Ahead of the open, (02-02)

Nothing new or catalytic caused the gap up.  Global PMI’s just reiterated the consistent ‘growth’, but risk related assets actually lagged some early and then led equities lower by close.  Bank stocks in Europe and here don’t lead off PMI’s as was the case today.  Maybe every financial was rumored to be running the Facebook IPO!.  In all, it wasn’t the standard rotation trade of 2012 as the safety sectors had money flow as well.  Maybe it was just fresh money being deployed broadly and indiscriminately at the start of the month, just to be in the game.

As far as PMI’s, U.S inline numbers were a win –win situation.  If we had ‘better than expected’ headlines, it may have invoked some QE debating.  A weak number and QE aspirations would rise because it would suggest growth is waning.  In those two scenarios today, the market likely would not have gone higher, thus just being inline was enough as it keeps all factors of 2012 going as far as economy (is strong enough) and QE speak (eco’ not robust enough) is concerned.  An example is probably China’s #, it’s PMI curbed easing chatter and it’s market fell 1 % off the ‘better than expected’ print despite ‘hard landing’ off the table.   This chance was noted last week in “better than expected” PMI’s selling off.  The fact it was only China, selling luckily only stayed in Asia.  All in, the bullish macro landscape from December still exists today with CB accommodative policies helping ‘risk on’ around the world, especially in fixing Europe through LTRO, which has brought down Italian and Spanish yields greatly and kept Eurozone economies from falling into pieces.

As good as today seemed, (maybe because it’s one of the few nice gains since the first trading day of the year), we are still about 10 handles off the recent top and in a range tug of war.  

• As far as mid-small cap earnings:  IACI, added last Q and LQDT  had solid earnings in the morning. CVLT also here in November was okay.  MKSI  AH’s was solid.

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, (09-02)

What do you say today at markets close that hasn’t been said all week?.  Well, the daily gains/losses on the higher beta Russell 2000 pretty well sum it up. (R2K ~-3 on Monday: -1 on Tuesday; +1 today at close).  As far as the intraday shenanigans, the market basically gains a few points on ‘optimistic’ Greek headlines and losses a few points on new postponement headlines!.  Unfortunately or is it fortunately, Greece has not been a market ‘factor’ to trade on or off here during the rally.  Maybe, we should just be patient and relax as the pace of gains so far in ’12 can’t go on forever, but this grind is difficult after being accustomed to the high volatility seen last year. Unfortunately, these 2 factors are probably keeping new money out of the market right now. On one side, the investor says these gains can’t keep going, so we’ll wait for a nice dip/correction, while the other battered and frightened investor says, it’s inevitable some bomb will still detonate in Europe!.

Anyways, next few days will be about Central banks speak (as noted last few days) to potentially move the market.

So, what to do in a flattish market with no clear leadership and/or sector to lean on?.  Where’s the alpha to trade on a daily basis?.  Well, it’s not far away , it’s in the earnings reports.  At this point, picking out winners that can be traded initially off a report and/or Shadowlisting going forward in ’12 is the general idea.  Today, HAR/TDG tacked on 4pts between them on day 2 after earnings showing you don’t need to jump on immediately following a report and/or on the gap.  Recall, LQDT gained 9% on day 2 after being posted following its first day of trading with report out.  As far as stocks posted before opening following earnings.  If you can’t trade them fast and take profits early as in high betas like PMTC  MKSI  that spiked and soon relinquished gains, you’ll have opportunities later to get in on a pullback. (ie. today PMTC made a fresh high). Primarily, this is why single stock alerts are not given out any longer, it’s a matter of ones comfort with jumping in and chance a high beta like SIMO  effect as well.

Overall, one thing to watch now is if ‘bigger’ cap names that report burst out of the gate, but soon after give up those gains. This will be a sign the market is getting fatigued with investors looking to take profits now and not chase.

Update on Thursday, February 9, 2012 at 08:39AM by Demi/ YourPersonalTrader

Now TLEO goes, SABA (up >50% since Dec note), KNXA were plays off SFSF deal and could be again.

 

 

 

Dec 5th:

SAP / SFSF deal summary: SAP announced on Saturday that it had entered into a definitive agreement to acquire SuccessFactors  for $40.00 per share representing a 52% premium.

 

TLEO KNXA SABA

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.)

Ahead of the open, (23-03)

Is this time going to be any different?.  Do the markets do a 3-peat in Q1?   

As the market (SP) closes lower for a third straight day, (~26 SP handles from ’12 intraday highs to today’s low), we ask if it will turn out like the 2 other shallow pullbacks this year?.  The last pullback and reversal is still pretty vivid here,  “…what happened was only a repeat (shallow pullback) of January’s 3 day/~35 SP handle drop, including a 200+DJIA decline day followed by a complete reversal to within 4pts of February highs."

The premise in early March,..” ..'Ahead of the open’ with the market at weeks low of SP1340 with NFP just 2 trading days away, asked, “Question now, is it better to wait on NFP#’s now or buy the dip now below broken support???.   And concluded with, ...“Still, if you believe in the recovery, it's hard not to get in on a ~35SP move off highs in front of the NFP# sooner than later”.  If an investor missed the ~65 SP point ride that followed in March, how long can you stay away this time?.   Some of the old culprits in the last pullback have returned with China, leading ‘a commodity swoon’ once again today.  Did they ever go away?  Basically, the same concerns discussed all month here are ringing through the marketplace today with the ‘risk off’ trade paying the price…sometimes it’s the Precious metals etc, today it was crude, base metals, but all in, it’s still a commodity demand worry linked sell-off. 

But, one thing that remains constant is the idea, “On 01/03 noted the possibility  ...”A commodity led correction, but not necessarily one that will take equities down very much!”.   Despite the selling in materials, steels, coals etc. today, the IBM type mega tech caps, internets, consumer stocks performed very well indicating equities are hard to take down as money flows through equity groups.  Although RUT gapped down and underperformed, listed names here covering a broad range all finished green with many others only marginally in the red. (ie. ULTA FOSL LVS  LULU  PCLN  N FFIV  V  PMTC BIDU  SXCI  LQDT)

All in, the market got something to talk about, but in the end the same trends remain until/unless more concrete data hits.  Example,(same trend), Initial claims was another robust # bringing in another fresh cycle low. (4wk avg.). 

The market ‘headlines’ and it’s gurus did their best to alarm the ‘Bull’ with the remix of the old hit..Hard ' China' landing and Eurozone recession fears.  It seems a .5 to .7% drop on the major indices is really a big deal today.  It’s almost comical.  Starting the "Ahead of the open' with “Do the markets do a 3-peat”  is even comical as the market is not even through stage 1 of a true 3-peat play(of ~35 handles).  It’s only been hit~26 SP pts. (H to L), so far!.   Incidentally, a trip of 10 more pts would take it to February highs and mark another ~35 ‘shallow’ pullback.  A few other supports are in the 1370’s.  It would’ve been ideal spot for dip buyers to pounce for month/Q end window dressing, but no such luck today!.