03-14-10 Stock Market Weekend Recap and the Week Ahead:
Most notable: the Indexes are moving up the last 5-6 trading days, but a lot of stocks are not. The SPX was lead by some laggards catching up, like AIG, Citigroup etc. There is also a lot of big money rotation, to and fro. Some days Materials are hot, some days its especially Tech, some days Retail. Energy, especially Oil, the OIH, Gold and the Dollar are moving in fits and starts. So, if you had trouble keeping up, there is a good reason. Yes we are revisiting the January highs. Some insist this resistance will repel the markets back down. I’m not so sure. Admittedly, I’m playing defense, but ready to get aggressive.
Where are the Sellers? Notice the really low volume, and low volatility?
The RUT, NDX and Transports have all been clicking. Industrials have been strong, too; Materials strong in spurts. Retail and other Consumer Discretionary have been the big surprises, note the numerous apparent short squeezes, like GYMB. LVS has been hot, my favorite consumer related play with Visa and Master Card.
But, alas, we are at the juncture where the bears are expected to growl, but are not. Where we could break out to new highs, but we haven’t. The Smart Money expects a pullback. If that is indeed an inverse Head & Shoulders pattern in the $SPX, the measured move looks to me like SPX 1260. Probably not if, but when in my humble estimation. The double dip seems to have been dispelled. The long term trend is intact.
Why the indecision? Why the numerous dojis in stock, ETF and Index charts? Looks like everybody is waiting for the other guy to do something. This week’s news may provide more than a couple catalysts. Here is some of what’s on deck:
China could raise rates (good new in my mind, but market will react… hard to predict what, how and when China moves, and how the news is received;
FOMC meeting Tuesday;
Health Care entitlement bill may come up for a procedural shenanigans vote the day after St Paddy’s;
Dodd’s Finance Reform bill may get pushed, may get watered down too;
February CPI numbers, March regional manufacturing reports, February leading economic indicators and housing starts, plus February's producer price indices;
Quadruple-witching @ the week’s end, March Futures and Options expire, which could make for more of a wild ride.
March Employment numbers, expected to rip, don’t come for a couple weeks though. That could be the game changer. Will Census number employment be in the figure? That’s what I’ve read.
Bottom line: Big week coming, again. Mutual Fund Monday tomorrow, but have they bought what they are going to buy, for now? Read that most are down to minimum cash positions.
If your Retirement account is outperforming your Trading account, there is a reason. Buy and hold, if you are a good stock picker, at least in last 12 months has worked, really well. All the jiggles from the Hedge Funds, computer generated trades and mish mash of recovery news shakes us out, then we miss the gap up. But if you are trading and trying to maintain trading positions longer than 2 or 3 days, then we again are playing football strategy: give up the field goals (put in stops, take small losses), but score touchdowns (buy the pullback, stay in what works and ride any bull that runs).
PS: I hate trading as much as I do at these junctures, but my number one Rule is “Don’t Take Losses”. I consider profits to be my money, my earned capital, and I don’t want to give it back. I’ll try to miss a few gaps down (and up, of course), and trade the other 80% for profit. Right now, we just have to watch out to see how the big money reacts to all the coming news. I am 80% long going into Monday, maybe too long, but ready to step back if we gap down...as we don’t know until the Buyers come, how long the downdraft may be. If we pop, at the Open, I might raise a little more CASH; but I’m long and staying at the table because the trend is up…for now. Good luck and protect your Money.
Disclosure: Long all discussed