Wednesday, January 16, 2008

Maybe This or Maybe Splat

If every day in the market were like today, I'd prefer dismantling bombs for a living.

The glass was half-full early and middle, but leaning half-empty again by the close. Beaten-down Retail, Financial and non-Intel Semiconductor names were firing mad to the upside, while leadership groups were predominantly woodsheded. In the end, we did not get the reversal wave off of the emotional flush, marking a bottom on the negative Intel news. The market was maybe firming and maybe breaking the key-SPX lows from August.

All the damned day long.

Now the Medical/Healthcare/Biopharma sectors are the only leadership not to get nailed. If the market is turning, these groups are the clear cut leadership for focusing long. If the market is not turning, these will likely be the next leaders hunted down and boiled.

Historically, terrible markets do not bottom on Friday's and it has been a long time since a reversal-looking day coming off of an emotional-flush morning sold-off in the final hour instead of rallying strongly. I'm bailing out of longs tomorrow if the worm does not turn.

The only reason I am still in here is that 1.> we did close well-off the lows today and we did hold above the intraday August lows in the NDX and SP500 (the NDX is showing a nice positive divergence here in fact, even with the blow-up in heavily weighted INTC. 2.> Breadth was positive today on the Nasdaq and flat on the NYSE on the bad-news session. 3.> The Nasdaq traded major volume (with positive breadth) and closed above the level it opened (accumulation). 4.> The semi-equipment stocks woke up today (take a look at KLAC, NVLS, LRCX and even AMAT. Perhaps it is just short covering, or perhaps it was a 1-day wonder - but this is a group that turns early in the market and they turned on major volume today. I wasn't buying these (I tried getting into KLAC and LRCX, but missed and then didn't want to chase them), but I was getting that cozy reversal feeling intraday, seeing the moves there.

That mood turned progressive shades of chowder in the final 60 minutes.

Like today, tomorrow is key. I don't want to have to bail-out Friday in a panic, so I'll bail out tomorrow if we don't see a positive tape.

I added to APOL and JASO today and took on small tranches long in SOLF, AKNS and ONXX. This means I have that much more egg to sell tomorrow if the chowder is still on my face (one thing I will say - there are a lot of new shorts in the Solar group. I think we'll see a wicked bounce in that group if the market turns here).

Current long Positions (by size): APOL, GENZ, JASO, FCSX, OII, LNN, CVI, HOLX, SUNH, VIVO, PRXL, CAF, CPHD, YGE, GHXD, IRIS, SOLF, TISI, ONXX, TITN, CZZ, HK, CSIQ, AKNS

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