DJIM #16 2010
Monday, April 19, 2010 at 07:46AM Even before the gov’t blew the top off GS the Volcano and the market scampered, signs the market in it’s recent overdrive, overbought status was potentially losing steam were prevalent. We talked about looking at underlying market last week in asking, if things were too good to be true?. The factors we touched on all week in looking at a potential stop were in full affect by the first hour of trading on Friday before the GS wire news.
1. Once again, X and a few other metal names were coming more off their highs. We were looking at this as potential 1st sign of a rollover / threat to other commodity-linked names/ broad market and finally many of the names holding up ie. coals CLF WLT >-4% came down as did X another 4% intraday.
2. The ‘High Bar ’ set by the ‘best’ in class was put in by INTC, JPM, UPS and after reporting quality EPS, GE BAC ISRG GOOG were still in trouble before GS news hit.
Once the ensuing panic hit the financials, we were seemingly in the same situation as in January’s correction when Obama got his foot in Wall Street’s door. If you go back you see X rolling over than, selling off after INTC EPS and than bank regulation news carried the market to a correction just under 10%. The question is this going to be identical or will this be just a blip of a correction about 2-3-4% correction? Well, it’s hard the judge the impact or tremors off this GS bit and we’re not going to worry about it. Yes, market doesn’t like uncertainty, but is this really crippling?. We doubt it and think the bigger correction comes in May still. Besides, we’re only thinking of one thing coming into earnings and that is fresh plays and that is the concentration here as corporate profits surge...one by one as they come in. http://www.djimstocks.com/earnings-dates/
On the other hand, we are also going to get some cheaper shares of all our favorite plays from last Q's successful list that were overbought and extended, if we wish to go that route. So, all in all…we’re not complaining, we were already hesitant last week and days/weeks from now we'll look at this week as just another opp’ to buy this market most likely.
Watch 20ma levels next intraday as next opp', if ‘Bullish channel' fails intraday or at close.