Trader Talk

Month's End: Defining the May Market Story

It's the last day of the month and no one wants to be a hero.

With that said, the Street is struggling to find a narrative -- it's not clear where we are, so instead of broad narratives I am getting a lot of little (and somewhat timid) stories.

Here are a few observations:

1) a lot of traders are long credit cards, but this is a CROWDED long;

2) energy and materials are tough shorts: a lot of traders want to short 'em, but many got burned at the end of April doing this;

3) brokers: buy when oversold, for a trade is the usual mantra, but quarter ends today for Lehman, Goldman, and Morgan Stanley. Lehman is the key here. If traders like what they hear on losses and capital preservation, as well as a broad vision of where they want to go, brokers could lead the financials higher.

4) some tech leadership is forming: stocks like EMC, Apple, and Research in Motion had a good month

5) retail: everyone is just staying negative on consumers until proven wrong. J. Crew's poor guidance does not bode well for May sales

6) fundamental on coal and metals still very strong: look at Joy Global , a mining machine maker, new highs today on positive comments. Fertilizers remain strong but many believe if oil comes in so will they.

7) macro outlook is cloudy: there are sizeable cash positions that need to be invested when the fear of a nasty recession ebbs, as does credit fears.

For the month: S&P up 1.2 percent, Dow down 1.2 percent (thanks to terrible performances from GM and the financials) -- this is the first time the Dow and S&P have diverged since June of 2006. Nasdaq up 4.8 percent.

Questions?  Comments?