The Wrap for 7/13/11

{+++} “The Bernanke” spoke today and basically said (without really saying) the the printing press is still nearby in case things run amok with this economy. The market loves printing, it’s great for stocks. The market rallied hard on this news, but as the day lingered on it sold off, giving up a big chunk o its gains. It was disappointing action for the bulls as buyers started to lose their zest for the upside and took profits. Stocks like AAPL and NFLX exploded out of the gate on positive comments and a price target increase, but gave some back near the close.

I think the market is waiting anxiously for the earnings report out of JPM in the morning and will be looking for some direction from Jamie Dimon. The financial sector XLF rolled over hard today. The sector gapped up but faded and closed on the lows, not bullish at all. Bank Of America looks horrible and is almost at the $10 level. The stock is sitting on some support that goes all the way back to May 2009. Many banking bulls got fried liked a twinkie on this one as buyers were all over BAC at the $17 level just about a year ago. Bad housing stats and high unemployment are killing the banks. They may be trades from the long side soon and I will be watching for an opportunity. I hate financials, but everything has a price.

On the Washington front nothing is getting done yet and I think Obama and Boehner need to have a sit down with Dr. Phil as this constant uncertainty is an overhang on the market. I think something will get done, not to everyone’s satisfaction, but I think the market will lift when it happens.

Moody’s after the close also said they have put The U.S. of A. on review for downgrade if debt talks fail, so tomorrow we could see some challenges. Keep trading this market SMALL until we get a decisive trend.


I wanted to address a couple of stocks that are still on the list that actually violated our stop. This occasionally happens, especially in markets that see volatility from a sudden news event like Italy or a bad unemployment number. Sometimes the stock will gap down and open “under” our stop price. In that situation you have two choices, you van sell it right away, which from my own experience isn’t always the right thing to do as these knee jerk moves can sometimes be an extreme overreaction. Sometimes the stock will continue lower.

If I leave a stock on the list it is because I am waiting for a better level to exit on a bounce, sometimes I will hold it if the stock and the market improves. I always respect stops although on occasion I will give them some wiggle room as in the case of TPX and INFA right now. It is only during extreme gap openings through our stop that I will try and “finesse” the trade so to speak. I want everyone to be clear on this. I am only addressing stops here that get violated with a gap down in the market.

This is a tricky area and I don’t mean to be vague, but I wanted to address it. If you still need some clarity on this issue, feel free to email me. I have TPX and INFA still on the list as a result. TPX looks like it may have found some support, I am not necessarily as optimistic on INFA right here, but we may be get surprised. Please see the new stops. They are highlighted on the P&L. Sorry for any confusion.



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