We have had the up move we called for at the beginning of the week.

Traded SSO from 72.90 to 74.40, timed the exit perfectly in hind sight.

Benefitted in AMR and DUG on the move down from oil.

The tone of the market is changing, we did not get the post oil close up market moves of the past few days. Things are going to get very interesting tomorrow or Monday :)

Good things I did today: took profits, did not get greedy. Stayed strong on STV and exited with a slightly up trade. Stayed strong on outlook for the markets and used direction and tone to create a profitable trading day.

Despite headline news, the inventories were actually fine and rising as the energy department reported issues offloading from the Gulf ships. Could energy and the market finally start moving in lockstep?

Byron Wein: Margin squeeze, Consumer hurting, new down leg coming.

Excellent post from tradinggoddess blog on stocks with 40% moves:

6. Stocks of companies that beat the analysts’ consensus estimate (if there is one) by a wide margin. Such companies report triple digit quarterly EPS growth and significant rise in sales. Boosted guidance for future earnings also help. Market tends to respond enthusiastically to such news, sending the price of a stock in the sky on monstrous volume.

7. Stocks, belonging to currently hot sectors. For example if several coal producers report significant earnings growth on favorable market conditions, it is very likely that Wall Street will bid up stocks of other members of the same sector, even when the fundamentals of those other members are far from impressing. Investors’ expectation for future earnings is a key here.

It's a wonderful feeling when the market moves the way you expect it to.

Took profits on MXC, nice scalp
Did not get greedy, took profits on IMB
Was Strong on trades, had to wait till the last half hour for QLD to come to my sell point
Was in control of my emotions all day long

Will post thoughts on tomorrow later

Net trend is breaking higher over the next couple days.

The consumer conference board confidence number at 57.5 was worse than expected, but the market was oversold and rallied on bad news.

CNBC tried to spin the uptick in home sales but it was a seasonal uptick from Mar to Apr, same as in prior years. We see no sign of a pickup in the home sales data today.

As we expected, we got the bounce in the market today. The Nasdaq which we stated was looking strong bounced up 1.8% today, a strong move up albeit on low volume.

Further, as we mentioned in our post yesterday, we expected Energy to be weak today and the XLE was down 0.48%.

Discretionary and Financials also got a well deserved bounce with the XLF up 0.37%. We'll be looking to establish short positions in the coming days and will give a heads up.

Stocks
Merrill Lynch MER +1.48%
Home Depot $27.28 +1.91%
We were looking for a bounce and will be looking for an entry on the short side in the coming days.

Markets sold off harder last week than expected.

S&P 500 Market Momentum:
Short term: Slightly Up over the early part of this week
Intermediate Term: Negative/ Short

Short Term Sentiment
Short term sentiment has moved into the firmly pessimistic territory and can be reviewed here. Paradoxically, this is slightly bullish for the markets.


Week Ahead Forecast
We expect a small move up /sideways consolidation over the coming days. However, the longer and intermediate trend remains decidedly bearish.

I am looking to unload long positions if the market trades higher and establishing short positions for the next wave down.

Sector Reviews
Energy - XLE $86.26
Short term and Intermediate term indicators are bearish for Energy. While we've been waiting for the topping call on Oil, the markets may have been waiting for Memorial Day driving weekend to pass before dropping the price of Oil. Oil is in a bubble as are other Commodities, but it has been tough to slay the beast and we'd look for confirmation of a turn before taking aggressive positions.

Technology - QQQQ $48.20
Nasdaq is in a bullish short term pattern over the next few days, but the intermediate term forecast is negative. With technology taking over leadership of the market, the QLD is a good play on Tuesday if the market gaps down on the open.

Consumer Discretionary - XLY $31.70
Consumer Discretionary sector is much weaker than the market currently. Rightly so, as Wall Street is recognizing how terrible the situation is for the consumer. We will be looking to short this sector once short term technical indicators roll over.

Financials XLF $24.65, SKF $112.95
Financials were battered last week and are in severely over sold status. Look for a bounce in stocks like AIG, Merrill, Lehman, Goldman, Fannie, Citi etc. However, we expect the bounce to be shortlived and will be looking for short entry positions for a new leg down coming soon.

Stocks
Home Depot $26.77 - Short position - look for entry.
We are looking for a bounce in the stock to enter a short position this week. Entry point is looking to be in the $28 range. If available, HD is about to embark on a relatively strong leg down over the coming weeks. Fundamentally, housing continues to be weak, inventories are building and the incentive for an uptick in building supplies does not look likely anytime this year.

Goldman Sachs GS $172.30, Merrill Lynch MER $43.36 - look for entry.
Look for a bounce in the financials early this week as they are in solidly oversold status in the very short term. Intermediate term, we are bearish and will be looking for shorting opportunities.

Comment: Last week shows the signs of an exhaustion move on Oil, we expect oil to have a down week this week and look for a catalyst to provide a move down in Oil over the coming days. Monday and Tuesday could see a continuation of rising oil prices but options expiration is at the end of the week and we see lower prices by the end of the week.

Is $120 oil even real? Not if you ask the Saudis, or even Lehman Bros.

The investment bank’s oil expert said this week that the oil boom is due to bust. Economic growth across the globe will slow just as new refineries kick in, raising supply.

Recession or not, a U.S. slowdown will slacken demand sharply, right as new oil hits the market. "Supply is outpacing demand growth,” said Michael Waldron, Lehman’s oil strategist.

"Inventories have been building since the beginning of the year. We have pretty significant projects starting soon in Saudi Arabia, and large off-shore fields in Nigeria,” he said.

http://moneynews.newsmax.com/money/archives/st/2008/4/25/175710.cfm?s=al&promo_code=6231-1

Lehman is now predicting prices at $83 a barrel in 2009 and as low as $70 in 2010.

Although some years off, Brazil too has found as much as 8 billion barrels of light oil and gas offshore. The South American giant’s president says his country might well join OPEC when the Tupi field begins to pump, in 2011.

In addition, Middle Eastern sovereign wealth funds have pushed up the oil price by investing billions of their oil gains, ironically, in commodities index funds.

Now they could be looking to get out, warns Waldron. He figures the money effect has driven anywhere from $20 to $30 into the barrel price.

In addition, a weak dollar is holding oil prices high, according to a series of statements from OPEC leaders over the past week.

If you buy the views of OPEC’s various leaders, that’s at least another $20 of oil price that is not supported by the actual supply and demand situation.

In addition, Europe’s central bank seems bent on containing inflation there. A rate increase in Europe is sure to contain the euro’s rise against the dollar — if serious steps are taken soon.

Couple that with a lower-than-expected rate cut in the U.S. next week, or perhaps no cut, and the oil price drops as the dollar gains ground.

All this is having little immediate impact now, of course. U.S. gas prices at the pump hit $3.58 a gallon just as the summer driving season kicks off.

If nothing changes, analysts now expect gas to rise to as high as $4 a gallon in as little as a month.

Comment: The mosaic is being put together by investors that this oil story has nothing to do with peak oil. Rather, it is yet another bubble created by Alan Greenspan and his boom bust economy, and now being perpetuated by Bernanke with his weak dollar and low interest rates:

The price of crude oil today is not made according to any traditional relation of supply to demand. It’s controlled by an elaborate financial market system as well as by the four major Anglo-American oil companies. As much as 60% of today’s crude oil price is pure speculation driven by large trader banks and hedge funds. It has nothing to do with the convenient myths of Peak Oil. It has to do with control of oil and its price. How?

First, the crucial role of the international oil exchanges in London and New York is crucial to the game. Nymex in New York and the ICE Futures in London today control global benchmark oil prices which in turn set most of the freely traded oil cargo. They do so via oil futures contracts on two grades of crude oil—West Texas Intermediate and North Sea Brent.

A third rather new oil exchange, the Dubai Mercantile Exchange (DME), trading Dubai crude, is more or less a daughter of Nymex, with Nymex President, James Newsome, sitting on the board of DME and most key personnel British or American citizens.

Read the entire story on Financial Sense

Part II

Part III

Part IV

Part V

Part VI

Part VII

Part VIII