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Entries in MA (4)


..some resiliency signs..

The market got an early bid and was up nearly 1%…oh wait, that was the bond market from the QE noise!.   The equity market was the one down nearly 1% before staging a decent reversal from the ~1118 levels and afterwards flat lining for the remainder of the day.   This was the expectation to consolidate and the hope not get a retest of 1131, just yet.    The view is it’s better the market didn’t even try to follow through from the previous days big gains and possibly succumb to selling if it tried to push 1131 too quickly.    Maybe this way, the market can generate some mustard by spending time bouncing around a tight range to show levels like ~1118, even 200ma~1114 will provide the necessary support to uplift the market in the near term.   In other words,  give some confidence to those on the fence at this point.

A key takeaway(s) from today could be the resiliency in the market showing up.  Despite a handful of negative reports from household names like DOW PG down 4-10% and not so hot macro data, the market held up quite nicely.   Also, the terrible underperformance of the consumer discretionaries didn't spook the market.   MA, didn't have the most pleasant things to say on spending.

Away from the broad market picture, we had numerous previous small caps put out nice reports to trade into the Q, a few like CTSH ’s amazing sequential growth and PCLN  had robust numbers.   Even, STEC  shows sign of a turnaround for the short term.   Other notables include RBC OPLK HLF VSH  to stick on the shadow list for the Q to go with the VMW EXPD ILMN CRUS CLW RVBD  earnings plays from July.   The more the merrier….                                

Sep212010 summer later

..the range is breached...

Although, the market had hovered in the mid 1120’s SPX for most of last week, today’s impressive rally seemed to have caught many off guard.  Firstly, we had no gap, but an open at 1126, while the European markets were already rallying after putting the "same song and dance"  from last week behind them.  The 'no gap’ made the move impressive considering the market did ~20 SPX intraday points as DJIM’ ‘bullish’ stance amongst over confident, overbought ‘sentiment’ gauges heading into the week, plus a better to buy market call for a few weeks paid off.   The fact we sliced through not only 1130, but 1140 another resistance made it even more impressive as the ‘machines’ went off as the market looked ahead to the FOMC with a 'big breakout'  (The constructive action all week is lending to the thought we could have a big breakout if the man vs. machine theme is hit by a favourable catalyst... ).  There were no real ‘catalysts’ besides the FOMC anticipation talked about here spreading through the media outlets over the weekend and today.   Okay, let's believe IBM's 1.7bln tag for DJIM's NZ  play had a little to do it with it;)...Now, we just need to get some follow through this week and start grinding the Bears away into mid Oct earnings season.   

The crying on some Bear tilted blogs shows the surprise in their misery and the fact this was still a ES futures based rally not supported by MF’s / retail investors highlights this caught those sidelined off guard.   Individual equity moves were not in step for the most part, but still the high flyers of DJIM, we said were being “accumulated on slight dips for broader market highs to come” …like high flyers CRM, VMW, FFIV, PCLN, AAPL, BIDU  and others off Shadowlist eg. EDU, MICC, ROVI, JOYG, WYNN, APKT,CMI  were striking new highs today.  While PVH  and MA  have added 6 and 8 pts respectively since added to our list in the past week or so.

Considering the sizable move all in one swoop, the market will likely look to take some profits once the FOMC statement hits.  We would look at it as a buy the dip oppy coming.  If they (FED) don’t give a piece of QE2 or hint for it very soon, every firm from MS GS JPM should be shot because of their calls.   A follow through post -FOMC (if out as expected) would show those off guard are getting off the bench. 


..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. 


Ad infinitum

Just imagine staying short/ Bear for the last 4-6 weeks counting off the days to the “day of reckoning“, while the market mercilessly inched it’s way up day after day, only to get a "sell on the news”  in Treasury’s, not equities today!.   Okay, maybe one equity (POTASH;)

As opined all week with reasons why ,  if the QE2 ‘consensus’ is correct, the market has reasons not to sell off as consensus thinks and we‘d see higher days soon instead…”if we get status-quo expectation revelations, this may likely turn out to be a non-event (yet choppy) and therefore, not necessarily sell the news event(s).”…The choppy came as well and we tested the previous days gap bottom SPX 1184, but all you had to do was watch the TSY ($TNX-10yr and 30yr sell off ‘ hard’ to know this market was going to hold. (SPX ~14pts move post gap fill).  *Recall, the premise here in October regarding the TSY into equities allocation shift,  if this wasn’t the harbinger for it at work today, it will be a big surprise!!

Probably some confusion initially as they released a NY Fed supplement, the pace (75bln/8mths) seemed a little light, but add the MBS and they will buy 110bln/monthy anyway.   This gap will be the ‘support’ line to look for ‘dip buying’ going forward.   If a subsequent downdraft to those levels occurs, it will be the global gov’ts reaction to QE2 and/or the eco’ data going forward (again more good data today).  So, let’s just move on to why we’re here and that is trading stocks (we’ve got DJIM’s eg. LVS, MOTR, JKS, MA  all reporting well and climbing since alerting most again in Oct.) and slap fines on ourselves if we ever note the ad nauseam “QE2”.    Eventually, ad infinitum (argument made repeatedly until nobody cares to discuss it any more) will win out and we can do it all over again with QE3 next year;)

Simply, Bears need a new ‘plan’ now…go to work, Cubs