The buyers showed some unusual patience today and actually let the market sell off for about 90 minutes before they did a little buying before the close and took us off the lows. The S&P 500 still hasn't pulled back more than 1% for the 43rd day in a row, but breadth was weaker, volume was heavier, and we had a technical distribution day.
Just no volatility lately. Strong trends make for great trading, but many traders out there have never seen a market that has provided so few "entry points" along the way. Even back in the bubble days of 1999-2000, we had more downside action on some days than we've seen in this market.
The little bit of selling we had this afternoon relieves some of the overbought pressure and helps give the traders some better opportunities, but in the bigger scheme of things, this selling doesn't even qualify as a pullback. It is nice that we have some variety in the action, but it is too early to conclude that it is foreshadowing what is yet to come.
The danger in a market that hasn't had a pullback in such a long time is that we'll be tempted to be overly bearish when we finally do have some selling. If a significant top is forming, and it is premature to say so, then we're going to see a pretty good battle between the dip-buyers and the bears before we roll over. Too many people missed this move, and they are going to be inclined to buy weakness here. It is going to take a while to scare the underinvested bulls away, and with earnings season rapidly approaching there will be some new catalysts at work as well.
Playing defense at this point wouldn't be a bad thing.
Wednesday, April 7, 2010
Many Are Missing The Boat On C.....
Many people, I think, are overthinking C. The company is getting rid of bad businesses and keeping good ones. It has branches all over the world.
It has already been through the investigation mill, with no consequences. It does have a plan to get rid of bad loans and investments -- the one that is Citi Holdings -- and hardly a day goes by without it dumping something, such as that hotel chain mentioned today.
The overhang? You buy before the overhang lifts. Everyone knows about it. The government has proven to be a savvy seller. You think it will price its stake at $3.95? OK, you can wait, but not for too long.....
Every time you read about a thaw in hard-to-understand bonds, such as collateralized debt, you should think Citigroup. If it can get out of that holding-company structure and make a lot of money on its deposit base, you're going to be asking yourself: "How in heck did I miss that 10-point move for 48 cents?"
very long C leaps
It has already been through the investigation mill, with no consequences. It does have a plan to get rid of bad loans and investments -- the one that is Citi Holdings -- and hardly a day goes by without it dumping something, such as that hotel chain mentioned today.
The overhang? You buy before the overhang lifts. Everyone knows about it. The government has proven to be a savvy seller. You think it will price its stake at $3.95? OK, you can wait, but not for too long.....
Every time you read about a thaw in hard-to-understand bonds, such as collateralized debt, you should think Citigroup. If it can get out of that holding-company structure and make a lot of money on its deposit base, you're going to be asking yourself: "How in heck did I miss that 10-point move for 48 cents?"
very long C leaps
Tuesday, April 6, 2010
Things I Think I Think
My "jobs tsunami" notion is looking more likely. From my perch, it'll take at least 6 months for economic forecasters to catch up with the turn in jobs creation numbers close to what will transpire.....
All paths lead to Naz 2800? But even though all paths lead to Naz 2800, don't we have to have a correction to actually move higher this year or next? Or did that correction occur from December to January when we almost declined 10%?
We did have two near 10% corrections in 2009 after the run started off the March nadir......Is a really strong quarter of reports really priced into the market?
If so, then why is AAPL's forward PEG ratio still hovering below .5? Or around .35 less cash. And that's just one of hundreds of similar examples.
At $29.20 is MSFT close to the steal AAPL was in the $170's, 150's, or 120's?
I'm reminded I need to look at CHK again....The best chip company on the planet is now acting like it......
long AAPL
All paths lead to Naz 2800? But even though all paths lead to Naz 2800, don't we have to have a correction to actually move higher this year or next? Or did that correction occur from December to January when we almost declined 10%?
We did have two near 10% corrections in 2009 after the run started off the March nadir......Is a really strong quarter of reports really priced into the market?
If so, then why is AAPL's forward PEG ratio still hovering below .5? Or around .35 less cash. And that's just one of hundreds of similar examples.
At $29.20 is MSFT close to the steal AAPL was in the $170's, 150's, or 120's?
I'm reminded I need to look at CHK again....The best chip company on the planet is now acting like it......
long AAPL
Just Don't Trade....
Although the Dow industrial average was slightly negative, the other major indexes gained slightly, and overall breadth remained quite good, with about 3,200 gainers to 2,450 decliners. Regional banks, retail and oil led, while biotechnology, chips and home builders lagged.
Once again, the dip-buyers provided very strong underlying support and prevented any real selling pressure. The bears are totally incapable of digging a claw into this market. At some point, we are going to be hit with some severe selling, but many market players have been expecting that for weeks now and are just becoming increasingly frustrated as we keep on ticking up.
Little is changing from day to day. We have good breadth, light volume, a high level of complacency and no volatility. It is a great market to sit and hold, but very challenging to trade, since there is little to do but chase strength and hope the momentum continues.
Keep in mind: Earnings season starts soon. That will be the main market driver for the next few weeks. Clearly, this rally over the past two months has raised expectations, increasing the danger of a "sell the news" reaction. But, as we all know, it isn't a smart move to anticipate any weakness in this market. Nonetheless, the traders are hoping to see some better volatility as the earnings reports roll in.....
Once again, the dip-buyers provided very strong underlying support and prevented any real selling pressure. The bears are totally incapable of digging a claw into this market. At some point, we are going to be hit with some severe selling, but many market players have been expecting that for weeks now and are just becoming increasingly frustrated as we keep on ticking up.
Little is changing from day to day. We have good breadth, light volume, a high level of complacency and no volatility. It is a great market to sit and hold, but very challenging to trade, since there is little to do but chase strength and hope the momentum continues.
Keep in mind: Earnings season starts soon. That will be the main market driver for the next few weeks. Clearly, this rally over the past two months has raised expectations, increasing the danger of a "sell the news" reaction. But, as we all know, it isn't a smart move to anticipate any weakness in this market. Nonetheless, the traders are hoping to see some better volatility as the earnings reports roll in.....
Monday, April 5, 2010
AAPL iPad Launch
Once folks get a full taste of the 3G version and that anytime, anywhere, always on type functionality I think the total sales (especially explosive in the enterprise) will be where the biggest positive push ultimately comes from.
Moreover, Apple has 3000 apps at iPad (iNetbookkiller's) launch as well. I don't think this fact should be understated and puts all competition in the rear view mirror for many quarter’s if not years to come. No Office. No problem. Use GOOG Doc's or give OpenOfficeOrg a few weeks and you have a workable solution for the time being. Combine all this with reports of various netbook producers delaying or stopping shipments of products (see Acer, Dell and others) and the writing is on the wall for anyone who wants to read it. The iPad has category killer written all over it.
long AAPL
Moreover, Apple has 3000 apps at iPad (iNetbookkiller's) launch as well. I don't think this fact should be understated and puts all competition in the rear view mirror for many quarter’s if not years to come. No Office. No problem. Use GOOG Doc's or give OpenOfficeOrg a few weeks and you have a workable solution for the time being. Combine all this with reports of various netbook producers delaying or stopping shipments of products (see Acer, Dell and others) and the writing is on the wall for anyone who wants to read it. The iPad has category killer written all over it.
long AAPL
The Unloved Rally Continues
This market continues to run over the skeptics and bears. If you aren't wildly bullish and happy to buy, then you are on the wrong side of the action. After weeks of a straight-up rally, you might think that the buyers would be a little more cautious, but on the contrary, they are sick and tired of missing out and are going to put more money to work, because obviously the technicians who keep talking about things being overbought just don't have a clue.
What is most interesting about this market action is the lack of emotion to accompany what looks like euphoric action. Breadth was quite good, but volume was quite light. If it weren't for the CNBC anchors who act like they will receive a bonus when the DJIA hits 11,000, you sure don't get the sense that many folks are loving this rally. As I've been saying for about six months now, it is one of the most hated bull markets I've ever seen.
The dilemma for traders at this point remains what it has been for some time now. Many say we are too extended to justify aggressive bullishness but the momentum is too strong to fight. The only viable approach from my standpoint is short term bullishness. Be fast to take gains when you have them, keep stops tight, and keep on doing it until the trend changes. Although it is extremely tempting, the worst thing you can do is to keep on trying to anticipate a top......
What is most interesting about this market action is the lack of emotion to accompany what looks like euphoric action. Breadth was quite good, but volume was quite light. If it weren't for the CNBC anchors who act like they will receive a bonus when the DJIA hits 11,000, you sure don't get the sense that many folks are loving this rally. As I've been saying for about six months now, it is one of the most hated bull markets I've ever seen.
The dilemma for traders at this point remains what it has been for some time now. Many say we are too extended to justify aggressive bullishness but the momentum is too strong to fight. The only viable approach from my standpoint is short term bullishness. Be fast to take gains when you have them, keep stops tight, and keep on doing it until the trend changes. Although it is extremely tempting, the worst thing you can do is to keep on trying to anticipate a top......
Thursday, April 1, 2010
A Positive Week.....
Once again, it was a positive week, but the action was a bit more mixed as we closed out the first quarter and started a new one. We still aren't seeing any real selling, but the momentum has slowed down and we aren't racking up the new highs as readily.
Volume was actually pretty good today, despite some thinning in the ranks for the holiday, and breadth was very solid yet again, at better than 2:1. It was oil, gold, coal, steel and the 'weak dollar' plays that led, but all the major sectors were up.
The end-of-the-quarter games and new money on the first day of the new quarter helped to maintain some upward pressure. Next week, after we digest the payroll report that comes out tomorrow, we should have a little more normal action, but we will quickly start focusing on first-quarter earnings reports.
The amazing resilience of this market is causing tremendous anxiety for traders, who would like to see a little more aggressive selling now and then, just to provide some interesting volatility. Until we are jerked around a bit and have stirred up some emotions, it just isn't going to be a very interesting trading atmosphere. Maybe earnings season will help solve that "problem"......
Volume was actually pretty good today, despite some thinning in the ranks for the holiday, and breadth was very solid yet again, at better than 2:1. It was oil, gold, coal, steel and the 'weak dollar' plays that led, but all the major sectors were up.
The end-of-the-quarter games and new money on the first day of the new quarter helped to maintain some upward pressure. Next week, after we digest the payroll report that comes out tomorrow, we should have a little more normal action, but we will quickly start focusing on first-quarter earnings reports.
The amazing resilience of this market is causing tremendous anxiety for traders, who would like to see a little more aggressive selling now and then, just to provide some interesting volatility. Until we are jerked around a bit and have stirred up some emotions, it just isn't going to be a very interesting trading atmosphere. Maybe earnings season will help solve that "problem"......
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