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Tactical Investing in the 21st Century. The FMAM Team is composed of seasoned Wall Street professionals with combined active experience on the buy side and the sell side of the Street. Together, we have worked as RIA's, managed BD's, banks, and mutual funds as well as proprietary trading desks.... More
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  • The Momentrix View of the Markets for Wednesday July 20, 2011
     Wednesday morning El-Erian of PIMCO made the point that Tuesday’s rally is an example of when the macro lines up with the micro. We do subscribe to his thesis although the question is whether the macro and micro are now lined up. We do not think that is the case as of yet.
    Today was a low volatility day, markets trading in a fairly tight range throughout the day. The S&P 500 finished just about flat on the day and the NASDAQ lagged slightly, down 0.4%. The one bright spot was the bank and financials sector, generally up more than 1% on the day. ($XLF)
    The market move today or lack thereof is a positive. The market held yesterday’s gains for the most part although the bulls would have liked to see the rally continue considering the Apple ($AAPL) earnings. The NASDAQ ($COMPX) was the market leader yesterday and we find it a bit disconcerting that the index lagged with such strong action from Apple today.
    We are in a wait and see mode, not acting on any of the news in the past days. Reacting to every earnings report during earnings season can be disastrous to investment health. And with the considerable volatility surrounding the macro headlines, it is not a good idea for us to get aggressive at this point. There will be better indications in the days to come on which way the market is going to go and we will act accordingly then.
     
    Tags: AAPL, XLF
    Jul 20 4:54 PM | Link | Comment!
  • The Momentrix Review of the Markets for the week of July 15, 2011-
    The Momentrix Review of the Week for July 15, 2011
    Equity markets resumed the downtrend this week, although they finished the week on a positive note. On Friday the S&P 500 finished the day up 0.5%, shaking off modest selling pressure throughout the day. For the week, the S&P 500 was down 2% and the NASDAQ was down 2.4%.
    Although the week was terrible, there are some positives, although minor, given the headline risk. The S&P 500 closed the week above 3 of the 4 major moving averages we follow.
     The 20-day moving average trend has now turned to the upside and appears to be trying to support price. We would like to see price regain the 10 day moving average and eventually turn the trend of the 50 day moving average back to the upside for a full improvement of the technical picture. 
    With price in the middle of the range from the early May top, it seems the market could go either way and it will make this choice from the data points coming in the weeks ahead.
    We remain cautious as the market seems to be doing its best to frustrate both the longs and shorts and this can be an environment for quick losses even for the most astute traders and investors. We prefer to keep a balanced approach until there is a clearer picture which way the market wants to go.
    Earning season started last week and the tone so far has been better than expected. Alcoa ($AA), JP Morgan ($JPM), Citigroup ($C), and Google ($GOOG) all had solid results, the latter really helping the NASDAQ ($COMP) and eventually the market reverse the weeks trend on Friday.
    We are encouraged by the early results but the key, going forward, will be the reaction in the markets. A strong earnings season with a negative market reaction could be the market discounting a weakening economy going into next year prior to it showing in the statistics.
    It is too early to tell right now but many market strategists see the potential for a weakening economy due to the extraordinary problems facing the U.S., Europe, and the world. We do not like to make these predictions and prefer to access future prospects from the clues the market and data present on a daily basis. That’s why the reaction to a set of data can be more significant that the data itself.
    Earnings season will really ramp up for the next three weeks before trailing off. As we have said the tone should generally be positive but the guidance for the current quarter will end up being the key. The market will have to fend off continued negative headlines from both the U.S. surrounding the debt talks and Europe relating to sovereign debt defaults and austerity. And we shouldn’t forget about the many trouble spots throughout the Middle East and its effect on the price of crude oil.
    Crude oil remains a major headwind for the world’s economy and some major stock markets have rolled over and are at the year’s lows. The Brazilian stock market is down over 14% year to date. This is significant as Brazil is looked to as one of the better indications of growth for the developing world.
    The coming week will be relatively quiet on the economic front. Tuesday will have housing starts and building permits giving some insight into the health of the housing market. Expectations are getting very low so a bad number will likely have a marginal effect on the market.
    Thursday will have the Philly Fed, weekly initial claims and the leading indicators. The market is very focused on the claims data and a move below 400,000 would probably be perceived as a market positive. With expectations for a weaker second half on the rise, the leading indicators could be a market mover if they are worse than expected, reinforcing this thesis. It should be a very interesting week.
     
    Jul 18 1:58 PM | Link | Comment!
  • The Momentrix View of the Markets for Wednesday July 13, 2011
     Futures painted an increasingly good picture as the morning went, boding well for a market rally. The Bernank (Ben Bernanke) highlighted the day with his testimony in front of Congress, the market interpreting his testimony as an increased probability of QE3.
     
                 With this news the market rallied sharply, the Dow up 160 points at the high of the day. A downgrade of Greek debt by Fitch put the high in for the day and the market slowly eroded for the rest of the day. A rumored statement on the U.S. debt debate by John Boehner is the culprit for the sharp fade in the 3 o’clock hour. The S&P 500 finished the day up .3%, a disappointment considering the early rally.
    We let some lagging stocks go into the early strength, reducing $APKT and $ULTA. We traded completely out of $ALTR, $ARUN, $MSM, and $OPEN. We also added to a hedged position in the portfolio. We are looking to reposition into some new opportunities at lower prices. It is a very difficult market right now and we are being very careful with our exposure.
     
    Jul 14 10:32 AM | Link | Comment!
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