Ahead of the open, (13-07)

Market losing streak hits 6 days, but magnet to the 50MA extends for a 3^rd day increasing the odds that a dead cat bounce began today.  The state of the market is so dour that today’s bounce off lows to its peak (~15 SP handles) was a celebration of sorts.  Unfortunately, 10 minutes before the close the party goers petered out and SP gave back half of the bounce to end off ~7 pts.  Still, market did reclaim the 50MA by a whisker and the longer this lasts, the better the odds this downward trend exhausts itself short term.   If anything, today showed the shorts are not so confident to press the market lower in fear of upside risk headlines. This usually indicates the market stays range bound until a fresh catalyst emerges as both sides lack conviction.

 

In all, an extension of the bounce is possible off the better than feared China data dump, but if sitting back and waiting as discussed early in the week for surprises in single stock 2H outlooks…why not wait it out some more.  Although the L-streak is at 6 days, it’s hardly been ‘juicy’ to step in size as the market is hardly off that much. 

  

Adding a few stocks to the Shadowlist, good ole NFLX (~$85) makes a return and YELP (~$22), the former for the squeeze factor and the latter for a bounce at this point (was just ~28).

Overall both may have a Shadowlist shelf life for longer term and not just be chartist’ potential plays as they appear to be now. 

Ahead of the open, (25-07)

A second consecutive day where intraday market loses are cut in half by close due to CB policy speculation.  Yesterday it was the ECB, today it was the FED as a WSJ article talked of earlier action and was specific on details for the first time, (thus Jackson Hole/ FOMC next week may set details for what will follow).  If anything the odds on dates changed some and importantly put pressure on ECB to do something on 02/08.

 

  

Although todays downward draft was blamed on more EZ stresses, (note at day’s trough, US markets were underperforming EZ markets by over 1%), the real culprit was U.S earnings as the higher bar premise noted entering the week was the driver….(A week of such behaviour will change to stocks needing to beat and have better 2H outlooks now to have similar reactions to last week’s.). Simply what was working last week isn’t this week as weak earnings are not rallying any longer. ( DD TXN, UPS ).  This is even more visible AH’s as growth/higher beta names get slaughtered after missing, (AAPL, BWLD, NFLX, TRIP).  It will interesting to see if the bar gets re-set back again due to AAPL's miss particularly in tech links.  All in, UPS’ call put it all (economy/earnings) into perspective as it talked of certain conditions only seen in recessions).

As bad as EZ stresses, Eco/ earnings momentum slowdown might be, it is also raising the odds of CB policy response. This in turn keeps market in its summer range.  The upside risk of action is keeping a floor to the market as shorts don’t want be involved in another upward surge.