DJIM #2 2010
Monday, January 11, 2010 at 07:00AM A little baffled perusing trading blogs/ sites this weekend as to the sentiment of what a boring trading week this was, especially the doldrums after the first 30min and before the last 30 minutes off NFP# . This was the biggest ‘up’ week in about 2 months, DOW up nearly 200 and the SPX closed twice over the upper trend line from Oct/Nov by Friday’s close represents a possible morning gap in our view and test of mid 1150's 'R' in the near future. Each day was a new high on SPX, a ladder to a possible gap as well. If this was boring??. What was the last 2 months of a tight range bound trade to most complainers? Oh, forgot these must be the shorts or those still flatfooted sidelined longs!. This ‘boring’ action is where DJIM calls to stay long in December exposed into early 2010 is paying big dividends. On the topic of the SMH from open alert, if Friday's short covering action has follow through as we think into INTC EPS, we would than look for a pause in the market and some sort of backfilling late in the week. This possible market direction twist is not a concern as it's EPS time, new individual plays will be the concentration going foward.
On the topic of the ‘disappointing’ NFP#, all we can say is the reaction was hardly disappointing and that is all that needs to be said on the matter. It’s going to be a bumpy ride recovery and that’s the end of it and is not a new prognosis. All this really showed was the market continues to shrug of potential ‘ bad news flow’ we had plenty of it during the week (home sales pending, China rate stuff etc.) that just didn’t add up to a red week. The market showed what we assumed be occurring an that is the market started to look ahead to 'earnings season' and the NFP was just a formality.
The market is running on upgrades of individual stocks and sectors as firms look forward to this earnings season and beyond. On Friday, the big beneficiaries were VECO (is a chip SMH play) and the steel sector X MT AKS off tier 1 coverage.
An updated `shadow list`is on site (Journal page). Every sector we`ve been concentrating on is moving along..eg China`s, Casinos, Coals, Steels, LED's and the financial / banks brokers rotation as evident in the 'green`on the list.