The abundance of news last week — most with a positive slant — finally boosted the S&P 500 out of the Channel of Gloom in which it was mired for so long. Not only did the S&P 500 break out of the channel, but it is now threatening the 200-day moving average, having surpassed the 50-day MA last week.
Apple (AAPL), Morgan Stanley (MS), and Ford (F) powered the corporate side with excellent earnings reports, while today’s positive news from FedEx (FDX) and the housing industry — new home sales were up 23.6% in June — lifted the gloom from the economic side. To be sure, there were a few corporate disappointments last week — IBM’s (IBM) revenues, Amazon’s (AMZN) earnings, Google (GOOG) — but on the economic side, most of the reports were at least tolerable.
All this positive news rapidly shifted the market from its flight to safety to chasing the bulls. The baby bulls led the charge, with all small-caps turning in a +6.5% or better performance. Among the small caps, small-cap growth was the best (+6.7%). The worst cap/style was large-cap value, up +3.3%, which is still pretty good. Read more…
Tweet This Post
Categories: What the Market Wants Tags: AAPL, AET, AFL, AMZN, BA, CIT, F, FCFS, FDX, GOOG, IBM, LVS, MOT, MRK, MS, NTSC, RGR, S, sectors, SNE, TESS, V, XOM
Stress Tests, Fed Frets and Sideways Bets
by Daniel Sckolnik of ETF Periscope
“A child of five would understand this. Send someone to fetch a child of five.” ~ Groucho Marx
There was something for everybody in the markets this week, with huge servings of earnings releases, multiple throat-clearings from the grizzled gentleman at the Fed, and test results out of Europe that were as subject to interpretation as a large splatter of ink on white paper.
On Wednesday, Federal Reserve Chairman Ben Bernanke recommended to Congress that they should continue to prop up the sputtering economy, coming in strongly on the stimulus side of the “stimulus versus budget deficits” debate that has two distinct camps circling their respective wagons. The markets gave Ben the raspberry, as the Dow Jones Industrial Average promptly lost over 100 points, ending at 10,120.
However, Bernanke’s encore appearance on Thursday got rave reviews. He proclaimed to his Congressional audience: “We are ready and we will act if the economy does not continue to improve — if we don’t see the kind of improvements in the labor market that we are hoping for and expecting,” The markets jumped from their seats in a standing ovation, as the Dow took back what was given the previous day and then some, ending at 10,322, up 200 points. Read more…
Tweet This Post
Sentimental Journey to the Southside
by Daniel Sckolnik of ETF Periscope
“Economics is extremely useful as a form of employment for economists.” ~ John Kenneth Galbraith
Talk about a serious display of bad feelings.
The markets were displaying an admirable sense of resiliency throughout the bulk of the week, shrugging off the sort of news that often spooks investors into bouts of melancholy mood swings.
On Tuesday, Moody’s Investors Service cut Portugal’s credit rating two levels to A1, ramping up concerns that Spain could be next in the process. If this happened just two months ago, the reverberations would have been as strong as a high number on the Richter Scale. Instead, the Dow Jones Industrial Average ended up over 145 points.
On Wednesday, May’s Retail Sales numbers were released, and they were slightly below expectations, with June’s sales down 0.5% on the heels of a 1.1% decline in May. Also on Wednesday, the Fed proceeded with its ritual reading of the minutes, proclaiming in their own inimitable fashion that “the recovery” shall continue, but maybe not on the pace they had hoped for. Both the DJIA and the S&P 500 Index responded with a sad face, manifesting in the form of a hearty round of selling. Still, the Dow managed to scratch out a win at the end of the day, though the S&P 500 ended off slightly. Read more…
Tweet This Post
By Phil of Phil’s Stock World
Wheee, what a ride!
We only had one trade idea for Members all day Monday and that was the DIA $103 calls for .52 from the 9:46 Alert. It is extremely rare that we only have one trade in a day but there really wasn’t anything for us to do as we had been BUYBUYBUYing all last week so there was nothing to do but watch. The calls finished yesterday at $1.12 for a nice 115% gain in 24 hours but we took the money and ran at 10:04 on a spike up to $1.25 because it’s too close to expirations to mess around. They actually topped out at $1.55 near the close but - better safe than sorry. Anyway, we replaced them with IWM calls later in the day and those doubled up and we were out at the close – again, it just doesn’t pay to be greedy. Read more…
Tweet This Post
Categories: Phil's Stock World Tags: AAPL, CSCO, DELL, DIA, GOOG, HPQ, IBM, INTC, MA, SNE, SNX, T, TZA
I hope you enjoyed the Fourth of July fireworks on Sunday, because there might not be much to celebrate on Wall Street this week.
Last week we warned that if most of the impending economic releases were negative, the market would likely fall worse than it did the week before. And that’s what happened. In fact, it dropped approximately twice as much as the week before. (It doesn’t feel so good to be right.)
Interestingly, the numbers weren’t all that bad, just somewhat lower than expected. In fact, there was a better-than-expected unemployment figure on Friday (9.5 versus the expected 9.6), but that was offset by the employment number (nonfarm payrolls) which fell -125,000.
The market’s 15% drop since late April seems to have turned Wall Street into a bargain basement. This morning, bargain hunters gave the market a nice pop, with the S&P 500 reaching an intraday high of 1042 (+2.0%), but it closed the day almost flat, up only +0.5%.
Read more…
Tweet This Post
By Phil Davis at Phil’s Stock World
Wheeee!
Finally all our very boring sitting around at 75% cash makes us feel smart as the market makes what we hope is that final blow-off bottom to re-test our lows. I already sent out an Alert to Members this morning so a lot of this is old news to them but nothing has changed since 4:30 so here’s a quick reprise – What we are mainly seeing in the futures this morning is 2 major factors that are driving the markets lower:
1) Japan, where too strong Yen (88.6), -0.1% industrial output, -1.7% exports, rising unemployment (just 5.2%) AND lower household spending (-0.7%) numbers sent the Nikkei down 1.25% today to 9,570. If you think about it though, pretty much all of that is a strong Yen issue because it lowers demand for the exports (making them more expensive) and then factories slow down and people get laid off and household spending drops from that PLUS the fact that it’s now cheaper for them to buy imports so they can buy the same stuff at lower prices. Read more…
Tweet This Post
Categories: Phil's Stock World Tags: AAPL, Case-Shiller, CAT, FCX, Macro View, OIH, PFE, TBT, TZA, VIX, XLB, XLF, XOM
By Phil Davis at Phil’s Stock World
We just cannot get this party started!
Every rally is getting sold into, much the way every sell-off was bought into last year. Is this a major change in sentiment as the “smart money” takes every opportunity to get out of the market or is this the “dumb money” being stampeded to the exits – once again at the bottom of the cycle?
Fear is certainly permeating the air and, as I have to keep saying to make our position clear, we are generally aiming for 75% cash with 23% positions that are hedged by at least 20% and 2% in Disaster Hedges that pay 5:1 so we’re “bullish” but it’s bullish and guarding against a 30% drop – which is more bullish than we were in May, when we were guarding against a 40% drop on our buys. Anyway, it’s VERY important to keep that in mind as we are picking up very long-term positions and we actually HOPE the market does go lower so we can buy more at low prices because it will be HARD to commit our cash to any rally that doesn’t get us over the April highs and we may have a LONG time to wait for that one.
Read more…
Tweet This Post
Perhaps it was the new senator from Massachusetts who let the bears out, but I suppose it was a bit more than that. When the week began on Tuesday, after the Martin Luther King holiday, the bulls were grazing happily on GARP stocks, as contented as California cows. But then somebody opened that gate, and the bears roared through and the bulls ran for cover.
It wasn’t exactly a massacre, but it was far from pretty. Consider that the best style/cap, Small-cap Value, was down 4.3% and the worst, Large-cap Value, was down 5.2%. Obviously, all style/caps were ravaged, and the week’s carnage wiped out everything we had accomplished since Santa Claus came in December. Read more…
Tweet This Post
Categories: What the Market Wants Tags: AAPL, AMTD, AZO AFL, BAC, C, EGAY, Manic Mondays, MS, NTRS, NVO, PH, RIMM, SCHW, sectors, WFC
Stocks came strongly out of the gate last Monday to kick off the 2010 Wall Street race. And indeed the market advanced throughout the week, albeit fitfully, with the S&P 500 starting the week at 1114 and closing at 1144. So let’s recap last week’s market data for some insight on where we should be looking to invest now.
Large-cap Value took the early lead and was up 3.8 % for the week. The worst cap/style was, interestingly, Large-cap Growth, which was still up 1.8% for the week. Value did better than growth in each of the caps, primarily because of the Financial Sector’s continued rally. Part of the blame for the lagging growth stocks is due to sporadic but realistic talk about valuations of large-cap techs, such as Apple (Nasdaq: AAPL) and Google (Nasdaq: GOOG). There was also concern, though not as noisy, about valuations in various Materials and Energy stocks. Read more…
Tweet This Post
Last week, the market was very selective, with only Large-cap Growth in positive territory — think Apple (Nasdaq: AAPL), Amazon (Nasdaq: AMZN), and American Express (NYSE: AXP). All other cap/styles were negative — and the smaller you were, the more you lost. In fact, this entire month the market has beat up on small-caps with its “the smaller you are, the more you lose” bias.
It was an odd week. Economic indicators were mixed, with the usual villain, the initial jobless claims report, disappointing us once again. To be sure, there was much positive news from reporting companies, but revenue growth was again spotty, although better than last quarter. The disappointers include Boeing (NYSE: BA), Northern Trust (Nasdaq: NTRS), Terex (NYSE: TEX), and USG Corp. (NYSE: USG). Seven more banks failed on Friday, and a rather significant player in the commercial real estate field, CapMark, filed for bankruptcy. Read more…
Tweet This Post
Categories: What the Market Wants Tags: AAPL, AMZN, AXP, BA, CapMark, energy, healthcare, HOGS, KMGB, KVA, NTRS, sectors, TEX, USG