Ahead of the open, (09-02)
Thursday, February 9, 2012 at 08:03AM 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.
Demi/ YourPersonalTrader
