The market continues to creep upward, with the short-term trend clearly positive albeit on quite low volume. The S&P 500 remains above its 50-day and 200-day moving average, but as we head into the current week, our concern is about conviction within the marketplace. The ECRI (Economic Cycle Research Institute) finally gave a positive uptick last week, but it would be early to conclude that we’re on a strong uptrend.
Perhaps we’ll get more clarity this week as a number of economic reports are in the offing. On Tuesday, the Fed will give us its reading on where the economy is headed, with the FOMC (Federal Open Market Committee) report. We’ll also get the numbers for productivity and wholesale inventory. Wednesday brings the international trade balance and Treasury budget reports; Thursday will give us export and import prices and weekly initial jobless claims; and Friday will see consumer sentiment, retail sales, and business inventories.
Tomorrow’s FOMC report is probably the most important of these, and it is likely that today’s relatively lifeless market is due to the wait-and-see attitude about the FOMC. Read more…
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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…
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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
By Phil at Phil’s Stock World
Isn’t this fun?
Up 200, down 200, up 200, down 200 - wash out your savings, rinse and repeat! What a total sham of a market we have these days with machines running us up and down on virtually no news at all. Yesterday they would have you believe that Ben Bernanke caused a sell-off. How ridiculous is that? He didn’t say one thing that he didn’t already say in the Fed Minutes that were released on the 14th, which were the notes from the meeting of June 23rd so for analysts to get on TV and say “the markets were concerned by the Chairman’s comments” is beyond stupid – it’s criminal negligence.
That’s Can Not Be Correct and other media outlets are supposed to have something that is called a Public Trust, which means that broadcast licenses are a national resource that are meant to be used responsibly. I know, that almost sounds like a joke but it’s not – we used to care about these things… Now the public is treated like cattle and is simply stampeded to the slaughterhouse at the whim of the media and the Big Money that pulls their strings and our equally puppet Government spend their days fighting over who gets to wear the captian’s hat on the Titanic. Maybe it is a joke - too bad it’s on us!
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Categories: Phil's Stock World Tags: BAC, BYD, CCJ, DIA, GOOG, IWM, NFLX, QQQQ, STX, TNA, TZA, UNG
Tipping Point Deja Vu
by David Brown, Chief Market Strategist, Sabrient Systems
Seems like we were here just last week, waiting for the market break out of its “Channel of Gloom” or tip further into the Channel’s murky depths. In fact, we came close to tipping to the positive side last week but were held down by a poor consumer sentiment report on Friday and negative earnings from Google (GOOG), plus a double negative whammy from Bank of America (BAC). Not only did BAC announce negative revenues, it let loose with a scary warning about the negative impact of write-offs from the new financial regulations. So on Friday, the S&P 500 tipped further into the three-month Channel of Gloom.
Today the market drifted near the unchanged mark most of the day, but S&P 500 managed to close up +0.6%, well below the top of the Channel and still submerged below its 50-day and 200-day moving averages. In the after-market, following IBM’s disappointing revenues report, the market gave it all back, and then some.
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Categories: What the Market Wants Tags: BAC, BAP, GOOG, GS, IBM, JNJ, KO, LINC, MS, NEU, sectors, T, TXN, UPS, WLP
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…
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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…
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Categories: Phil's Stock World Tags: AAPL, CSCO, DELL, DIA, GOOG, HPQ, IBM, INTC, MA, SNE, SNX, T, TZA
One hesitates to put too much emphasis on any given week when discussing market trends, but this week could be the tipping point for the current market. Despite the S&P 500’s 50-point gain last week on virtually no news at all, the fact remains that it is still more than 12% below the April 23rd high of 1217 and still has not broken out of the downward channel that began on April 26.
The bottom of the channel was reached about two weeks ago at 1010, and the top is now about 1080, as you can see from the chart below. Coincidentally, the top is close to where the 50-day and 200-day moving averages currently reside.
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Categories: What the Market Wants Tags: AA, AMD, BAC, BVN, CSX, GE, GOOG, IDCC, INTC, JPM, MRX, NVLS, RIG, sectors
ETF Periscope: Mirror, Mirror on the Wall Street
“‘But I don’t want to go among mad people,’ said Alice. ‘Oh, you can’t help that,’ said the cat. ‘We’re all mad here.’” ~Lewis Carroll
One version of a well known children’s fairytale features a magic mirror that, upon being asked the question “Who’s the fairest of them all?” replies with the harsh truth of reality. Such a mirror would be eminently useful at this juncture in time, when the markets are, at best erratic and yes, even a bit more schizophrenic than usual.
So in terms of the markets right now, who, indeed, is the fairest of them all? Would it be the snorting Bovines, who have prodded the major indexes past key points of resistance during the current holiday-shortened week, or the lumbering Grizzlies who pounded the indexes into submission for the bulk of the last several weeks?
Who, indeed, mirror, mirror? Bear or Bull? Or maybe a beast of a more sideways nature?
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By Phil of Phil’s Stock World
“The rich are less susceptible to the shame and fear-mongering used by the government and the mortgage banking industry to keep underwater homeowners from acting in their financial best interest.” – Brent White
One in seven homeowners with loan over $1M are in default. That compares to 1 in 12 loans below the $1M mark. This is putting a huge amount of stress on the financial system as 23% of all luxury homes bought as investments are now 90 days or more overdue compared to just 9% of the smaller homes. Don’t think of this as a 1:1 relationship either as the cut-off of $1M means that a single $10M unpaid mortgage above the line is worth 100 $100,000 loans (the national average) that are unpaid below the line so the distortion from a cash basis is close to a level of 100:1, which just so happens to be the difference in the income level between the top 1% and the bottom 99% as well! Read more…
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It has been a week of sparse market-moving news, but what news there was continued to be generally supportive of the market’s slow growth recovery. Remarkably, volatility continues to be very low. Unlike the 6 to 10% gyrations (in both directions) of late 2008 and early 2009, we’ve seen very few days this year when the market has moved more than 1% in either direction.
That could change — maybe soon, as this week is packed full of potentially market moving reports.
On the government side, we have trade balance data tomorrow, along with export and import price data. Wednesday brings the Consumer Price Index (CPI), retail sales, and business inventories. Thursday we have the weekly initial jobless claims, along with the fairly important industrial production report and capacity utilization. On Friday, building permits and housing starts top off the week. Read more…
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Categories: What the Market Wants Tags: AA, BAC, GE, GOOG, INTC, JPM, ORRF, sectors, UGI, USMO, VMW