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September 30, 2010

|Includes:AAPL, ADTN, ANF, ANTM, APKT, BORN, F5 Networks, Inc. (FFIV), JPM, MA, NFLX, PAY, RAX, SQQQ, VMW, VXX


Just when it looked as though the market was about to get parabolic…

 

The good news is Thursday’s session didn’t close as ugly as it looked it might when noon rolled around and we were at the lows of the day.  In the end, it couldn’t be said that there wasn’t at least a modicum of support.  The bad news was the action in some of the leaders.  Stocks like FFIV and NFLX reversed hard, while others: VMW, AAPL and APKT, just to name a few, fell on heavy volume.  A pullback here shouldn’t take anybody by surprise.  It’s not set in stone, of course, but one has to at least admit the possibility.  It wouldn't have been unreasonable to pare back some positions in the face of such a hard reversal.

 

A few “notables” displaying resilience:        

 

BORN

RAX

PAY

ADTN

AGP

 

Take nothing for granted here.  Don’t get complacent.  No need to run for the hills, yet remain alert and, above all, stay humble.  You’re Dante and the market’s Virgil right now.  Listen to what is being said.  Thursday may have been a one day affair, or it could be the beginning of a very normal and orderly pullback or, perhaps, something more sinister.  To resist forming an opinion takes mental toughness.

 

That being said, going long VXX or SQQQ or both could be profitable for those who are fleet of foot.  Still, shorting here does seem a tad premature.  Yet I did take note of three stocks that might break the hardest should we fall:  ANF (cover above 9/30 high), JPM (cover above the 50dma) and MA (cover above the 200dma).  Truth be told, though, there just isn’t much to short.  Also, consider that everybody sees FFIV and NFLX, VMW and AAPL and APKT.  Probably best to just cool your heels and let things play out…. 



Disclosure: Long: BIDU, NFLX, RVBD, PCLN, DGP
Stocks: FFIV, NFLX, VMW, AAPL, APKT, BORN, RAX, PAY, ADTN, ANTM, VXX, SQQQ, ANF, JPM, MA