Junkyard dogs..

Since our note post-Monday’s trade regarding a holiday trade in ‘rare’ stuff(chit) with REE/AVL joining in, mayhem has broken out with more junkyard stocks participating.  This coinciding with greater media coverage (inc. CNBC running segments seemingly every hour) that is giving daytraders a playpen year end.  If this is what QE2 is about in regards to bringing money off the sidelines, it’s going to end bad for many of the inexperienced once again and they’ll be going back to their day jobs soon enough. 

Luckily, we had something in the market for those looking beyond a flip possibly rearing it’s head as Ag’ related stocks climbed to 2 yr highs (see noon comment/names).  As said, if 2011 begins with upgrades of the sector this might be the sign this will be a hot commodity link group to trade after a long hiatus for the sector.

All in, the broader market once again failed to breakout 1260SPX, even though breaking out on holiday volume means little, it still shows conviction buying is far from coming back.  The fact Shang bounced is good, but it has to continue to take a lid off this market.  The China PMI is out over the weekend and if it shows signs it peaked in November, it might offer some inflation relief.   As far as Europe, which has been ‘spooky’ quiet for over 2-3 weeks is offering some Italy noise now heading into 2011.  Things should get interesting soon enough from all directions..until, we still have 2 days of little disruption.

Happy New Year..

On Friday, a great (yet bumpy) trading year will culminate in a >6% December melt up and an excruciatingly boring final week.  What’s amazing is Decembers gains are 1/2 of '10 SPX gains, yet all the real trading gains were done in the previous 11 months as the ‘winners’ traded since Jan- Feb Shadowlists have simply hibernated during this grinding (Dec) melt up.  Basically, this month’s gains are a figment of the market’s imagination, a month’s worth of ‘window dressing’, you could say.  Don’t want to end the year on a sour puss note, but this is similar to last year’s December melt up and subsequent mid-January correction. Still, this would only be a short lived correction.(hiccup)

All in, an artificial month, but, further gains likely into the front half of January with individual 'leading' equities catching up.   Part of a further melt up could be a Santa rally catching some air off a bouncing Shang (2 days now)- PMI to follow may subdue <5% inflation/over heating fears/ today’s strong eco’ data continuing (Chi PMI nearly 60/ earnings ahead(kicks off 01/10-14).  Today’s, v, good eco data and little market reaction (can’t push 1260>) is something the Bears try to use as ammunition today, but in this view, you can’t read much into things with this illiquid holiday environment.  This includes reading much into any gains/losses you may have in any individual equity holdings this week either as bids are no-existent and just one selling grinch can lead your stock to a loss.

Wishing all a Happy and Prosperous New year…