Yesterday’s Action

by Dan June 9, 2011 9:11 am • Commentary

Afternoon sell-offs have been the story this week as the equity markets have tried to stabilize each day this week since Friday’s 2% sell off and each day we have seen the markets fail and close at or near the lows of the session.  This is obviously very poor action. 

[caption id="attachment_2518" align="aligncenter" width="300" caption="4 Day Intra-Day "][/caption]

Banks continue to lead the way lower, as most investors have shifted their focus from the lack of revenue opportunities back to regulatory issues…..(watch video here of JPM CEO Dimon questioning Fed Chairman Bernanke on the issue).

Tech continues to be a mixed bag as names like AAPL, IBM and AMZN put up a fairly decent fight, while Chinese Internet names like BIDU, SINA and SOHU continue to get destroyed……this makes sense to me as investors likely to hold on to perceived quality for as long as they can, and puke more speculative issues…..CIEN disappointed on earnings Tues evening and saw its stock get slayed yesterday, down 16%, which took down other telco equipment names like JDSU, NVTL and RVBD…..

TXN after the close lowered Q2 earnings and sales estimates in their mid quarter update and until they blamed the short fall on NOK the stock was down 5% in the after hours session only to recover to unchanged.   This is BS in my opinion, it’s not like NOK’s woes will suddenly turn around in Q3..this stock will see 31 at some point this summer, I am staying short.

Retail names got into the mix yesterday adding fuel to the fire as the CFO of ANF reiterated Q2 guidance but his comments about the selling environment and input costs sent the stock down 5%…..this also makes sense to me as ANF’s stock has enjoyed a very healthy rally this year as it’s specialty apparel peers like GPS, ARO and AEO have gotten the snot kicked out of them……

Energy names were all over the map as the focus had been on the OPEC meeting and their inability to agree on crude production for the first time in 20 years….this is likely to cause continued volatility in the space as crude was all over the map yesterday….

In sum, individual stories trying to hang on here, but I see too many chinks in the armor. Earnings will hold the key….with economic data cooling I am hard-pressed to see managements sticking their heads out there with overly aggressive guidance for the 2nd half….markets are obviously getting a little near term oversold and probably due for a little relief rally…I continue to trim shorts with the intention of putting them back out…..shucking and jiving a little…..on the flip side I am going to look for opportunities on the long side for names that have gotten massively oversold….thus the RIMM idea from yesterday.