April 9

Despite a drubing of bad news the major US market indexes managed to put in relatively good performance. Led off by Alcoa several other stocks reported earnings under pressure currently and for the foreseeable future. Then the International Monetary Fund got in on the game, noting that Global Markets, particular American Financial Markets, remain under considerable strain. They stated that banks are likely sitting on nearly $1TRILLION in credit losses. But wait, wait, there's more fun to come. Later in the day the Fed minutes came out, and in that the wise men at the Fed mused about a severe and protracted downtrend in the US Economy over the coming year. All in all the news was pretty ugly. If I had not seen the markets action myself and some-one had just told me all of these things came out, I'd be expecting to see a several hundred point down move in the market. However, Mr. Market does not agree with my assessment at this time, and its better to be riding his coattails than standing in front of the avalanche.
This is a key principle that is responsible for a HUGE portion of the success I have enjoyed over the last 10 years, and its very simple. That which should go up, better go up. That which should go down, had better go down. If everything is terribly bearish but the markets continue to move higher, its not a sign of “idiots who dont understand how bad things are”, its a sign that the news that's come out has already been baked into the cake and the market does not mind what its seeing.

So, our markets. The Nasdaq closed down 16.07 points to 2348.76. This was on light volume, my main worry here is that we saw only 15 new Nasdaq Highs Vs 64 new Nasdaq lows. This goes right along with the theme I've been discussing that its been pretty hard to find quality setups out there. Declining issues lead Advancing issues slightly, 1678 to 1226. The more broadly based S&P500 lost 7 points, closing at 1365.54. Thirty seven new highs were made on the NYSE, while only 19 new lows appeared. Declining issues still lead advancing issues by a ratio of 1816 to 1325, but again we had a pullback on pretty tepid volume, so this is not something I'm going to spend a lot of time worrying about.

I generally like to have some trading idea's in here for you all, but as of late they have been few and far between even with a volatile market. Only a few stocks are really standing out to me at this time. In the agriculture arena the DBA looks like its putting in a decent top and could be shorted. I'm considering that along with a buy in the MOO to hedge myself a bit until a clear direction shows itself in the group.

The financial group continues to look like the south end of a north bound donkey, and this is of major concern because I have never seen a meaningful rally without this key groups participation. One stock that is making a nice base and looks ready to be coming out of it is MA. We purchased Visa the other day and already have nice gains on that, and MA is looking pretty good at this point. Oil stocks have been fairly strong of late as well, but I think we will want to wait for a pullback in them as they are up in the thin air right now. In Big Cap land IBM has held up nicely and looks ready for a decent run if it can break this base its in right now.