Nice last 30 min close..
Friday, June 18, 2010 at 06:37AM
Jon in CLH, CRM, NTAP, VMW

We definitely had some help from strengthening Euro today, plus the market was able to shrug off  disappointing U.S. Econ. data to end the day slightly higher.    The fact that there was a successful closely followed bond offering by Spain and the subsequent move of Euro, really set the tone for this market.    Right now, anything that gives a positive indication that things aren't as bad as people feared in Euro land, people gives our market a shot of calmness.  Also, importantly the premise of buyers coming on dips was present again.

The so called disappointing Eco. data isn't a big issue to us.  Despite the recent mixed signals, (+ consumer confidence still showing resilency) trend still indicates expansion and recovery for the U.S. Economy.    In addition, we came off a very strong April where most of the Econ. reports we remember beat estimates and it's just difficult to repeat the process month after month.    Unless people are anticipating a 10% GDP growth and 5% employment by the end of year, it's just unrealistic to expect a huge increase in key Econ. data month after month.    So, let's just give this Economy some more time and see where it's going.     The earning season is soon upon us and we'd like to give the CEO/CFO's more credibility on their outlook as oppose to some of the raw Econ. data.    Can companies grow profit and revenue while unemployment rate stayed at a relatively high level?   Of course,  it can happen and this is the scenario we are actually banking on.    Of course, picking the right sector that are taking advantage of the recovery is the key to our trading strategy.

As far as plays go, technology plays are outperforming.  Again listed plays like VMW CRM NTAP  were inching to NCH's.   Also, CLH  off list as a play on the oil clean up hit a NCH.  Basically, we have a choice of either chasing/playing the strong techs that are at or near the recent high, or playing the beat up plays that are no where near high and have tons of resistance on the way up.    Well, it's pretty clear choice, isn't it?   Also, we feel commodity, material and industrial stocks are more sensitive to "disappointing" Econ. data as oppose to tech stocks.

Bottom line, market as a whole just wants to churn higher.    The only thing we aren't sure at this point is the pace of the churn.   In either case, we feel with the end of q coming up, some of the fund managers would love to have some of the high beta plays (the ones hitting new highs) in their portfolio.

Article originally appeared on Your Personal Trader (http://www.yourpersonaltrader.com/).
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