Non-farm payrolls came in and job growth is still taking place. Market players are not concerned that it is very light growth, the direction is the key part they are bullish about. I have been waiting for the data to come out and while I was skeptical leading into it, the headline numbers (which if you dig deeper are never as positive as the headline sounds) beat expectations therefore I have to give the odds to the bulls for the next few weeks. The bears will make a run at it, they will point out the weak growth, Greece defaulting and that we may not see another QE for a while, but the positive jobs number should overrule all of that.
The market can always use a consolidation day or two. It would be healthy if we can receive that here and there as that helps create favorable setups. This allows us to feel comfortable that we are about to make some upside headway without the market running away from us. If we can receive consolidation days every now and then, we will be able to trade with more favorable setups and larger positions that have a strong risk-reward scenario. What we do not want to see is the big winners in the market being those who blindly predict the upside will not end. This creates too much of a gambling atmosphere and not enough disciplined trading.
Last week's monthly jobs report was the key data for most investors. The economic recovery is still intact, although jobs numbers are nothing spectacular, especially taking into consideration the extreme levels of spending it took to achieve this type of modest growth. This is still the slowest economic recovery in history, but at least it is in the right direction and that is what market players are mostly concerned with.
This week the FOMC announcement on Tuesday is likely the big market driver, if anything. The concern for bulls is that the bears can gain traction on the lack of future quantitative easing terminology that will likely be noted in this meeting. Since jobs are moving in the right direction and inflation is always a concern, it would be highly unlikely that the Fed will make it seem like another QE is around the corner. This could give the bears a little ammunition for the fight, but I don't expect them to gain too much traction without some very concerning headline news. The monthly jobs report should keep hopes high for the next few weeks and I feel the bulls will be firmly in charge due to that with weak days being infrequent.
For the FOMC decision on Tuesday, don't expect much volatility until after the decision. Many times the day of the decision is drifting action rather than high volume action.
| Date | ET | Release | For | Actual | Briefing.com Forecast | Briefing.com Consensus | Prior | Revised From |
|---|---|---|---|---|---|---|---|---|
| Mar 12 | 14:00 | Treasury Budget | Feb | -$229.0B | -$229.0B | -$222.5B | ||
| Mar 13 | 08:30 | Retail Sales | Feb | 1.8% | 1.0% | 0.4% | ||
| Mar 13 | 08:30 | Retail Sales ex-auto | Feb | 1.2% | 0.7% | 0.7% | ||
| Mar 13 | 10:00 | Business Inventories | Jan | 0.6% | 0.6% | 0.4% | ||
| Mar 13 | 14:15 | FOMC Rate Decision | Mar | 0.25% | 0.25% | 0.25% | ||
| Mar 14 | 07:00 | MBA Mortgage Index | 03/10 | NA | NA | -1.2% | ||
| Mar 14 | 08:30 | Current Account Balance | Q4 | -$114.0B | -$113.8B | -$110.3B | ||
| Mar 14 | 08:30 | Export Prices ex-ag. | Feb | NA | NA | 0.0% | ||
| Mar 14 | 08:30 | Import Prices ex-oil | Feb | NA | NA | 0.1% | ||
| Mar 14 | 10:30 | Crude Inventories | 03/10 | NA | NA | 0.832M | ||
| Mar 15 | 08:30 | Initial Claims | 03/10 | 360K | 358K | 362K | ||
| Mar 15 | 08:30 | Continuing Claims | 03/03 | 3415K | 3415K | 3416K | ||
| Mar 15 | 08:30 | Empire Manufacturing | Mar | 15.0 | 15.0 | 19.5 | ||
| Mar 15 | 08:30 | PPI | Feb | 0.4% | 0.5% | 0.1% | ||
| Mar 15 | 08:30 | Core PPI | Feb | 0.1% | 0.2% | 0.4% | ||
| Mar 15 | 09:00 | Net Long-Term TIC Flows | Jan | NA | NA | $17.9B | ||
| Mar 15 | 10:00 | Philadelphia Fed | Mar | 15.0 | 12.5 | 10.2 | ||
| Mar 16 | 08:30 | CPI | Feb | 0.3% | 0.4% | 0.2% | ||
| Mar 16 | 08:30 | Core CPI | Feb | 0.2% | 0.2% | 0.2% | ||
| Mar 16 | 09:15 | Industrial Production | Feb | 0.2% | 0.5% | 0.0% | ||
| Mar 16 | 09:15 | Capacity Utilization | Feb | 78.6% | 78.8% | 78.5% | ||
| Mar 16 | 09:55 | Mich Sentiment | Mar | 76.5 | 76.0 | 75.3 |
Game-Plan
Late last week I started deploying cash into more positions via my StockTalks. I plan on growing these positions pending the early action this week. Tuesday could be a drifting day, so if we drift up before the FOMC decision, I may reduce some of my positions into the decision. If we drift down on light volume, I may look to increase my positions at favorable prices. I don't expect the announcement to be shocking at all as QE should not be on the table right now.
I've started a position in NOG)">Northern Oil and Gas (NOG) again as the chart seems to have bottomed. I've also started a position in BYD)">Boyd Gaming (BYD). Both of these plays have short squeeze potential after they have been beaten up. CLDX)">Celldex Therapeutics (CLDX) is one of my larger swing trades at the moment as the secondary at $3.85 should provide good support and give way for a run higher to allow those from the secondary to profit. I will continue to search for more trades this week and hope the market does not run away from us.
After the recent weakness, we should be able to find more developments, but if we have a string of days that just keep moving up, it may be complex very soon to find new favorable setups.
If you can't make it to the live-chat where all the magic begins, you can view my real-time trade updates throughout the day by following me on SeekingAlpha StockTalks.
I am sticking to stocks showing overall relative strength for my swing trades. Preferably, these companies have more cash than debt and valuations showing reason to believe it is undervalued, but more homework is needed to sort through the list. If they have upcoming earnings, I may not trade until after the earnings. My style does not allow me to hold swing trades into earnings unless I am only holding “profits” into them.
I look for these stocks to pullback towards favorable support levels (the price area designated next to the stock below) where I can start to buy incrementally if the conditions feel safe upon reaching the support area. Again, the price target is just an area of interest, it is not a firm buy just for touching it.
I am cautious of buying on breakouts unless I am in a very aggressive mode. This aggressive mode may be just for a day-trade rather than risking the large position overnight where my stop-loss may not protect me from a large gap-down. Market players have been reluctant to buy stocks on breakouts over the past year and I have adjusted my strategy to be more selective and patient. If we can gain some very positive sentiment or a QE-based environment, I'd expect that will change. The first list is my normal weekly radar using my proprietary settings on my stock screener. For all my radars, I tend to keep four weeks worth before deleting them allowing me to rotate through a greater number of recently bullish stocks.
ACCO Brands (ABD) – $11 to $11.50
AKRX)">Akorn (AKRX) – $11 to $11.50
ALNY)">Alnylam Pharma (ALNY) – $11.50 to $12
ATP Oil & Gas (ATPG) – $8 to $8.50
Avanir Pharma (AVNR) – $2.75 to $3
BioCryst Pharma (BCRX) – $5 to $5.25
Bon-Ton Stores (BONT) – $7
BPZ Resources (BPZ) – $3 to $3.25
Cenveo (CVO) – $4.50 to $4.75
Dice Holdings (DHX) – $9 to $9.50
Cal Dive International (DVR) – $3.50
Endologix (ELGX) – $12.50
Callaway Golf (ELY) – $6.75
Endeavour International (END) – $11.75
Helix Energy Solutions (HLX) – $18 to $18.50
Keryx Biopharmaceuticals (KERX) – $4 to $4.25
Oclaro (OCLR) – $4.25 to $4.50
Pinnacle Entertainment (PNK) – $11
Pilgrim's (PPC) – $6 to $6.25
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The second radar is the short squeeze radar which is compiled of stocks showing relative strength, but having high short interest (you will notice duplicates among both radars because of this). Any bullish spark may set them off in a short squeeze run netting significant profits if you trade correctly. Always trade these short squeeze candidates carefully as stocks with high short interest will have negative rumors swirling around them trying to shakeout investors who have not done their homework. However, some of those rumors may indeed be true, hence the importance of doing homework and being very selective. The risk is higher for these types, so make sure you know what you are getting into before you buy, not after you buy. The key is to be selective and find those stocks which the shorts are wrong about, not to blindly believe every high short position is wrong.
American Equity Investment Life (AEL)
ATP Oil & Gas (ATPG)
AsiaInfo-Linkage (ASIA)
Briggs & Stratton (BGG)
Bon-Ton Stores (BONT)
BPZ Resources (BPZ)
Callaway Golf (ELY)
Endeavour International (END)
Flotek Industries (FTK)
Goodrich Petro (GDP)
Harvest Natural Resources (HNR)
Keryx Biopharmaceuticals (KERX)
Miller Energy Resources (MILL)
Mitek Systems (MITK)
MGIC Investment (MTG)
Sonic Automotive (SAH)
Saks (SKS)
You can follow my trades alongside the 36,000 plus market players who follow me on SeekingAlpha (Shameless promotion). As always, do your own homework to see if you agree. Good luck out there.
Mike
At the time of publication, Kudrna was long NOG, BYD, and CLDX, but positions may change at any time.
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Tags: Akorn (AKRX), Alnylam Pharma (ALNY), Boyd Gaming (BYD), Celldex Therapeutics (CLDX), Default, Economic Calendar, Endeavour International (END), Flotek Industries (FTK), FOMC, Game-plan, Michael Kudrna, Northern Oil and Gas (NOG), Quantitative Easing, short squeeze, Sonic Automotive (SAH), Stock Radar, Weekly Homework
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