Pre Fed

Many are lead to believe that last couple of day's action is due to the anticipation of a Fed rate cut tomorrow.     We think it's a combination of many factors that are setting us up for some really good action in this month.    However, Fed is still Fed and anything they say tomorrow can have a dramatic impact on the course of this rally.      As far as we are concerned, as long as the Fed addresses the current financial environment we are in and it's willing to adjust its policy to help the market, we basically get a green light for the next few weeks.    If for some reason the market sells off the Fed news, and especially if it's some good news, we wouldn't be hesitate to buy into the dip. 

Now the playlist...

Over 90% of the stocks on our watchlist are green and we just have to be very encouraged by the market action today, but FOMC on deck!!.  We'll get into detail of some of the action here,

Solars,  this group has been on fire since the Energy bill.   If you miss the low of the group on Thursday, then Friday would've been just fine getting into some of the popular names.    Today we are getting some really good follow through on top of the good action from last Friday.   Our top favourites are now STP LDK JASO FSLR...  we are also trading SOLF CSIQ as well to throw in the mix.     

China Plays, we are actually surprised that some of the more speculative names are still holding up and showing signs of perkiness.   This leads us to believe that there's definitely more pop to come with the whole sector.    The quality ones we like had some mixed action today with STV WX outshining EJ LFT by a wide margin.     STV has a particularly nice breakout out of the recent consolidation off very good volume and we think it has potential to return to its former glory.    We are definitely trading more aggressively toward STV after today's action.   With LFT, the consolidation is still between $23.50 and $25 and it may require some more time to really break out of it clean.

EPS winners, MELI had a very nice breakout today on very healthy volume.  It notched a nch and sits well above the recent range.    We were really hoping for an intraday dip to buy some more but it just never came.   It looks like we may just have to chase it if we want to get some more of this.  SIGM MA VIP MBT continue to trade with this market.   One thing we have to remind people that the eps winners do trade in a rational manner so the further away they move from 9 ema, the more likely that they'd stall and pullback.    We simply have to be a little patient with the eps winners and have a bit longer term perspective.     

The bottom line, this market still feels unconvinced for a rally and many people are still underinvested.   Alot of negative news are being absorbed by this market recently and all these are all considered bullish sign.    We have LEH releasing earning this Thursday and that may give us a clue of how the financial world will react, which is very important to gauge the market sentiment.