Live with it!.

Oh, the disgust amongst Bears and shorts tonight after the late 30min ramp in the markets.  Why would they expect anything less on a day when the FED fills 4bln into the coffers of sellers of treasuries that can now go buy something else?.    Also,  it’s clearly been a better to buy market with stocks having an underlying bid on dips, especially when technicals come into play.   Anyways,  we always enjoy the disgruntled tone and this sort of action,  even if it was just a ES/ ETF trade  for the most part with DJIM shadow listed stocks basically flat on the day.   A few days ago,  DJIM closely followed stocks and their NCH’s were posted, clearly these stocks ran before this market inch by inch move to fresh highs mid week.   

As expressed last night ignore the QE2 noise / why all safe assets are running in tandem as yesterdays trade would end shortly and all explanations would be worthless.   All you we need to know is..‘equities are better to buy’ as has been the theme in the 10 trading days of September.   The ‘all we go up’ trade noted fizzled 24 hours later.  

A possible myth in the market is if SPX1130 resolved to the upside, it will get traders/investors active again.   Yes,  “PA”,..some performance anxiety will hit, but it already has as noted if a break of April-Aug down trendline occurred.    We’re not getting the 30% loss in volume from last year back overnight on a catalyst free breakout.    So, even if this summer’s nightmare range is resolved shortly,  it’s breaking out to the upside is really no biggie as it’s not going to be a wild rush in.   Hate pointing old stuff out, but remember breakouts are not of years gone by in the major indicies.   Instead, breakouts have been of the grind you Bears /shorts to death over days and days/weeks.   

Recall, a market top call this year because of the turn in X  first in April.    The last few days have included warnings from Steels..NUE, STLD AKS  for Q3.  We don’t think this is another top.    Just throwing this in as fear mongering is abound after these warnings.    This weekend’s edition overview of week ahead has gone to plan with China data/Basel/BBY-CSCO  playing their part and brings us to Thursday’s watch on FDX .  Considering the market action this week, watch if a good report gets sold off after a move higher as it could signal a broader market move for the day.

Simply,  if 1130 is gonna fall or fail,  it’s going to do it without much fanfare on this side.  The trade has already taken place with DJIM list as a lead.    If our list is foreshadowing a temporary top with steels, it will only be a buyable pullback.   It may be best to wait for the outcome of 1130 as most of the heavy movers are already pausing and pick them back up around 9ema ( like note here for Sept 8th trade when FTNT  kissed 9ema at 20.30 and moved 15% in 5 days).  This pertains to recent movers like GMCR, RVBD  types and of course, excludes commodity linked stocks. 

Clouds still pinched..

VMWorld starting tomorrow 12-14th potential catalyst for space.

http://www.vmworld.com/community/conferences/europe2010/

Stocks >$10 linked to group below (site)

DJIM #43 2010

Market’s G20 headwind kept the market at par late in the week.  This weekends G20 produced a status -quo communiqué, no headline risk/ not hawkish to USD and all focus goes back on FOMC/QE date.    In last weeks case,  it was more of the market holding it’s breath at ~1180 levels despite a slew of earnings exceeding forecasts/ China surprise hike while USD consolidated.   The ‘little surprise’ over the weekend should put the risk back on to start the week,  so we’ll likely have some commodity linked stocks rotation.  

Away from the broad market dullness, (SPX hit 1084 on Oct 13th) most of the trade leads/alerts here last week were on ‘set ups’ instead that worked quickly..MCP  for Tuesday $30L-35H,  MOTR, (9ema) $15L to near $19 AMC on Friday, KH , (9ema), 18L to 19.50H.  So, despite a flattish market for awhile now, we have those ‘daily’ sector rotations and/or earnings (below note)/ set ups making for a good traders environment, while the QE2/election outcome is being waited on.

You can already paint a macro picture from earnings as the notables in each sector have reported,  now it’s gets into being more of an individual game as 2 DJIM stocks showcased on Thur/Fri. ..FTNT, RVBD (+~20%).   This may help rejuvenate the ’cloud-virt’ space, but this week’s up coming names need to keep this out performance up with their reports.  * A good thing to see is there was upside from open gaps of 7-10% from their upbeat earnings for this Q and next, plus, many techs that didn’t ‘guide’ well for next Q,  traded well anyways!, (eg INFA,PMCS,CTXS,SNDK)  is a good sign for the market.   This is a change of pace this group this EPS season.

..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. 

..market padded down...use scanner!

As trading desks empty slowly into Thanksgiving,  the market is at the mercy of low volume volatility.  Today’s 20pts ES drop from overnight H and then a return ticket in the afternoon is probably indicative of what is at hand for the rest of the week.  Clearly, the issues of Ireland/ China/ CSCO consequences are not going away and more (FBI probes) is being thrown at the market.  *Even though, HPQ refuted CSCO’s claims, what is not being noted AMC is the how brutal BRCD’s  EPS guide (they have one the biggest gov’t/ federal  stakes).

Luckily…. yesterday it was noted ‘dip buyers” are back and today’s reversal exemplified this as does the easiness to change directions due to low volume.  If you watched the market get padded down by all the noise, a soothing aspect is to use the ‘Shadowlist Scanner’  to see if it was warranted.  Clearly, the only pressure on the % loser side was the Financials and if you flipped the list over, you’ d see all our momo/clouds in NFLX, FFIV, RVBD, CRM  etc making NCH’s.  Simply, what this points out is a lot of the tape is ES/ETF related, while individual equities outperform as noted yesterday regarding ‘correlations’ and broad market tape not mattering that much.   As long as this visibility remains in the underlying tape, Thanksgiving will come even with ‘war games’ now on the table to test the market.