Too good to be true 'day'?...
Thursday, April 15, 2010 at 07:17AM Possibly...
If you were on the sidelines watching this market grind higher and higher..day after day, this was the day you probably got sucked in some (w/ CNBC help) as today's action was seemingly proclaimed as a re-birth of a Bull market. Okay , hold your horses, we’ve had a Bull market for months and all today did was reaffirm the premise of a recovery trade we’ve been in as all the ‘right’ eggs were in the ‘market’ basket.
- All the stocks bolded yesterday, INTC, LLTC, CSX, JPM all had frothy earnings/expectations met and didn’t sell off. So, tech, financials, transports ..what more can you ask for as the majors give upbeat reports.
- Improving Eco’data!. Retail, subdued inflation via CPI
- Bernanke reaffirmed for the hundredth time about rates.
At the end of the day, this is nothing new to what we’ve saying for months and the idea of more money flow coming into riskier assets in 2010 is going to happen eventually, but it’s not gonna come in piles tomorrow after potential investors read DOW 11,000+, SPX 1200+ tomorrow morning!. So, where’s/why our skepticism coming from today?. Well, it’s what we’ve been noting last few Journals and that is to watch for money coming out of the high beta flyers that have pushed this market higher so far in 2010. A part of this is…“we’re more concerned about the action in commods’ off highs, notably select steels that is still continuing today” . This theme is continuing today notably with X /AKS lagging again and could be the lead for a rollover coming in the group. Also, yesterday….“ One slight change in market flow today was morning upgrades didn`t help our Coals, Led’s, Casinos as much as they usually do. It could be nothing, but we`ll watch if this continues as a sign of these stocks getting overly tired”. Well, LED`s had no problems (RBCN, VECO etc.) as they are Tech Semi`s which propelled the rally off INTC-LLTC, but we once again had muted action in the high beta Casino's, who also got weighted on AMC due to MGM`s pre -announcement. This could all be part of rotation about to start that will be civil or it`s a lead we are coming to a correction very soon. It is always a good idea to look at the underlying market and now we are doing just that by looking at these groups trading action more closely.