April off to a bad start, what is in store ?

First two weeks in April has alarmed many optimist.

S&P 500 is down 2.71% in 9 trading days.

Chinese Data in Q1 is less than expectations.

Chinese GDP in Q1 came in @ 8.1% growth, but Chinese target is 7.5% for the year...IF that is where we are heading, then Q2 & Q3 will be well below 8.1%......

Chinese Export are under severe pressure, latest currency tinkering on Saturday is not going to help it either. China has increased its band from .5% to 1% in terms of allowable swing. This means that Chinese currency can appreciate more against US$ & Euro. Its going to increase imports further.

Many optimist are trying to read Chinese data with no concern for their official target of 7.5% GDP growth.

I expect volatility to continue till end of July, resulting in lower lows & lower highs.

Individual investors are @ their lowest level of  confidence in being bull in last six months, bullish reading @ 28% only.

CMF in majority of stocks and indices are heading towards negative. S&P 500 CMF @ only 0.055 lowest level in last 4 months.

April to September is traditionally weak period for US market, but due to US Presidential election, we may get some policy boost earlier. August may start to look bullish again.

This does not mean, that we should be out of this market, but it means to be extremely selective where we focus.

Many stocks may outperform during this weak period, based on improving fundamental.

I personally believe that commodities will not go up, unless Chinese economy improves from hereon.

Follow what is working on a day to day basis.

Here is a summary of how some of our portfolio fared in first two weeks of April. I have included some widely followed stocks also :

LVS   +5.54%
CMG +5.36%
LNKD +5.15%
BIDU  +3.84%
CF      +1.97%
AAPL +.95%

CLF........0%
APKT <.04%>
LULU <1.63%>
FCX    <2.04%>
GOOG <2.59%>
APWC <2.89%>
CNQ   <3.59%>
COH   <3.93%>
DOW  <4.16%>
MET   <4.58%>
STLD <5.71%>
AMZN <6.94%>

WPRT <8.04%>
RVBD <9.12%>
ZNGA <9.89%>
MS      <12.02%>
RIMM <12.31%>
PMTC <25.38%>

What we can clearly see in this performance chart, that strong stocks fared much better than bargain. Moral of the story is, that there is a very good reason, why money managers chase strong stocks.

Next four months, may bring out some laggard, that is my strategy which will remain unchanged in the short term.

Earnings reaction has been negative so far, focus is on "quality of earnings"

SO......tread carefully in next four months, weak period may become painful for some of us. Only guidance i have, is to do homework & have longer time span for trades to work out.

Good luck with your OWN analysis & view of market.

BLOG does NOT give buy or sell.

Saleem