U.S EQUITIES- ‘INTO THE TRADING WEEK’, 02.03.2015

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SPX is up a seemingly fatigued 1% over the past 2 weeks, yet traders at the close Friday, including YPT were calling the last 2 weeks ‘sensational’ and ‘great!’

WHY?

Well, YPT got it’s long awaited QNET (NASDAQ INTERNET INDEX) breakout on Feb 12/13. This QNET Momentum gauge plasters, ‘INTO THE TRADING DAY’ and YPT social media links. It has steered our clients books almost perfectly with each market unwind and rally, leading the major indices in each market turn the past year.

In the past 10 trading sessions, the max gain in YPT’s MOMO ( Growth, Leaders, High Beta ) barometer was ~4.5%, while the majors indices limped around at highs. Early in Wednesday’s trading session, YPT noted the outperformance of the QNET as its MegaCap components started to flourish (GOOG LNKD PCLN NFLX AMZN) in what we called ‘sugar coating”. Pour some sugar on Me’ga Caps continued to see follow through on Thursday into months end. The index peaked this week above the summer highs and likely does not go further in YPT’s view until the SPX re-visits its place in the upper range it was bound to for many weeks till recent leg higher. It’s been a nice ride, but some consolidation is needed in our SMID’s and MegaCap QNETS after the rip higher and SPX may lead it there.

QNETmarch1

Also, despite Small Caps showing stronger Revenue growth vs. S&P 500 this earnings season (*as expected due to Domestic vs. Multi’s foreign exposure), RUT outperformance / daily new highs last week, the Relative strength performance of Small Caps can’t get over the ‘R’ hump (line). It’s not a secret IR hikes make Small Caps less attractive as markets near their due date, so RUT relative strength v. S&P 500 chart at this time is hardly surprising. To get over the hump, market as a whole needs a catalyst and there doesn’t seem to be one near term. Also this past week, market lost its reasons to climb the ‘Wall of Worry’ that got it to fresh highs.

MARCH1st

Is YPT worrying about the posssible consequences of money starting to resume its roll out of RUT (YPT niche is SMID caps/ growth!)?. Were we worried in March 2014 till the bottom in October 2014 on this chart?. No, just rotated to the Grumpy Old Men stocks (MSFT INTC CSCO) for a period of time. Lastly, how many growth, high beta stocks did YPT play to the upside after the grizzly valuation unwind exhausted itself in June till now?. This chart didn’t look any better than, but its been a nice beta ride since, including this amazing earnings season for our top 40 SHADOWLIST (public) stocks. In Q1’15, YPT alerted multiple SMID’s, which rocked +15-35% post calls. They included ( PAHC NOW PAYC QTWO IPGP FEYE ) and more in YPT Premium as you know. Just last week, 3 more YPT top stocks knocked it out of the park, ( AVGO here since $38, CRM blow out and CSGP ). All these listed stocks were on our sites SHADOWLIST top ~40 (public) tab entering 2015.

In all, yes, it’s going to be a struggle to see this breakout in favor of the small guy. An inevitable shake and unwind is likely as soon as the hike date gets priced in and YPT will adapt as needed when the time comes. In the meantime, as noted post Greece expected developments over a week ago, we’d trim some of our big winners as ‘Wall of Worry’ gets painted over with Greece, FED (Yellen) and earnings that matter disappearing over the horizon.

It’s (trimming, taking profits) not out of fear due to any Bear rumblings, it’s just the natural thing you do as a trader and investor, especially if you’ve had a ‘sensational’..’great’ earnings season!

Now..onto YPT SHADOWLIST single stock/ sector plays heading into the week, …………………”

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