The first of the month has normally been a positive market day. In fact, only ONCE in the past year did we have a negative day – the last one in March of this year. Today’s action was nasty and particularly troublesome after yesterday’s very strong performance. Tuesday had all the characteristics – positive volume, good breadth and wide dispersion of sector strength. Today was the complete opposite, and rarely is it a good thing when a reversal happens so quickly. The market tanked early on the poor employment data from ADP, an advanced reading on what we may expect for Friday’s BLS report. If today is any indication it could be frightening. Nothing was saved today as every group was hammered. It was a true 90% down day, which now may give us a respite of sorts.
Commodities were hit hard today as were financials and techs – but I suspect if Friday’s number is not harmful we’ll see these all come back in a ‘risk on’ rally. Why do I feel confident? The VIX was up but the futures did not confirm this move – hence, a quick reversal may be at hand. The euro situation notwithstanding I believe we’ll see more positive action in the coming days up until the end of the month.
No trades out today as we won’t buy anything into the teeth of a massive sell off. We often find residual selling after a day like this and may see that in the am. Be on the alert as I’m looking for a bounce back. JOYG has earnings in the am and that may set the table for a nice trade, other commodity names as well. Names I’m looking at include: FCX, BTU, POT, APA, APC, SLB in the commodity group – VMW, CRM an CTXS in the tech area and AAPL as well.
I’m also happy to take other ideas from any of you – I can’t find them all myself but we can certainly all work together over twitter or via email. I can be reached at email@example.com
Have a great night, thank you for being part of the team!