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Entries in EDU (2)


New SPX high

What a three day rest has done to this market, eh?   We focused last week on the possibility INTC earning may bring out the "sell on news" crowd and it played out.   Into Friday’s trade,  we noted the 3 day weekend may give this "market direction" and not INTC, JPM earnings .   The question into today’s trade is 'BROWN really GREEN' for traders/ investors and give this market direction as Washington’s messing into the markets, notably into financials, get a wake up call.   It definitely helped today after we re-tested 1130 levels pre-market and in the longer term it should as well.

More importantly to DJIM today was the expectation…“The reactions to reports next week might be completely different than last weeks, ‘sell the ‘good news earning news’ reaction” and the political hype had little to do with the change today.   As said, less than 5% of SP had reported by last weeks close and doesn’t make an earning season.  Today investors came back more optimistic as market shrugged off   so-so call, liked an early cyclical PH  industrial upward guidance,  which gives a good read through to the recovery and sector,  EDU  quickly reversed some early selling and was one of the big winners on the day and AMC, we got a good reaction to CREE.  

Still,  a one day change doesn’t make an earnings season,  but it was good to see.  Given the reports from the likes of AA, INTC, or JPM and today PH, more should start to realize that the economic recovery pace will remain quite steady.    Maybe, we've been spoiled by last couple of quarters' surprise upside announcement by many companies.    Keep in mind though,  previously the estimate were much too low for most companies on average.      For this quarter,  we are assuming analysts' estimate are much more inline with what's happening out there and expectations are greater.    In other words,  if a company can shine through this quarter's report, it may just be a real star we are looking for in 2010.

Regardless how much upside churning we go through this year,  the trend will still be the same.   This is the most important aspect of our trading theme here.    It means that on down days and on pullbacks, we basically have to have strong faith and buy into it.    It's somewhat of an adjustment because this time around last year,  we were trained to stay away from any down day.    Any big down day from early last year would lead to further down days.    This is the reason we assume many people are still cautious about this market.

In AMC,  as noted CREE  came out with an excellent guidance print.   If the selloff in the stock Friday was the concern that their report won't be good, then we'd assume it can at least return to its previous high and perhaps beyond quite soon.  The collateral plays at DJIM, (AIXG, VECO ) should benefit, not just from report, but the fact they’ve gone down with the rest of the tech (SMH) weakness so far this year and we expect a rebound in the sectors.   IBM  came out with number/guidance that met the expectation, but didn‘t raise guidance enough to satisfy hopes.   In addition,  this is actually a reporting week of many financial companies including the likes of MS, BAC, WFC, GS,  but judging by JPM, C  it might be a non-event.   

Bottom line, as earning season gets busier, we have to keep our heads cool and pick the plays that stand out.   For now,  we simply have to lie back and wait for winners to come.

* Wednesday night, loads of very important China Eco data…


...looking ahead

Following an eventful 4 days for the Bulls, today’s flat session is perfectly fine with us.   Actually, even better than fine if you consider the 200ma provided support.   Even though, we didn't see a lot of new buying/ conviction to push this market even higher (let’s be realistic short term..digestion needed),  it is almost as good because we saw ‘dip buyers’  come in.    An oppy’ to buy the market on dips has been methodology of longs for a long time to get into this market.  We just haven’t seen those explosive breakouts of years past, instead those wanting to be in the the dips.   This is what we will center around going forward and will use it ourselves to position into Q end.  

Speaking of Q end, entering the week, we discussed “…sidelined money should come in for June Q end”.  This Q provides more than one reason for this to occur.    First, look at where the SPX is today on June 16th…almost half way through the year…1115.!   Yes, that’s a hefty return of 0% on the widely followed benchmark for every manager with a book in 2010.   Secondly, consider this…Hedge funds – “Hedge funds hit in monstrous May….Global hedge funds in May suffered the heaviest losses for 18 months after some of biggest and most successful managers were wrong-footed by world markets”.      Simply,  if we’re these guys we’re in a mess after May and need to put up some numbers, not only for June to make-up losses and avoid consecutive months of underperformance, but they also have to put up Q numbers!.    To us at DJIM, this is almost a perfect storm for money flow to come in the next 2 weeks.    This is why we will be watching the dips carefully for oppy’ for accumulation.

As far a individual stocks, sectors, we are seeing many of our listed stocks hitting NCH’s the past few days…EDU AZO VCI SXCI RBCN  and these aren’t even offensive high beta stocks.   At this point,  we are concentrating on the tech’s and have many from our lists of techs/and earnings related that on any given day can pop..from VMW  to NFLX AKAM, NTAP (SNDK added)  etc.   Many like DLB VRSN  are also setting up near highs.    Hopefully in the days heading into Q end, the number of sectors in play extends to beat up commodity linked stocks and more high beta names/sec‘s.   Until this is evident, we’ll concentrate on Nazzy/ tech linked stocks.