Ahead of the open, (02-03)

After an eye opening commodity slide Wednesday morning, all the market needed was a good night’s dream about buying the good ole’ dip.   Of course, it wasn’t all that, but when you’re an investor/trader confused about ‘free money’ awash in the markets vs. economic growth dilemma going forward, hey just buy the dip and move on!.   The above question will linger on; can markets live with one and not the other and/or how much of each is sufficient to keep markets rolling.   This should be enough to drive one crazy with over analysis in the weeks to come.  In this view,  …”Overall, accommodative policy is still very much in place”…and economic growth is sufficient enough at this point, so not going to fret over it.  Sort of like the premise here for months of being cognizant of European headlines, but don’t let it keep you away from equities.

An interesting reaction to eco' data today. As said for days, economic ‘better than expected’ has probably had its day in the short term.  Besides the Initial claims today, (whose 4 week average has dropped by a significant 20K since the end of January), other data in the US is coming in softer this week.  Yes, the US ISM was a surprise considering almost all regionals were strong in February.  Durable goods, real consumption were softer too, yet market tried to hit fresh highs intraday signifying a belief by investors of the recovery holding.  Recall, noted earlier Global PMI gains would need to be consolidated following last ‘flash PMI’s and that’s what it looks like has happened again, here and abroad…. “… It (PMI’s) won’t be enough to buoy the markets, but aren’t a concern as last month’s jump needs to be digested….” Feb 22.  All in, it looks like it’s all about ‘Jobs, Jobs’ into March 9 allowing ‘softer’ data to be a blip for now.  Today’s tape almost going back to yesterday’s highs intraday is almost a disappointment as chance for a shallow pullback to buy into NFP# was short lived as Bears were unable to stir things up for longer than an hour or two. (after no promises of morphine and what could have been construed as disappointing data today.)  Instead, a potentially robust NFP# becomes the focus giving little chance to a pullback beforehand now and instead likely more upside risk.

Overall, the day started very encouragingly. Transports continued the reversal noted last week, single stock action in the RUT was very good with many names followed hitting fresh 2012 highs or flirting with such on 3-5% gains, which have become a rarity… ie.WYNN PII LULU UA IACI FOSL LVS FTNT and outside the group the momo/earnings, GS JPM might be prelude to more upside ahead in the Financials.  This is the kind of action you like to see and the type we’ve been waiting for as discussed lately. (including disappointing RUT vs. SP performance of late.)  Unfortunately, RUT gave up 10pts after 2pm and ended up lagging once again, while SP, NASDAQ managed to keep gains.  Still, as long as closely followed stocks here perform, the mixed signals even in the RUT are better ignored.

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!.

Ahead of the open, (27-04)

Market doubled its day gains post noon hour as upward bias once again caught people flat footed and chasing into the afternoon/close.  Yesterday, noted the upside risks and also potential to reclaim SP1400, starting with a better than expected Initial claims.  Well, seems market didn’t mind initial claims disappointing, maybe because spike in Pending home #'s took some of the heat off recent related data.  Still, the spin is likely that a disappointing I.C # put some QE back on table following Bernanke’s remarks on FOMC day.  All QE asset classes rising together signal this. 

  

All in, SP got over 1392 range top on most radars, a second day over 20ma, RUT pushing over 20ma.  Most stocks escaped ‘inside day’ on charts noted yesterday.  A little digestion of 3% uptick since Monday’s low is in order, but mentality should revert to buying the dips, which eventually would allow for SP 1400 to be reclaimed.

  

GTLS, EQIX  were earnings winners off the Shadowlist, gaining 10% and 13% respectively.  LVS, more of a momo’ stock caught the selloff draft despite good EPS as many names recently noted.

   

Retail earnings heats up in May, but a few small/mid- caps coming in early were pretty positive today.  Most retail links off Shadowlist put in >2% gains (KORS, VRA, LULU, FOSL , RL). Those names keep list balanced and at max. ~45 equities, other retail closely followed like COH VFC  PVH TIF  are never far away to mix in the group

Ahead of the open, (06-06)

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’.