And the rotation is on

[Biggus Piggus]

Market's running like mad away from energy.  If you didn't get out yet, you've taken a harpoon in your portfolio.

Crappy banks are rallying like crazy.  Health care's picking up.  Transports are doing well.  Seeing some wild short covering.  Pinnacle Entertainment was up 21% today on...no news.  All the casinos were up after being in a death spiral for two weeks.  Six Flags, damn near a penny stock now, was up 81% after management said the company would be cash flow positive.

OTOH it's a bad time to announce poor news.  Insteel Industries warned about slowing end markets and fell 22%.  Polycom guided Q3 EPS below the Street and dipped 11%.  Champion Enterprises, which makes mobile homes, missed sales expectations by a mile and got hit 33%.  ValueClick and Teletech both gave weak guidance and were down 20% and 26% respectively.

A lot of the beaten up crap rallied the past two days.  The thing to do now in my view is to buy stocks of the better companies, because they might join the rally once they report quarterly results.

[Masshog]

Beaten up CRAP is the key.    I suspect that this is just another bear market correction, but one that may carry from three to four weeks (and I could use the rest).  It would take a lot more than the last two days to convince me that anything other than a trading rally was occurring.  I sure don't see anything in the credit market spreads that would lead me to believe that its done.  But hell, Im wrong a lot. 

[Masshog]

I wonder how much of the strength in the financials is the result of the enforcement of the short cover rules?  Of course, a rally like yesterdays will force a lot of late shorts to cover anyway. 

[BlackKnightHogFan]

Market's running like mad away from energy.  If you didn't get out yet, you've taken a harpoon in your portfolio.

Crappy banks are rallying like crazy.  Health care's picking up.  Transports are doing well.  Seeing some wild short covering.  Pinnacle Entertainment was up 21% today on...no news.  All the casinos were up after being in a death spiral for two weeks.  Six Flags, damn near a penny stock now, was up 81% after management said the company would be cash flow positive.

OTOH it's a bad time to announce poor news.  Insteel Industries warned about slowing end markets and fell 22%.  Polycom guided Q3 EPS below the Street and dipped 11%.  Champion Enterprises, which makes mobile homes, missed sales expectations by a mile and got hit 33%.  ValueClick and Teletech both gave weak guidance and were down 20% and 26% respectively.

A lot of the beaten up crap rallied the past two days.  The thing to do now in my view is to buy stocks of the better companies, because they might join the rally once they report quarterly results.

Rotated out of financials in Jan, energy in June.  Been overweight tech and I am starting to bottom pick cyclicals and industrials.  I still see oil making a last ditch come back before it bottoms.  I am not ready to go back into financials now with the upswing.  I still think there is more downside.  Don't know if we bottomed last week or not technically if it is a "cub" market we should start a rally around this time.  If this is a true bear, no real rally till Q1 2009.  That's the camp I am in, I think this is a technical bounce off the bottom.  I still think we test 10,500 on the DOW and 1175 on the S&P before we see any type of a true rally. 

If oil keeps falling though all bets are off.  I could see a slowdown in Europe and Asia causing their central banks to lower rates, thus boosting the dollar's strength.  That coupled with increased drilling in the US, could send the speculators running from oil and we could see a drop of 20% plus...then the market rallies strong.

I can also see a senerio with the credit spreads, ARMs and Alt A mortgages defaulting causing more then expected write downs and more bank failures.  Then the market falls hard.

We are on an edge right now with either a major upswing on downturn, too soon to tell yet.

[SultanofSwine]

The bear just took a quick nap. I bet he wakes up hungry today.

On another note, spoke with a client yesterday in the C-Store business and he said gas volumes were up over the same period last year by about 4%. That seems to support BK's contention that the consumer has not bailed on this economy entirely and may not.

Fun times huh?

[Ash]

Well...

The large funds have been jumping one bubble to another. They created the energy bubble and now they are going to reap the results of it bursting. This runup in oil has been ridiculous for months now. Hell yesterday they were whining that oil didn't go up because an 8,000 bbl/day line in Nigeria got shut down. 8k bbl is NOTHING in todays market. We are talking on the order of less than 1/10th of one percent.

These analysts have a vested interest in the price going up which is why they predicted horrible draws on our inventories yet we gained. As an example the analysts at GS which is heavily invested in oil right now predicted a 3 million bbl draw in inventory. Instead inventory grew by 3 million bbl. That doesn't happen unless the analysts are outright lying to pump up their stock (or in this case their commodity).

[Masshog]

I think the rally might hold for a week or two.... but I continue to suspect that its a trading rally.  Anyone else find it even remotely amusing that ML lent Bloomberg the money for Bloomberg to buy its stake back from Merrill with?  I mean, it is capital, but only sort of.  I think. 

[BlackKnightHogFan]

I think the rally might hold for a week or two.... but I continue to suspect that its a trading rally.  Anyone else find it even remotely amusing that ML lent Bloomberg the money for Bloomberg to buy its stake back from Merrill with?  I mean, it is capital, but only sort of.  I think. 

Goes on the correct side of the balance sheet...that is good for Merrill right?  If the Fed can print its own money why shouldn't Merrill...I think...maybe?