April 10th

The markets started off with a bit of a double whammy today with higher oil and commodity costs as well as poor news from UPS which carried over to other Transportation names. The Retail tracking indexes hit the top of their most recent ranges and backed off from there, bringing those stocks lower. Likewise Financial groups had a hard day as well. Certainly this is not the type of market action you want to see if you are long. In fact, even though the DOW was only down 50 points for the day, the underlying action was much worse than the numbers on the index would have you think. Up/Down Volume was heavily in favor of the downside. The only area's retaining strength seem to be commodity and commodity related markets.
The Dow closed down 49.44 points for the day, settling at 12527, while the S&P500 was off by 11.05, closing at 1354.49. The Nasdaq closed down over 1%, losing 26.64 points, coming to rest at 2322.12. Smallcap stocks though took the worst of it, the S&P600 losing nearly 2% on day, losing 7.03 points and closing at 369.9. Volume was significantly higher on the Nasdaq than the prior day, up nearly 12% for the day. Over on the NYSE volume also rose, but not as much, climbing about 2% above Wednesday's levels. Yesterday marked a distribution day for the Nasdaq, the second such day since the rally was confirmed on March 20th. This is a pretty high number of them for the market to be having so soon after the FTD, not to mention that as stated its hard to find any real leadership outside the commodities and related areas. My own personal opinion would be that at best the market is seriously strained right now, and in a worst case scenario its backed to the chicken coup for chicken little as the bear market resumes.
There are a few stocks out there worth having a look at, the majority of them are on the short side. We did very well with the breakout from April 2nd in Apache Corp (NYSE: APA), with my own average entry point being 120.35. I will be watching it closely on any pullback to see if an opportunity presents itself to get bigger in this clear leaders. Lindsay Corp. (NYSE: LNN) has also been a stellar performance generator for me since the April 1st entry of 103.86. I was able to get into this one on a nice daytrading setup which significantly reduced my overall risk, but I slightly mismanaged the trade, getting out with a profit, but before I probably should have done so.

Now in the Brandon is a Financial genius we simply look back to yesterdays newsletter where I noted that I thought the Ag groups might be topping out and advocated a spread, DBA short and MOO long. It's just such a wonderful feeling when your longs go down and your shorts go up. Probably the market teaching me a lesson about trying to be too cute with things. Simplicity almost always works better.

As I said at the onset of today's report yesterday's market action was much worse then that of a down 50 point's DOW Day. Plenty of stocks and sectors are looking like the south side of a north bound donkey, while very few outside of the commodities and agriculture have much to write home to mom about. On the short side we have plenty of stocks to look at. Wendy's (NYSE: WEN) has over the course of the last several months been the picture perfect example of both a basing stock and of a stock that has a lot of relative weakness. Why? Well, during the entire time that the market did rally WEN was never even able to attempt to breakout of the channel its in. It has remained a dog for the entire time the market was offering buying opportunity and should the market turn lower I'd expect a name like WEN to be a clear leader. Wendy's is very similar to the setup we have seen in DELL, which I shorted on April 4th. In the troubled financial's sector I think that stocks like BAC, ZION, CORS and LM should certainly be on your radar as names worth following and potentially trading as well. One final stock I will give you to look at is Casey's General Stores (NASDAQ: CASY). The setup in CASY is actually pretty similar to the one in WEN, this simply being a stock that, even when the market did give it an opportunity to get a bid during the rally it could still not get out of its own way and remains trading near the lows. A break lower will trigger a short setup in this stock.