"Home Alone"

Isn’t it amazing what the US market can do when left home alone?.  Simply..with China "Eye of the Tiger” on holidays this week not peeking over our shoulder and us not over theirs…and Greece acting as it should ..a “Club Med” vacation spot,  the US market is running the house!

Today, the house was very quiet after partying for days as it should, a sluggish, choppy trade (although still firm breadth) that seems to take most of it’s cues from FX action.   Earnings were led by our alerted WFMI, which helped the staples lead the SP500.  Just on Tuesday, a strong Euro gave a bump to stocks,  today an early sell off occurred as the Euro sank and USD strengthened, but in the end the  market held up well.   The signals sent from FX continue to be mixed,  today even the strong USD didn’t hurt commodity linked stocks or the market end of day.  

It would be advantageous to break 1100 soon, we failed on a few attempts today.  If this failure continues it becomes a  ‘psyche’ thing and nervous longs will start to think this rally is petering out and begin to take more profits.   Also,  if this level to 1005 is not broken through,  it would signal a technical failure and odds would grow to the possibility of a 1040's retest.   *Next week,  the Chinese holidays conclude and Greece has some important dates, including a possible bond offering to have a negative effect on the markets.  The Chinese RRR announcement came out after their markets close and their market needs to react and the reaction will likely be negative.    So, as we said lighten those commodity positions and any China positions, especially before they begin to trade.

Conviction buying is needed and tomorrow the Joblesss claims will be eyed closely as longs need something extra at this point.

AMC, Tech earnings were inline and management comments are still inline positive, but nothing ground breaking.  The trade was into these mid-week reports as noted last week,  there is nothing new to propel tech higher,  it should trade with the broad market tape.

...upside risk coming back slowly

After breaking the string of lower highs closes on Friday,  the market woke up to be powered out of the gate by a string of M&A activity worth about 50bln  + more Greece aid package noise to close at flush levels of 1115 SPX, we discussed last week.   This is just above the 7 day recent range and if a good ‘breadth ‘ day is indication, as many times it is for a few days more,  the risk is upside and those conviction buyers may have reason to step off the sidelines as the shorts will keep their distance.  What’s good about the ‘ breadth’ is even the big momo laggards got in the action..AAPL, AMZN.    This appetite for techs helped propel the SOX over the 50ma after trying unsuccessfully last week. 

Of course,  the financials are always the disconnect from the market tape it seems.  Last week they outperformed the tape,  today they stunk the joint out.  Well, we’ve learned the past 6 months or so that GS and the boys are not greatest barometer of the tape, so it’s no big deal.    If we follow our shadowlist names and set it up as we did in our last update, you know where the money flow is going and therefore what is the trade.   We can see by the example below of where some of the flow was today and it was into our Q earnings plays.  Some names noted in February off earnings enjoyed a NCH day…ie. WFMI  MICC DLB NFLX PMTC

Shadowlist update

Shadowlist by sector money flow/ rotation to follow. (visit site).