Fruits of the consolidation...

We now know why the market wanted to consolidate for the past few days, the market was setting up for action like today.    Ok, we have pointed out in the past few days that consolidation can be frustrating and not fun.    Fortunately, consolidation comprises down and up action.  Hopefully, today's action would make us forget about the frustration we had to endure the last couple of days.    Now lets recap some action here...    First, some of our members would like to know what's the point of recapping everyday's action at the end?    For starter, recapping the action would give us an idea what events and action transpired during the day so we can better prepare for trading ahead.    We can look forward to the plays that were doing well today, assuming good action gets some kind of follow through.    Secondly, by recapping the action, we'd have an idea exactly where we are in this market.     Compare to yesterday, today's events are much more exciting and meaningful, in our opinion.     By not having to review the action at the end of the day, we would simply start the next trading day half blindly, in a way.  It all depends how one uses the Journal, for many its been a learning tool of our methodology, our frame of mind.  This morning the Journal might have reminded you of SIGM recently noted here as a buy the dip earnings play prospect.  It had a great day.   Our lead was the China's and that we are still trading the lot of them.  This has worked for a week and today it spread to the more speculative lot.  Makes sense doesn't it that this part might try to get into the act sooner than later.  We also said the Solars heading into today are getting harder to see as an easy trade, today that spilled further as most finished lower than their opening price in a fast market.  Bascially, it's all in your interpretation of how you take the Journal in.  To most the Journal is 'leading' them into the next trading day, this includes recapping.

So it this market more of the same?   Are we expecting some better action in the near term or what?    We think today's the proof that we CAN definitely get some good trading action in the next little while.    This time, Fed is on our side and recent oversold condition coupled with the seasonal factor can and should propel this market to gain some upside ground.

Many big technology stocks did well today!  It's always good to see companies like INTC MSFT AAPL to carry the index weight.    As long as the Indices are in the firm green territory, we as traders can pick off little ones to make our play.

SIGM/PCLN/VIP/MBT, these are few of the latest earning winners we are busy trading today.    We have mentioned all of these before on the site, (a few for over a year) and they all notched a nch today.    This goes to show that even in a crisis environment, we can still have earning plays that stand out from the crowd.   We like all of their action and we'd expect follow through from them if the market keeps up the good spirit.    We'd also wouldn't mind buying these on dips as long as the 9 ema isn't breached.  If you want firm coverage reports on MBT- Russian mobile and VIP following it's earnings, send an email for the PDF's.

WDC, we noted this one following earnings Sept 11 on a premarket Journal note.  The stock was $22-23, today it hit $31 after raising its profit forecast including December.  In our view this a huge revision and a good market will definitely take note.  On the other hand this stock has performed well in rocky times.

China Plays, from early last week, we'd pointed out that many Chinese plays seemed to be stabilizing and we'd be getting our foot back into some of these names.   Today, the entire sector lit the fire and all of the names on our watchlist have done heck of a job with some speculative leading the charge.     Our strategy here is that since it's the entire sector move, we can not afford NOT to play even the speculative ones.  Just to point a few out, we still like EDU LFT STV WX CMED... as the quality ones but the speculative ones like CHNR JRJC EFUT... are also on our playlist.   Now we believe the move we seen today may last a few days because the last time we recalled, China sector move doesn't just pop one day and die.  Keep you eyes open for a possibility of more.

Solars, this is the area which we were concerned about heading into the day as per Journal.   We are a little concerned over the somewhat overheated action from the speculative solar plays but as well as the looming energy bill.    There's a very likelihood that there's going to be a "sell on news" reaction.   We'd like to see how some plays react to the news first before venture our way back in.    Because of many other plays out there today, we all can afford to take a little cautious attitude toward this sector for now. 

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.