..underlying stocks

Today might be looked on as a blown oppy’ for the broad market after it closed near the low’s on the heels of the risk trade put back on globally, following weekends go ahead to weaken the USD.  U.S market’s couldn’t carry what was put in other markets globally off the G20.   Add some M&A activity, decent eco’ data here and you see,  it just doesn’t really matter now to the broad market ahead of the early November catalysts.  So, instead,  let's decipher broad market from individual stocks.  The underlying stock tape is where there’s light and life.

As pointed out yesterday, the reactions of individual equities is something that can keep us traders busy while market stalls and today was a good follow through/ confirmation on this front.  This falls into DJIM’s trading methodology, instead of the ETF trade that has been ongoing.   First, we had commodity linked stocks here like eg. FCX/WLT  do the sector rotate game off the FX game.  Secondly, it was  pointed out that earnings are getting a good reaction and today SOHU  was a prime example…traded low $70’s premarket after EPS and made it up to $76’s intraday, exactly what was pointed out post FTNT/ RVBD, stocks still have leg room to move after gap ups.  BIDU/SOHU's  results are also helping the China stocks move, so we have more individual names moving within a group.

Also,  the Virts’clouds extended off the RVBD/FTNT  reports with CRM, FFIV SVVS RDWR  having good days with RDWR earnings helping/ and M&A noise coming back into the group as well.   Also, you`re seeing some individual names  go without catalysts like BID (alerted Sept 27) at $35 hit about $42, MA,   (alerted Sept 16, $210 hit $248 (both >20% since) made fresh highs and fresh names like MOTR  got a Cramer fix supposedly and ran another ~15% to $20.70H , KH  made an early intraday H/ NCH.  PCLN  running off and with good ole`TZOO  earnings.   Geez, even RIMM  made a new high since added back to list (Sept 21).   Simply, there is plenty to trade off the Shadowlist, while 'broad'  market still struggles with SPX ~1180’s. 

In the end, you can’t expect the market to do much as a whole before next weeks FOMC/Elections, so don’t worry about it.   Just fixate on individual stocks as this trade has come back for now.  Nothing broke out today like USD to new lows, Euro, Gold to new highs, so nothing has changed to give this broad market a shot in the arm. 

...data..data

The premise to start the week  ….”market’s ‘resiliency’ keeps on showing it’s hand as it hold ups on economic drivers withstanding depressing events”…” only hope is eco’ figures this week turn some heads away from European perpherials..”.    Slowly this is playing as the big media debate for the last 2 trading days has turned to‘Eco data vs. Contagion’  as the market bounces back to back after terrible openings.  The plan here is taking effect as focus is turning to eco data and away from European peripherals for the time being.   Today’s data points (Chi PMI, CConfidence) moved the market in the right direction and tomorrow should be no different with key data to hit (China PMI, US ISM).   The European peripheral situation will remain center stage, but if eco’ data continues to be strong (as expected), the headlines out of Europe will get muted somewhat.   A combination of European fears easing and v.good data, including euro figures and we may finally break out of this 30 point November range.   In reality, market needs to do it soon and gain some momentum as ‘important eco' data’ wind down after NFP on Friday into year end.

As far as the trading tape,  today was more of the same (see yesterday’s bolded comment).   As long as this trend keeps up, which we watch via Shadowlist, the market will hold up and you shouldn’t fall into ‘panicked’ selling because the market slides 160 and 110 points as has been the case last 2 days.   There was some negative noise (liquidation) about techs/momo/internets trading patterns (FFIV, CRM, PCLN, AMZN  types), but viewing it as a (month end/holiday end sell on news) phenomenon more than anything at this point as the selling wasn’t really aggressive.   Still, despite a negative day, we had some good individual stocks action off our list with APKT, KH, TFM  putting in NCH’s with >6% gains.

Trichet's tricks

The overwhelming theme underneath today’s impressive market recovery was not discussed in 99% of the market commentary you’d come across this week and thus was a ‘shock and awe’ to most.  What we’re talking is the lead you had at DJIM…. “Now, the ECB’s meeting (Thurs.) comes into ‘big’ focus (exit strategy speak)….. only hope is eco’ figures this week turn some heads away from European perpherials and/or ECB provides some relief.”.

So, besides more v.good “economic data drivers” in China PMI, US ADP/ISM, GS raising GDP#’s, Germany retail, the market got some’ relief’ from the ECB in the way of ‘hints for surprises’ for Thursday morning on ‘exit strategy’ to contain the contagion.  Simply, the market mover was ECB’s “Trichet’s trick” hinting that the ECB’s bond purchase program could see significant expansion and warned markets not to underestimate Europe’s determination to resolve the eurozone crisis!.  Basically, ECB won’t be aggressive with policy exit strategy given the growing debt stress, but let’s just hope the market is not over the top (exaggerating) in thinking there will be something radical in Trichet’s one hour pre market massaging of the stressful markets and thus end up being disappointed.  If it’s only a soothing massage/delay of exit and not a specific policy change (big bond purchase) that may occur.  Simply, fingers crossed ECB live up to expectaions now.

In all, an impressive broad market move above the late November range.  Yesterday’s note on breaking 30 point late November range came sooner than thought, but we’ll definitely take the effort and hope the market builds momentum now as important eco’ data winds down.   As far as Shadowlist, it was quite funny seeing yesterday’s noted NCH’s APKT, KH, TFM on top again with gains of another >7% intraday.