Broad Market Advance

The broad market has picked up steam since my last post. After consolidating early, a breakout at 11:45 am has really pushed the market higher. Now after advancing more than a dollar (129.30 all the way up to 130.20) the SPY is cooling off marginally. I'd expect the dip to be bought as it has been all day. Crude plunged after sliding early on. The USO reached all the way down to 92.20 before a quick double bottom and retracing a fraction of its losses. There is really no edge to trading that market more than intraday. With a long weekend coming up, a storm that could that go either way, and big gap risk on the open, I would not be holding overnight.

LO is having a terrific day. That stock has really been turbocharged after announcing a $400 million dollar buyback in July and increasing its dividend dramatically to a more competitive rate more recently. PM is coming down (now 4 days in a row). Another day or two down and it may be a nice buy. In its short life, it has been a very range bound, but volatile stock. Buying low after multiple down days and selling high is the name of the game in that stock.

Oil Quick to Drop

The action of the open was much different than past mornings. It was not slow to drift lower--it just came off pretty easily and was showing no resilience. Given this action, the large gap up, and the fact that it is now up four days in a row, I'd expect it to come off a bit and extend this slide.

Oil's drop is providing some fuel to the broad market's rally, but it's not moving too strongly upward. Retail is up off of a strong quarter from Tiffany's (now up 10% plus). Other retail reports from companies such as Men's Warehouse are being looked in a favorable light as well. That stock is up to over 21 bucks currently, a 6% gain. Those stocks seem strong, but we'll have to see if they can hold their gains.

Slow Market; MENT, JCG

Things are pretty slow off the open. MENT is slightly positive after ramping yesterday. It's probably done moving up for a while. JCG looks to be recovering after gapping down a few bucks. It's experienced a slow, painful slide since late May. It's not looking especially attractive on a long term chart, but may be ok to fill some of this morning's gap. Oil is fading slightly after being up strongly on the open. Sentiment in that market has turned slightly from where it used to be and things are looking relatively bullish. However, the commodity is now up three days in a row which means it may have limited upside from here.

The Inevitable Rollover

Financials look poised to take another step lower here. While the XLF is currently near support at 20.28, the action at that level is not lively at all and support is likely to give way. The mood is negative despite FNM and FRE moving higher. Even oil is down slightly. Overall, I'd look for down 50 max on Nazz, down 250 max on DJIA and probably flat lining into the close.

A Buy the Dips Morning

The S&P opened up strong and has started to trend upwards. Oil is weak as is gold. KBR is up barely, but doesn't seem like it will be able to hold its gains. I would look at shorting it around 24 or above to catch some quick drops. LO came down and quickly recovered which has been typical action for the last two months.

Overall, things are looking strong. Small caps are being looked at favorably, financials are picking up some steam and the dips in the SPY are being bought.

Oil Up; LO Finds Its Way

It turns out my new outlook on oil was correct. Oil gapped up strongly this morning taking KBR right along with it. Interestingly the action off the open occurred in a very similar fashion to yesterday. Off the open, oil made a relatively shallow pullback to its 50 minute moving average and then rallied. Again, it was a good spot for a trade that could've netted some quick gains.

The broad market is not down to much, but instead waffling back and forth similarly to yesterday. The XLF is getting hit even though FRE and FNM are up. Other stocks to note are LO (which has been a favorite of mine) and NVTL, which is positive today.

Daily Wrap

Both oil and the financials ended positive on the day. Financials performance was a bit weak in my estimate, but not too terrible. They're still right around a support level at 19.60/19.80, but I'm not putting too much weight behind that. I was more impressed by oil's rally after being down hard early. Even though it got burnt on oil inventories, it rounded out, and rallied straight out into the close. I don't want to be a victim of another oil fake out, but things are looking slightly better in that market--maybe its time for a nice snapback rally. KBR might be a good way to play it. It's been taken down with oil but looks like it has support at around 22 and could move up from here.

I'm also watching NVTL and MENT. Snapback plays have been incredibly persistent lately. ZMH, HOLX, BF/B, MRK are all examples. MENT has already started to move but may have more juice. NVTL might have a day or two more down, but could stabilize after.

USO Recovery

The market seems a bit range bound as the broad indices have oscillated around unchanged for the day. However, two sectors, oil and financials, have been particularly active. The long XLF/short USO was a good trade (USO down to 90.95 at 11:30 and XLF topped out around 20.28) but has since reversed course. They don't seem to want to shoot to hard to the upside or downside similar to the broad indices, but I'll continue to watch to see what happens as the day goes along.

Long XLF/Short USO

Oil gapped up on the morning and actually rallied decently before oil inventories. However, inventories changed the path of the commodity drastically as it has now come off sharply. I don't think financials have realized their full potential on the day and I think the drop in oil may be a bit more lasting (it should at least go negative on the day). Therefore, I would look to go long XLF/short USO. Oil is coming back up to its 20 period moving average at 93.88ish after plunging which should be a good place to take a position. XLF is barely over positive, it should have up to .75% pretty easy.