OFF TO THE BEACH

The markets continue to trade at their highs of the session sans the QQQQ and the SMH. The old economy stocks are doing well and I expect the major market indexes will close near their highs. The IWM continues to outperform the SPY and if the markets continue to trade higher it will continue to outperform. If they go lower, it will do worse. I have held off on the sale of my IWM as I anticipate money to come into the market next week and then that will be it for awhile especially in light of Jimmy Top Tick.

TOPPING?

So Jimmy on realmoney.com is telling us again that one has to love this market as it makes new highs for the year. I just don't get why folks don't realize what a contrary indicator he is as he hates the markets lower and loves the markets as they make new highs. Check out this from his latest missive:

"Right now, at this very moment, savor this screen. Other than a smattering of poorly performing defensive names and a couple of liquidating biotechs, everything is working. Everything.

As we go toward all-time highs, you need to remember these days, because these days are why you stay in the game. These are the days that I talk about when I say that no other asset performs as well as high-quality stocks. But you must be in them to win. Stick with Leonard, he will outperform the Harvard Law Graduate over the longer term.




Oh, and right now, at this very moment, do you mind banishing the silly cottage industry of slogans and half-truths captured by "sell in May and go away"? Or how about the canard of buying stocks ahead of a midterm election that could go badly for the president? Or the notion that the bull market is "old" and has to end? Or that without certain leadership -- from tech, from growth stocks -- you can't move?

I, for one, am sick of all of the shibboleths that keep people out of the market all the time. They are always uttered with a certainty, an element of conceit that is simply ridiculous, given what we are seeing at this very moment. "

I have pointed out articles he has written before as the market was near its lows, like this one when the DJIA was barely at 11K. It is just comical what a real joker he is.

He even has the nerve to mention "all time highs" as widely held stocks like MSFT GE INTC PFE and ETF'S such as QQQQ and SMH were all double their recent prices five or six years ago.

LOVE FEST FOR LOUSY NUMBERS

So the jobs number comes in lighter than expected and the thought of today is the fed will only raise one more time. How many times have we heard this before? Until the next data point of course.

The rally this morning isn't all that impressive as the highs were made at the open and the IWM is trailing the big cap SPY by .49% to .57%. Surely sounds like rotation is back in play.

The best thing about the market this morning is the internals, although they also hit their high at the open with 1,600 more green than red on the NYSE. The NAZ internals are more muted with 540 more green than red (lack of fixed income securities).

The never in doubt OIH and XLE puts continue to drip lower and I remain a put seller into a slippage in those ETF's.

The danger signals for the day are there as the Semi's are lagging and the 2 day RSI numbers on all the major indexes has shot back up to overbought levels and since I will be heading out for the weekend, I will be taking my IWM and SMH trades off the boards.

WHERE WE STAND

In light of the recent bubblevision blather about the new six year highs on the DJIA and the SPX one tends to lose sight of the fact that the RUSSELL 2K (IWM) is within pennies of its all time high hit back in April. The talking heads will also have one believe that the Large Caps are "starting" to outperform. I have one word for them - NO. And if you/them really think that a market that trends higher will be led by GE MSFT PFE XOM WMT C PG BAC JNJ and INTC, and not Small Caps, I suggest you/them put a bit more thought into the process. If you think that the market will trend lower, than yes the Large Caps will probably do less worse.

The markets have recently trended a bit higher but according to my indicators are not in overbought territory yet. The VIX and the VXO are both sitting near their respective 10 day SMA's and the 2 day RSI on SPY is 66, QQQQ / 78 and IWM / 86. If you really want to get technical, pull up a one month chart of any of those indexes and you will see that they are all right in the middle of their recent ranges.

NEAR THE CLOSE

The markets are a few moments away from the close and the OIH has made a roaring comeback. It traded under the 160 level this morning and has now rebounded to the 165 area. Anyone buying the dips or selling the puts? Puts on the XLE also looking nice and I sold the May 57's at the 1.15 level and now they are under 90 cents. Any chance they go out worthless(lol)?

The market internals are 1,500 to the green and like the major market indexes, have flatlined since near the opening bell.

IWM is +1%, QQQQ +.8%, SMH+.75% and the always underperforming SPY is +.4%. The sector outperforming today is the metals with HUI +1.4% and XAU+2.6%.

The brokers are green but old reliable GS is underperforming along with C.

If one is expecting this market to break out of its recent trading range and go materially higher, I think it is time to reevaluate the strategy. My strategy is to buy em lower and sell em higher as that is the strategy that has worked. Whenever the market gets jiggy and Haines and the ladies talk about new six year highs the market just fizzles and drifts lower.

STOP THE INSANITY

Jimmy on realmoney is surprising the heck out of me today. He is actually saying to buy the dip in the oil patch today. Here is what he says:


"Energy's right. At least right on schedule. We always see the midweek declines and then, starting tomorrow, Iran makes noise, or Nigeria threatens to blow up and the commodity and the group run in advance.

That means today might be the day to start buying some drillers or oils into the weakness.
A couple are really getting hit that I like very much. As usual, Kerr McGee (KMG:NYSE) and Occidental Petroleum (OXY:NYSE) are going down. Check out the unusually negative activity in Canadian Natural Resources (CNQ:NYSE) , which also seems cheap to me.

But please, please, don't overlook Halliburton (HAL:NYSE) . McDermott (MDR:NYSE) , as good as it is, is not as good as HAL subsidiary Kellogg Brown and Root in my mind and you are soon going to be involved in the same game as well as a pure-play oil service company that should trade on par with Schlumberger (SLB:NYSE) and Baker Hughes (BHI:NYSE) . Even the bears on the name think the sum of the parts is worth $90."

He never ceases to amaze me.

AFTERNOON UPDATE

The markets are off their highs but I expect another run to at least the morning highs later this afternoon.

I hear Doug Kass on street insight is "all in" on the short side and others have mentioned that the "market is going to get crushed". I will continue to follow the "buy the dip" mantra until it stops working. Calling for a change in market direction has not worked in about three years.

The Oils are crushed and I think its time to sell some puts on the OIH or the XLE. That strategy has also worked for a long time now (free money).

The market internals are still 900 to the green and the QQQQ/SMH/IWM trio is leading the SPY and the DIA.

The brokers and the banks are also behaving quite well and with the jig in the techs is setting the markets up for a jig higher.

Volatility indexes are flat and continue to yield zero in the way of trading signlals.

Jimmy's big long in BOL is crushed another 5% today and check out Adam's take on Cramer V Leonard. Too funny.

THEY ARE UP

Its early but the leaders today are SMH (+1%)QQQQ(+1%) and IWM(+.75%). Believe it or not, no sign of a shift to the big cap stocks (lol) SPY (+.49%).

Market internals show about 1,500 more advancers than decliners and the markets are led by, yikes, tech, semis and bios (AAPL SNDK AMGN GOOG IBB).

The laggards are the OILS and the Volatility indexes as they sink 3 or 4% lower and based on their slippage it will not be long before we get sell signals as the markets, regardless of what bubblevision quacks, are rangebound.

My buys yesterday of IWM and SMH are green but I will trail them closely as flexibility is the name of the game for now and I would not be surprised to see the oils flip to the greenside later on in the day (same old same old).

CRAMER V LEONARD

While tooling around the WWW this morning, I came across a wonderful new site (to me) called cramerwatch.org. The site compares cramer's picks against the picks of a lesser known and supposedly less intelligent critter, Leonard the Monkey. This is how the site works:


Jim Cramer has built his reputation picking stocks and making rapid-fire analysis on his cable TV show Mad Money with Jim Cramer. But is he really that good?At CramerWatch.org we show how you would be better picking ‘buy’ or ‘sell’ at random, which is pretty much how our monkey, Leonard, picks stocks. And Leonard is right more often then Jim. With a lot less noise. Jim advises buying or selling stocks in his ‘Lightning Round’ and we record his picks and see just how well he does.

The site also allows investors/speculators/traders to ask Leonard his advice on any particular security. It is too funny.

STOP TRADING

Interesting how Jimmy now defends his KRY pick, but no mention of his BOL fiasco. I have a feeling Jimmy will eventually run into the same fate as the Murray Twins (lol) but you can catch him on Conan tonight. And if you want to read the real story on KRY, take a look at this. Bill gets an A+ on his homework from me.

The markets are bouncing a bit here as the internals improve and the SMH makes a new high for the day. The bio's have also bounced into green so maybe a rotation into the recent laggards is under way.

Oil stocks are down 2% or so but are also trying to make a comeback. I would not discount the strategy of buying oil stocks on dips as that strategy has worked every time. The metal dip buyers also have had success for about three years now so I would not count out that strategy either.

AFTERNOON UPDATE

The markets continue to meander this afternoon with the SMH leading the way a bit higher. Market internals are mildly bearish as 800 more shares trade lower than higher.

The Oils and Metals continue to take the brunt of the selling and tech and small caps look like the best bet for an upside shot.

The IWM trades near all time highs and the chart tells me nothing is about to change any time soon. Robert Marcin, on realmoney.com sees things a bit differently:


"A falling US dollar and a rising domestic interest rates play into the hands of large cap, multinational companies. I wonder if the small cap trade is not over, if only on a short term, relative basis. I know everyone says small caps are overpriced, but they keep working. Investors said that about the long bond not too long ago as well. Once investors wake up, things can change quickly."

Folks have been crowing about the end of the small cap trade for years as they have outperformed the bigger guys by a wide margin. I would like to know why folks insist on calling for an end to a strong trend. When has that been a good trading strategy? BTW, Bob has been calling for lower oil prices since crude was in the $40/$45 area and has called for higher homie stock prices since they were about 1.5 times the current prices. Just so you know.

MY PLAN

The markets continue lower but improving and I think we may get a little jig before the day is over. My strategy for now is to buy any dip in the SMH as they have underperformed along with the QQQQ. The IWM is also acting well in light of the drubbing the big caps are taking this morning.

The brokers, banks and reits are lower on the heels of the 10 year Bond reaching the 5.15% number. Oils are down on the news of the "big" inventory build and I look at it as another chance to sell some puts. Metals are lower as gold trades back to the 660 level. If one wishes to purchase metal stocks on this pullback, go with the best of breed (GLG GG MDG BHP FCX). I dipped a toe in the commodity basket DBC this morning as it is down over 1%.

MORNING THOUGHTS

The markets open lower this morning with about 1,200 more losers than winners on the major exchanges.

The SPY first support is the 130.85 level and the markets may get a small bounce from there. The two stocks that have drawn my attention this morning are two of Jimmy's favs, KRY and BOL. KRY is down 11% to the 4.75 area as Gold surges to the $700 area. Note the correlation between KRY and Gold. I still wonder why in the world he had to pick this hunk of junk when there were so many other sound precious metals stocks to buy. Doesn't he always say buy best of breed?

The highlight of the day no doubt will be the Oil patch report at 10:30 Eastern time. The Oils are currently trading lower so they may turn on the report regardless of the numbers.

ALL THE BLATHER

They can't be serious with all this talk about five/six year highs and of course the shift to large cap stocks. After all, since February 1, the IWM is + 5.4% and the SPX is +3.4%, so clearly a major shift is underway. Who writes this stuff for the CNBC anchors or do they just analyze the data on their own? What exactly did Melissa Lee notice as she mentioned the shift to large caps. Today the IWM was up 1.3% and the SPY was higher by .75%.

The big winner on the day as usual was the Oil stocks as the OSX was up 3.4% and the XOI was higher by 1.8%. My favorite, the OIH was higher by 3.3% and I predict the puts go worthless before expiration Friday.

The brokers bounced a bit today and AAPL was a big winner on the NAZ 100 as the QQQQ soared 7 cents on the day. The SMH also an area to watch for the momentum crowd soared a dime. Why do these anchors insist on finding and telling us about the winning indexes and ignore the laggards?

Market internals were green on the NYSE by 900 issues and 350 on the NAZ. Volatility indexes dribbled down roughly 4% and offer little in the way of buy or sell signals.

1:00 LOOK

Breaking News: Some shrewd traders on Street Insight are shorting into today's strength. My take- Shorting has been difficult anytime in the last 3 years. If someone/anyone has been successful predominantly shorting stocks in the past 3 years please email or post a comment. On the flip side, buying the dip has worked every time in past three years.

The DJIA is rippin higher by 70 points and the SPY is hanging in at resistance of 131.35. I have done very little except sell my BSC too early (always better than too late).

The market internals have improved a bit, but the NAZ numbers are still light at under 300 to the green and they don't give me much confidence of a big rip into the close. SMH has flipped to the green but also not with much conviction. The QQQQ has ripped higher by 15 cents so maybe the real action is trading the NAZ 100(sure).

The Volatility sisters are dribbling back down to yesterday's lows and are still a few percentage points above their 10 day SMA's.

Bottom line, I am not interested in shorting or buying at these levels so I am just doing a bit of research.

SAME OLD SAME OLD

The markets are mixed with the usual suspects higher (Oils +1.5% / Precious Metals +1%) and the usual suspects lower (HGX SMH HHH). The OIH is up another 1.5% and I just wish the puts would just get to the 5 cent price and stay their as everyone knows that is where they will be on expiration Friday. The bio's are looking pretty ugly as the IBB is down over 1% and the every day down AMGN is right back it lower by almost 2%.

The internals are flat on the NAZ and slightly green on the NYSE (Oils and Commodities).

The SPY bounced at the Pivot level of 130.85 and has been churning since. One stock that has caught a recent bid and may have bottomed is AAPL +3%. GOOG is lower by 5 bucks and is back under the 400 level.

I sold my BSC into the morning lift and am contemplating heading to the gym as I do not expect much excitement until later in the afternoon.

HEADS UP

Careful out there all you gap buyers; the market internals are not confirming this gap as there are now less than 150 more gainers than losers on the NAZ and 400 more winners than losers on the NYSE ( oils and commodities?) .

All the chatter this AM about the markets rebounding off the statements, don't be so sure.

THE GAP

The market is set to gap up this morning with SP500 futures higher by 5.5 points bringing the SPY back above today's Pivot to the 131 level. Generally, the high percentage trade is to fade the gap or buy a closing of the gap and that will be my strategy.

Chatter continues about Big Ben and Queen Maria and something tells me some CNBC/GE brass had a little talk with her (can you do this more often).

My watch list for the day includes HAL TXN and the brokers (BSC LEH LM GS MER).

TECHNICALS-VIX/SPY

Buy signals are near as the SPY closes with a 2 day RSI of 26 and the VIX closes about 7% above its 10 day SMA. The general rule is the market doesn't make much progress when the VIX trades more than 5% below its 10 day SMA and the reverse is true as it doesn't go much lower when the VIX trades more than 5% above its 10 day SMA.

I would like to get the SPY closer to its 50 day SMA level of 129.75 and the VIX a bit higher, but it may be time to begin to scale in long. The QQQQ may be the best bet here as it trades at a 2 day RSI level of 14.

On another note, the OIH closed over 4 bucks to the green and if you aren't making money selling puts into the dips you are not paying attention.

UGLY CLOSE

One question for the non tiffany network (CNBC), if Maria obtained the info from Big Bad Ben over the weekend, why did she wait until after 3:00 PM eastern time to make it public?

The markets closed lower in light of the Fed Head news with the Brokers, Small caps and GOOG taking the biggest hits. Market internals also were ugly with 1,100 more lower than higher. The SPY closed down a buck and change leaving a Pivot Point for tomorrow at the 130.85 level.

I suspect we may get a selloff at the open tomorrow and then go higher as the markets digest the news and react to the oversold levels. In addition the brokers such as BSC MER GS and LM are getting very oversold and may be getting ready for a bounce. I did buy some BSC into the close with a stop a bit below the 50 day SMA.

ONE AND DONE

So is helicopter Ben having a bit of a problem with on the job training? Sure seems that way as he now "hints" that he was "misunderstood" last week. How can prepared comments be "misunderstood" several days later? How long before we pine for the clear speaking former fed head?

Anyhow, what we might get from this misunderstanding is a buy signal. The SPY is currently down 90 cents and trading at at 2 day RSI of 30, while the VIX has jumped up to over 12.5 and is now about 7% above its 10 day SMA. We have not gotten a decent buy signal in several days so maybe we get one tomorrow for a short term SPY trade.

And why is it with stocks getting trashed by these comments Oils and Commodity stocks stay strong(lol)?

PM LOOK

Markets continue to trade mixed with slightly more winners than losers. The winners on the day are the usual suspects, the Oils and the Metals. The big losers are the brokers with all of them getting crushed. The worst trashing being absorbed by JEF and LM.

The SPY has been trading a bit above the pivot point for most of the afternoon and will probably be pushed higher into the final 90 minutes.

The OIH is trading up 4+ bucks or 2.75% and those put sales last week are looking mighty fine. Cramer on realmoney.com is touting oil stocks, specifically NBR and HAL, and he is causing me to sell some inventory here. Jimmy is quintessential buy higher sell lower tradeologist.

VOTE IS IN?

Tony Crescenzi on realmoney.com is opining that the markets are giving a thumbs down to Helicopter Ben ALREADY. Tony is blaming the ramp in the ten year Bond to 5.13% to a lack of confidence in the new Fed Head:


"To me, part of this bond-market selloff is a thumbs-down on Bernanke.

Greenspan would almost certainly have delivered an extra quarter-point rate hike and he might have even considered an exclamation-point hike rather than stop while the markets were sending such strong signals about its inflation expectations.

The signals are plentiful:

The TIPS spread is the widest in a year and moving toward an inflation expectation of 3%.

The yield curve is the steepest in seven months.

The 10-year yield is the highest in four years.

The dollar is down 3.5% in two weeks and reversed more than 61.8% of the rally seen last year following three years of losses.

Commodities are still surging.

Sure, Greenspan in 1995 said that there would come a time when the Fed might either stop raising rates or even ease even if inflation was still rising.

The difference between him and Bernanke is that Greenspan spoke up and said when the markets concurred and inflation expectations were falling. Bernanke is not paying nearly as much attention to the markets."

NOON SWOON

Just as we were all excited about the markets this morning, the plug has been pulled and the markets are flatlining (SPY -.08/QQQQ +.03/IWM -.20), and the market internals have flipped to flat from +1,300. Semis, GOOG, Internet's (HHH) all act doggy while AAPL has a little jig.

The financials are leading the trip lower with recent market stalwarts GS LEH BSC MER LM all much lower. C WFC and BAC are also red as the 10 year Bond has backed up to over 5.13%.

The VIX is back up over 12 (oh boy) or about 4% higher.

The leaders are still metals and oils (OIH Puts anyone?) and my strategy is still to buy the dips into the SPY pivot and sell the rip into resistance.

Big question though is Why are these brokers getting hammered; Too much too quick or are they forecasting a bigger market dip?

TECHNICALS - MER

Here is a chart of MER which clearly states the recent problems in the Broker group. Looks like it is due for a bounce here on a 2 day RSI of 1 but I am going to wait it out for some sign of a bounce.

OPENING LOOK

The markets are have opened to the green side led surprisingly by Precious metals(+1%) and Oils(+1.25). The financials are lagging as all the big banks and brokers are trading red as LEH LM and BSC are leading lower. The 10 year Bond is back over 5.12% and that is also preasuring the homies.


The market internals are bullish with 1,300 more winners than losers and the Volatility sisters are trading a bit higher digesting the weekend decay.

SPY Pivot point is 131.3 with support and resistance at 130.9 and 131.9 respectively. The day is shaping up as a good one to daytrade the indexes and I intend to buy the dips to the pivot and sell any rips into resistance.

TERROR PREMIUM ?

Interesting weekend as I was out speaking to some local merchants about gas prices and how they know and have heard about the premium (Terror/Iran/Iraq/Venezueala/Nigeria) built into the price of oil ($10/$15) and the real price should be significantly lower. My question to anyone who will listen; What is the premium built into the price of copper and what is causing that price to be wrong?