  CRM  MA DDD OTEX etc.)