Marketview: Against All Odds

• Posted by DynamicHedge
• on July 22nd, 2012

Despite all the pessimism and the various cases against it, the market continues to act well.  This is not an easy market to comment on or trade.  While I’ve been giving a reluctant nod the the long side for the last couple weeks, it’s been amid very mixed signals.  The truth is, the long trade here is much tougher than it was at the beginning of the year, and the short trade is less attractive than it was at the end of April.  It’s choppy and will likely stay choppy, but with so many investors betting against or just plain hating this market, favoring the long side should continue to work well.

Technology found it’s swagger this week and the $NDX posted the best results of any of the senior indices.  The important part of this is that $AAPL barely participated, meaning that the rally in tech is deep and it’s not just $AAPL dragging the index up.  Tech IPOs even performed decently for the first time since the $FB beatdown — both $KYAK and $PANW launched this week without cratering.

On the negative end of the spectrum yields are still falling and safety sectors are still catching bids.  Spain is not looking good as yields move higher and equity moves to new 52-week lows.  I also noticed that the $TRAN isn’t confirming to the upside.

Bottom line: watch for more frustrating choppy back and fill, not signs of imminent collapse.

Winners: $BHI, $HAL, $GOOG, $EBAY, $AMZN, $BAX, $PFE, $MON

Losers: $BAC, $MS, $JPM, $HD, $LOW, $CAT, $CVS, $WAG

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