Not surprising to see some profit taking in front of the FED yesterday, especially after a 6 day rebound from Oct 22 lows. A surprise to some maybe was the late round of selling led by the "dry bulk rate", Chinese games taking down the momentum shipping group hard in the last hour or so. A few other groups caught the coattails of the dump and sold off as well. In reality, this was a non-event and all eyes and ears will be on the 2:15pm decision. This was not a true reflection or a hint of what may come today.
As far as the shippers, we haven't covered this group on the daily Journal since mid October, ..."This story ain't going away heading into the New Year as we've noted before, but after this latest binge momo run we are more cautious and prefer a pullback to go with a worthy position overnight. Lets just say, we liked a TBSI more at $50 recently than at $60 now.". Well.. we haven't missed much action since those words, except one sell off and rebound and now we definitely got a big pullback, but it is too early to say we are looking for an entry back into this group. This group story isn't going away unless the Chinese don't need ships (if that's the case everything on the market is in trouble). These are cat and mouse games to get rates down and it is something worth watching now if you are thinking of going long for more than a intra day trade. When selling hits, it is always best to rid yourself of the stock and ask questions later such as to the reasoning. You have some political games here now and you need to keep updated. We don't have the time and will only react when the coast is clear. Many firms recently raised this groups price targets and will be going on the defensive tomorrow, a bounce here and there should happen. Nothing could have been more dangerous than trying to find a place to park your money as this group started to sink, looking for an entry and not knowing what is the cause is praying for some blind luck. Just in the last 30 minutes EXM fell another 7 after giving up that much already. The 9ema short term was crushed here and it is a second pullback late in the month, this one more extreme. Hopefully, our constant warnings of this possibility hit home as this group was having yet another binge recently, included was the information given that their are large amounts of hedgies playing a derivative market here in this group. A dangerous combination, just waiting to Titanic. This ain't no Mom and Pop selling yesterday, this was led and taken apart by the bigger money......We`ll let this cool off..
We are about to get a load of EPS reports from recent DJIM names in the next few days. (see earnings link). Hopefully with a favourable FED reaction and some nice earning we can continue to go forward off this latest bounce. There is really no use discussing what could be strong in the morning based on Tuesdays action as so much is riding on the reaction in the afternoon. But a few notables yesterday heading into the morning trade are CETV into earning , EJ YGE BIDU were the Chinese stars on Tuesday and AAPL fit in with the tech sec having a good day. A few remain near highs like SPWR should remain in play as well. One thing to possibly watch for in the upcoming days is where is the momentum money flushed out of the shipping group is going to go. It might sit on the sidelines if the FED reaction is muted or terrible, but if its not, we'd closely watch the other momo groups such as the Chinese, Solars, IPO's to start with.