Market Update-July 22

I meant to get a few charts out last night with a post, but last thing I remember it was 7pm and I was making some notes trying to keep my eyes open and next thing I knew it was 2 am with my legs numb and my lap with a 2nd degree burn from my laptop. The night before (Sunday night) I had stayed up until 2:30 preparing for a meeting I had Monday morning with a Hedge Fund manager. I was ironing my own clothes, being my wife is vacationing with her family in Europe and cleaning my laptop, getting together my notes and all kinds on details. I was up at 6am so yesterday was a tough day to stay awake....more on my meeting in a moment.

Last night before the earnings moved the market, my notes were pretty much this: I'm seeing market rotation, which is something you'd expect to see in a healthy bull market, not a bear market bounce or even rally (as far as I know). The Q's hadn't performed very well the last several days while financials obviously had stolen the stage (See this video-about half way through I said words to the effect of "everyone is expecting the rally in tech, Financials are the sleeper and they are the one that will catch everyone off guard and produce the huge short squeeze) and this the day before the rally was launched. In any case, my notes indicated financials ready to pullback. Tech, while being highly dependent on the earnings of AAPL (and I'll I'll have more to say about MSFT, especially if someone emails me and reminds me) is sure in a good position to pick up the mantle of leader and keep the rally spirit alive. In very broad terms, if the Q's can manage to stay alive above $44 on a close today, they keep the nice Broadening bottom I've been talking about alive and launch a rally from a sort of bull flag from within it-great positioning to do so-especially coming off a shakeout/pullback.

The DOW and the SPY to a somewhat less pronounced degree, I saw as taking one more shot at a run-specifically I was looking at DDM (DOW Ultra) and I thought it would make a run this am for $62.50 and then it would succumb to the longer term 3C negative divergences that have been calling for a pullback within this rally. So I didn't see anything that said gap down this am, but I am pleased to see that the analysis otherwise seems to be right on. In my view, thus far this am we are just seeing gaps being filled more or less with a little extra or a little falling short. Now, if my analysis is correct, at some point, DOW/SP/Financials all pullback and tech takes up the role of leadership. I'm not sure if that means out and out plus side gains-which I assume it to mean that, or if it means that Q's just perform better on a relative basis.

I didn't get as far as oil/energy/commods maybe later, but my basic analysis still stands-oil/energy complex lower. Specifically OIH lower and DUG higher. I expected a pullback there in DUG so I'm okay with that, in the end I think it is knocking down $40 and originally I thought that would be this week. I'll check to see if that still stands.

On a stock side-CPSL is still on deck, JRJC as well. ARNA is doing well. I'm in WX, but I'm worried there. Also still in HALO but a pullback is certainly do there. CEIN is looking very good and I've been in that since last week. I started a position in GWR-others in the group look okay as well-these are puts though-or shorts. Also short as of yesterday (puts) VRSN, I'll add today if I can free up enough capital. DUG of course is still hot, I'm in stock and just exercised my July $30's. CTAS is still in my portfolio-long of course and I added HNSN calls. TSO calls are also in the portfolio and I'll add to those today.

That's it for now, check back in a bit.

As for the Hedge fund meeting, it wasn't everything that I imagined and hoped it would be "Oh, wow, let us give you a few mil and see how you do", but I did make a good contact with someone who is very willing to help me out once I establish a record managing something that is more realistic in terms of money. What I trade with now is simply too small and he was surprised that I manage to make a living or that I manage to even stay alive. In his words "It's just too hard, you can't do it with less than $$$$$$-(note the six dollar signs) one mistake and you're done". He basically said, get yourself a financial backer with "X" amount of dollars so we can see what you do with a realistic sum, I'll draw up the contracts, do it for 6-12 months and if you do well, I'll make the introductions for you. So it wasn't everything I hoped, but far better than a kick in the cajones.


So, any backers?

By the way-on that note, Dave thank you very much for your generosity. It is very much appreciated. I hope we can hit a few more and really out of the park. Go get some CPSL.