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Entries in GOOG (3)


Grind me higher...

Lately, it feels like this market is outperforming everyone.   Why do we say that?   It's those stocks that weigh so much on the index and have hardly done anything in the past are starting to slowly grinding higher, just as are lagging stocks in lagging sectors, you’d never look at it.   Nothing wrong with this catch up picture though!   We knew that eventually the optimism will spread from the high beta stocks to others.    It was just a matter of time and adds to the performance anxiety theme.  What's surprising though that it's happening around the middle of the month , a lot sooner than we expected for Q end window dressing.  

*On the hand today, high beta names from AMZN to GOOG to BIDU rested, some commodity linked stocks (steels/metals) had big reversals,  momo China stocks were hit all day (is policy tightening around the bend?), all this hints at resistance being hit today around 1165.

Well,  we still haven't got out of March yet and market is locking SPX 1200 in its sight and that may happen a lot sooner than everyone realizes.    Of course, any number on SPX is nothing but a number until people start to make a case out of it.    We know a lot of analysts have set SPX 1200 as a target for this year and we wonder what'd happen once we've reach it.    Trading in today's environment is a little bit tricky even though media has painted a very rosy picture of the market lately.

If we didn’t know any better, we could've just bought every stock out there and add more everyday.   The stocks that are hitting new 52 week high is simply unreal.    So, there's abundance of plays out there seemingly worthy to chase as there is not much resistance after 1165 and 1177.     Question here, shall we chase blindly now and hope for the market gets to 1200 soon or shall we wait for some better prices?    As it stands,  this super sized market is fat and could use a diet pill and that's what's keeping us from chasing it higher.    Lets just give it a couple more days as the odds of reaching 1200 any time soon is not very high, but realize it's being eyed now as a target.


Expectation Game...

When a stock is expected to come out with good earnings, it better not disappoint.   Most earning seasons,  we have often seen that a stock trades up just prior to the earning announcement, but only to get a lousy reaction due to the "miss" of high expectation or what they call the "whisper #”.  For some stocks, such as GOOG, AAPL, AMZN.. they fall into the category of "need to beat the expectation" as they are the “Crème de la Crème’ of the stock market.

Maybe it has something to do with their fairly rich multiples and the fact these stocks always had wild moves post earnings in the past.    However, doesn't that game get a bit tiresome after these many years?   Come on, why can't people treat GOOG  just like any other tech stocks?.    Honestly, we don't really want to put much emphasis on GOOG's earning or reaction tonight because it can get into an endless debate.   Instead, we wanted to point out UPS, which guided much higher for the year as a barometer for health.   If anything, this gives us the impression that the increased business from UPS means Economic activity is more or less flourishing across the board.

Today's the second day market closed over SPX 1200,  little follow through, but same story in buying/ selling trends as on most days talked about here.  down >3% added more credence to what we’ve been alluding to regarding the commodity linked names & broad market.   

Since, many of our plays are getting close to the report time and according to our own trading rules, we'd let go most if not all of the position prior to the earning date.  This is hard to do in a recovery period as you’d expect most to do as well as previous Q, if not better.      When the play reports number/guidance that surpasses the most optimistic expectation, we can always get back in.  

So far we are only getting a small taste of what's to come for this earning period, but these are the best names reporting first and they ie.(INTC UPS JPM) set the stage or let’s call it a “high bar", so far to meet for names reporting later.   GOOG/ISRG  are proof tonight.   Already, we have broken through some major levels from this market.    We can't wait till next week as the bulk of EPS begins, even though we have some important names tomorrow for the broad market.


DJIM #42  2010

A look at the majors weekly closes,  SPX +1%, Dow -.5%, NASDAQ +2.8%, the mixed results exemplifies the ‘funky’ market tape noted mid week continued on.  Money flow circulated from one leader group. There were as many as 3 ‘group’, 1 day moves this week that kept the market a float.

  • 1-’Clouds-Virts’ on Tuesday-  5-7% gains in momo names like FFIV, VMW, CRM after alerted here for a possible catalyst this day. (VMW  EPS on Monday will be important for group, many names reporting later in week)


  • 2- Transports./Industrials/ Base metals  rallied huge on Wednesday.   Money flow was discussed previous day and this was the outstanding group coming off CSX earnings, FCX, WLT rallied in the base sec’ …“…Monday, it was the casinos, today the clouds.   Tomorrow, who knows...Commodities?..Banks?..or some EPS stuff.”.   The commodity base material trade bullish call from 2 weeks ago is working, but with USD biggest day in weeks on Friday, this trade may rollover some in the next few days until this minor corrective USD/Euro phase ends.


  • 3- Mega caps- it was noted  before Thursday trade…“.the answer is money is also flowing into the ‘safe havens mega caps  like MSFT, CSCO etc".  This premise was only solidified 48 hours later, post GOOG  earnings as it and AAPL AMZN  all ran large on Friday.   So, yes the broad market may have ‘blinkers’ on for GOOG as seen by a flat SPX on Friday, but the ‘groups’ associated  with the catalyst still get the liquidity/mo’ flow.   At least 50% of the small gains in SP this week can be attributed to 4-5 mega cap stocks.

In the middle of all this were some timely words on Fins’  as 2 days of intraday losses of 4-5% followed hitting the money center banks and JPM etc, that also helped the ’rotation’ picture as money flowed out of this group.     A wild underlying market week on the micro side and the macro side was just as wild.  

Since the FOMC minutes a shift to selling TSY’s is probably underway,  which would signal that QE2 is selling on the news.. (USD just doesn't go up any more right?)…The fact it did Friday after Ben's address and inflation data, this is probably the case, but still equities did not sell off on the higher USD.    This could be because rotation/liquidity into stocks from Treasuries is the natural course, even if it signals QE2 is selling on the news.   How’s that for confusing?.   It actually might not be as the market remains steady because individual groups get enough liquidity to sustain it.    Only thing to do is go with the ‘premise’ discussed into Wednesday…“As the last few days point out, it’s very possible to trade from a defensive posture (as in not being heavily exposed overnight mostly) to avoid any surprise sell off and to have money available to jump on new company specific earnings.   It also allows you to use that money to play groups moving on a particular day , if no earnings plays show up".   It may not be perfect the action for broad market follow through, but it gets you through day to day.  Like every other trade that gets crowded and fatigues, QE2 is also such a trade is something to keep in mind!.

So, just sticking to this trading methodology as it’s "sell the news"  in TSY, which interwines to QEII, but it’s "buy the news" in particular sectors/stocks off earnings.  How long can this daily rotation keep up until the 2 major groups (Fins’/Semi’s) struggle wear down the market?