THURS. JUN. 5 THOUGHTS

A bit of an odd happenstance the last few days has been the divergence of the performance of the broader sector and the tech sector. With the Dow down 100 points (0.7%) on Tuesday, the NASDAQ was only down 11 (0.4%). With the Dow down 12 points yesterday (-0.1%), the NASDAQ was up 22 points (0.9%) . What does that tell us? People are shifting monies from sectors/commodities such as oil and banks to tech particularly after the MBI/ABK downgrade threat. That is not earth-shattering. What is notable is that it indicates a palpable lack of fear in the markets much less an abject indiscernible interest in LEH, MBI, and ABK. The ‘scare’ factor in LEH just is not there and people just don’t seem to care about the MBI/ABK items in the immediate-term. This would indicate that money is not necessarily going to money heaven off-hand; rather, it is being jostled around from sector to sector. Is there any guaranty that tech will stay stronger than the broader sector? Of course not. But that does lead to two prescient points. First, there would not seem to be an impetus (LEH aside) for a major market move right now. Thus, the way to day trade is to follow the hot money of the day. And point two- the hot money of the day tends to last for only a day or two rather than weeks on end right now. Just because tech is tops and oil stinks right now does not mean it will be the inverse tomorrow. So, keep be exceptionally quick on the trigger as the strong and weak sectors become almost interchangeable on a day-to-day basis for awhile.

Everything is as quiet as quiet can be right now. Foreign markets are mixed and little change. Commodities are little changed. The dollar is strong. But, the bias state-side is higher this morning with LEH seemingly stabilizing and tech showing an upside move in the early going.

The news flow continues to slow; day trading is hard as is, but it is going to get progressively harder with lack of news flow so not a ton of good thoughts this morning trade idea-wise:

CIEN- good earnings; stock has traded between 31 and 31.80 in the pre-open. Will use those extremes as entry points, i.e. short below 31, buy above 31.80.

ADCT- good earnings as well. Stock has traded between 16 and 16.50. Will short below 16 and buy above 16.50.

ROYL/WNR/SUN/VLO/most other oils- many of these stocks were crushed yesterday. Using the A-B-A2 thinking today; if for instance SUN opens at 44.50, goes down to 44.20 and comes back to 44.50, buy at 44.50 particularly if oil is inching higher.

LEH/GS/MER- all strong as LEH situations seems to be holding. If LEH in particular goes toward unchanged, short it and watch the other brokers.

CMTL- bid up strong on good earnings. A-B-A2. if it opens at something like 48.50ish, falls to 48ish, and rallies back to 48.50ish, it is a buy.

Airlines- all strong as several were upgraded. Don't know if there is a trade here, but keep an eye on them.

Good luck today.