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Naufal Sanaullah

naufalsanaullah@gmail.comwww.shadowcapitalism.com

MorepositiveearningsfromUStechcombinewithconstructiveperipheryauctionstosendriskhigher

StrongearningsbeatsandupwardguidancerevisionsfromIBMandJohnson&Johnsonhelpedtosetthepaceearlyforrisk,andthemarketsneverlookedbackallday.BetterthanexpectedresultsfromPortugueseandSpanishauctionsalsoprovidedacatalystforrisk-on,astheyieldsontheseauctionsarestartingtoslowdownaftersharplyrisingauctionafterauction.Afterhours,AppleprovidedmorefireworksasiPhonesaleshelpedbuoyearningspastconsensusestimates,evenasiPadsalesunderwhelmed(unsurprising,giventheMarch11USreleasedateandMarch25globalreleasedate).TheS&Paddedanother1.35%toitsvaluetoday,andtheinversehead&shouldersInotedinlastnight’spieceseemstocomingtofruition.Abreakthrough1340-1350shouldsendthemarketonanotherstronglegup,andafterAAPL’searningsafterthebell,thechancesofthathappeningsoonareimpressive.TheNazzysoared2.25%today,andtechcontinuestolookgreathere,particularlylarge-capfromavaluestandpoint.EURUSDhadamonsterdaytodayasSpain&Portugalsuccessfullyplacedsomepaperatbetterthanexpectedyields.WithriskonandtheECB-Fedpolicydifferentialonlywidening,EURUSDremainsago-tolongforthetimebeing,andIthink1.50isinthecards.AsInotedlastnight,thebreakoutthroughandretestof1.42issignificantfromatechnicalstandpoint,andwearenowtradingalmostfourbigfigsrichtothatlevel.

Shadow Capitalism

Market Commentary by Naufal Sanaullah

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Crudeinventoriescameinwellbelowexpectedtoday,asa2.3mbbldrawdownwasannounced,againstconsensusestimatesofa1.3mbblsurplus.Thishelpedtodriveoilandothercommoditieshigherstill,andcrudenowsitscomfortablybackabove$110/bbl.Supportaround$106/bblisholdingwellandIexpectnewhighsinoiltobepostedsoonerthanlater.Supplyconcernsaregoingnowhere,andneitherareinflationarypressuresinEM,especiallyasBrazilandChinacontinuetobebehindthecurveintheirattacksoninflation.Withoilpricesontheriseandinflationarypressurescreepingup,solarspresumablywouldbebeneficiaries.Infact,solarstockshavetradedratherpoorly,underperforminginrecentmonths,althoughthatmaybedueforachangeinthenearfuture.JinkosolarisonesolarnameinparticularthatIthinkcouldbereadytosetoffarally,especiallyasitapproachestheapextoitssymmetricaltriangle.AbreakoutimpliesamovebacktoOctober2010highsaround$40,about67%richfromcurrentlevels.

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Movingovertotech,opensourceenterprisesolutionsproviderRedHatstagedanimpressive5.67%rallytodayandisapproachingabigbreakoutattempt.RHThasgonestraightupsincepostinggreatearningslatelastmonth,andtodaybrokeoutoftheflagithadbeenbuildingasitconsolidatedtheearningssurge.Overheadresistanceat$48-49willbethenexttestforthisstockandasuccessfulbreakoutcouldleadtosomedramaticupside.Iamlongasoftoday.AnothertechnameIwentlongtodaywasthecloudcomputingplayFFIV.Afterfindingstrongsupportinthelow$90range,FFIVmanagedtopostastrong7.34%gaintodayasitbrokeoutofitsfallingwedgepattern.Earliertoday,Inotedthat“afterVMW’sgreatearnings,FFIVhasalotofroomtorun,”andafterannouncingterrificearningsafterhours,FFIVralliedanother12.53%afterthebell.Itisalreadybackaboveits55dand200dnowandthecaseforcloudstocksherecontinuestogetmoreconvincing.