Bears Get the Upper Hand After Disappointing Housing and Manufacturing Data

     "U.S. stocks declined Tuesday, with the Nasdaq Composite falling closer to correction territory, after disappointing reads on builder sentiment and manufacturing in the New York region offset upbeat earnings from Dow components Coca-Cola and Johnson & Johnson."

     "We're not getting consistently good economic data," said Mark Luschini, chief investment strategist at Janney Montgomery Scott.

     "The market is trading more on technical levels as opposed to fundamentals, but ultimately the fundamentals will trump everything, as that's the environment you can project for corporate profits, and corporate profits are going to matter more than multiple expansion," he added.

     "Reports of pro-Russian separatists briefly taking control of an airfield in eastern Ukraine also weighed on investor sentiment."

     "Wall Street had started off the session higher, with the Dow climbing nearly 100 points, after Coca-Cola reported first-quarter revenue that beat expectations and Johnson & Johnson hiked its yearly outlook."

     http://www.cnbc.com/id/101584684

     However, I wrote this at lunch. I didn't have time to say more but I was thinking the market might turn by end of the day. After all what you had was a bullish input-the strong earnings out of value stocks like KO and JNJ and then a bearish input in disappointing econ numbers. 

    Still, I don't agree that the bears are led by the real economy while the bulls are only getting by on technicals. To the contrary I think that the selloff has mostly been about the rotation for the big money managers who are moving from the momentum 'growth stocks'-the Nasdaq-to the 'value stocks' like KO and JNJ. 

     Having said that the Nasdaq itself bounced back hard. After the midday sell off pushed the index into technical bear territory it bounced all the way back up to positive. 

     "Whipped by volatile internet and biotech stocks, the Nasdaq staged a more than 2 percent rally back from the brink of correction territory Tuesday in the biggest one day turnaround in five years."

     "At its lowest point Tuesday, the Nasdaq was off 9.7 percent from its March intraday high of 4371 - close to the 10 percent threshold that some traders say marks an official correction. But the market bounced back, and Nasdaq ended the day with an 11 point gain at 4034, about 7.7 percent below its March 6 high."

     "Some of the very stocks that helped push the Nasdaq to fresh 14-year highs by early March were slammed in early trading Tuesday, adding to losses of more than 20 or 30 percent from their highs. The poster child for momentum—the iShares Nasdaq Biotechnology ETF IBB—was down as much as 24 percent from its Feb. 25 high Tuesday but closed in positive territory."

     http://www.cnbc.com/id/101585442

     So where does that leave us? For now I'm a bull-if you recall I was a bear last week and hit the sweet spot on the ball shorting Citi down to $45. 

     http://diaryofarepublicanhater.blogspot.com/2014/04/d-day-jp-morgan-misses-estimates-market.html

      I managed to time C just perfectly on Friday-which was driven down with the rest of the banks and the rest of the market in the premarket to $45-by getting out by about 10 A.M. when it was around $45.26 or so-this was just barely off its low of $45.15 so my timing was almost perfect for once. My best decision was not to try to short it any further down from there as its Monday's earnings impressed the market and it's now trading back at over $48. 

      Now I have BAC at $17-90 calls May 2! If things go well tomorrow I should realize a big gain here maybe even bigger than I got on C last week. At the present I'm up net almost 10 percent on the $10,000 I've invested over the last few weeks. If I can continue at that rate I'd be pretty happy-if I do get BAC right tomorrow I will be at considerably more than a 10 percent gain. 

     My guess is that BAC just can't miss big on the downside and can't have any brand new thing to worry about that nobody ever thought of before. If it does this it should be a big day for the stock-and for me. 

     In any case my title shows the folly of summing up the market at midday-though CNBC does it too-you have no choice. At lunch the bears had the upper hand but it's how things finished that counts.