Same tale, different spin...

While last month the market was dragged down by subprime woes, this time it's dragged down by fear of recession and inflation.   Basically, bears aren't ready to press the "we are done" button and leave this market in peace.   Some of the worries that have been pointed out in the media, during the last few days, are nothing but worries, at this point.    We feel that even though there's a possibility of recession, it won't be likely known for a while, and pricing the market assuming there's a recession on the way may not be the smartest thing to do.   We definitely need further evidence before jumping into such a conclusion.

However, it's enough to cause jitters among the market participants and the technical picture isn't good at this moment.    Basically, whatever the upside momentum we had prior to the Fed announcement is no longer there anymore,the market got rolled over.    We have broken some short term support and today's pop is just to get off the recent oversold condition.     As a matter of fact,  Q's almost reached November low intraday.   SPX isn't quite at the November low yet but we feel the probability of testing it has increased substantially.    Unfortunately, any testing of markets recent low's will probably be pushed into January of the coming year.    Can this negative momentum be stopped still?   We think it's possible but it pretty much has to rely on two things.    One, the financials have to stop going down and react positively to news (good and bad).   Two, some of the key companies have to come through during this earning quarter.   They have to demonstrate that not only there's no hint of a global slowdown, everything is still firing on all cylinders on the growth front.    Make people believers!     With those two things in place, we can probably come out of this downturn and establish a rally which we've been long wishing for.     As you can see, we still have a few weeks before we know for sure where this market wants to take us.

In the meantime, there are still short term trades that can be played among many of the familiar ones.     Solars, we'd continue to trade this sector aggressively and we'll stay this way until the next round of earning reports.    We'd try to buy more often on the dip these days as oppose to chasing the breakouts.     FSLR had a really nice bounce off yesterday's selloff.    LDK is inching up ahead of the 3rd q earing report Wednesday.  As far as CSIQ goes, someone just lit a fire underneath it midday. 

Some of the foreign stocks also did well, especially WBD, a buyer was definitely present as any sizeable lot was taken out pushing to highs of day. Remeber this one is volatile, but usually worth the headache (look for possible interest to come in $124 area for further upside as noted before). VIP, MBT came out with subscriber metrics yesterday and are hitting on all cyclinders.  If the GLDN combination occurs this is a definite positive to VIP and its share price as well.  We'd continuing to trade these as there is less exposure to the problems here.

The bottom line, we have to differentiate the overall market direction from the individual trading opportunity.   It means that although the market trend is uncertain or downward biased,  we can still find good setups still for short term trading.    The key is to stay flexible and be ready to sell when things don't go your way.    The end trading result may not be like holding small cap eps winners in the past, but it is a way of survival in this particularly difficult trading environment.