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’.

Ahead of the open, (08-06)

Considering the market squeezed on ‘hope’ this week, it’s not a surprise the peak of the move occurred just a few minutes before the last main ‘ hope ’event of the week. (Bernanke’s much awaited testimony). Of course, the hope was for more hints of QE, but the speech was less dovish than market had expected.  In the last 72hrs, the tone through WSJ story and Yellen had become more dovish, so market seemed to have wanted more remarks on the prospects of monetary policy.  Unfortunately this is not Ben’s way to do things.

 

But, is that the sole reason for the selling in the last hour?.  Was the market that disappointed?.  Probably not, the rollover from SP 1325 was likely due to the magnitude of this week’s rip and just pure tiredness setting in.   Other than the last hour of trading, the day exhibited customary signs of digestion.  End of day may have been realization this weeks ‘hopes’ calendar concluded and now it’s time to get back to some reality and cold hard facts.   Greek elections have played second fiddle this week (no polls noise till election), but are now just over a week away and considering the markets tumble after last election, it will begin to matter next week.   Also, a look at Gold today signals hope for any major policy action on FOMC June 20 was abating.  Although the market initially rallied off China’s surprise rate cut, the realization later is the cut may have been due to this weekends eco’ data signalling some ‘hard landing’ facts.

  

On the corporate single stock side,  LULU  guided down signalling what other high beta retailers like FOSL, VRA have done since March. These names have shown high multiples were out of whack as now growth appears to have stalled on a dime.   

WPRT  added this week to list, peaked at 15% intraday gains.

Ahead of the open, (20-07)

EZ summit highs were penetrated in the morning, rinsed back before finishing right on the SPY swing high from early July.  All in, an interesting day.  Why?.  Although small cap RUT was the only red finish amongst the indices many of our ‘higher beta’ Shadowed growth stocks outperformed substantially.  This smells of rotation, but at this point it’s just a lot of covering in tech linked stocks.(SOX up nearly 6% off lows).  Still, its possibly enough to reach SP1400 as long as bad eco’ data is ignored (Existing home sales -5% vs +1% expectation, Phily Fed today) and EZ stays quiet.  Financials stepping up would enhance the possibilities of a higher SP price.

  

MLNX  significant growth outlook followed up VMW slightly positive report to lead tech linked stocks , VFC  earnings led ‘retail’ growth names..(RL, COH, FOSL +5%).  FCX’s helped base metal linked stocks.  Other single stocks closings, BSFT +7%, YELP, LVS, GWRE +5%, FFIV WPRT, LNKD, LULU, CRM,  WYNN,  BIDU >3%.  FFIV  weak guidance is another example in tech/internet where…”Bad reports this Q are any that simply don’t beat the watered down consensus estimates”.  The stock climbed $10 off printed lows.  These reactions are especially prominant in tech, which ranks as the most beaten down sector recently as far as sentiment is concerned.