.."before long"
Wednesday, October 13, 2010 at 05:46AM If the market needed reassurances of loose money and strong earnings to continue to chug along, it received it’s reinforcements today. Okay, INTC/LLTC (industrial tech end markets) wasn’t all that strong, but INTC's commentary was sanguine enough for Q4 with business improving the last 4 weeks. Add loose money relief "before long” in the FOMC minutes and the market should get to the next ladder step tomorrow (~1175'ish SPX).
Despite all eyes on minutes/INTC, the interesting tape action occurred much earlier in the day. A quick opening 10pt drop to 1155 (9ema) was swallowed up (as it should with no fundamental sell off catalysts). Once again this showed the markets ‘resiliency’ and guess who led the upturn. Well, yesterday in the afternoon, we pointed out the cloud stocks having a potential catalyst, so the stocks list attached on site was being watched and it was the first thing to turn, leading the Nasdaq back off it’s morning fall and outperformance on the day. Whatever the catalyst (it was afternoon in Europe, so some conference dissemination at bottom feeding time), the big momo names VMW CRM FFIV bounced off lows and had 5-7 pts intraday reversals each even before the late ‘minutes’ rally. By this late rally time the ’clouds-virts’ had all the gains they can chew, besides the rally was nothing more than an ES/ETF driven move, so no top off gains in most equities. This will be interesting to see tomorrow, if a bid comes into stocks and not just be a ES/ETF follow through move higher off the open. All other groups were basically in line with the Euro/USD and/or the SPX tape all day. Maybe of significance though is in the financials as GS traded above 200ma with JPM earnings on deck tomorrow.
As the last few days point out, it’s very possible to trade from a ‘defensive’ posture (as in not being heavily exposed ovrnight mostly) to avoid any surpise sell off and to have money available to jump on new company specific earnings. It also allows you to use that money to play groups moving on a particular day, if no earnings plays show up. At this juncture the DJIM Shadowlist has maybe 35-40 stocks in it broken down in groups, which make it easy to see where the money flow is going. Monday, it was the casinos, today the clouds. Tomorrow, who knows...Commodities?..Banks?..or some EPS stuff.
