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 Davis at Phil’s Stock World
Wheeeee – this is fun!
Well, it’s fun when you have disaster hedges anyway. I already sent out an Alert to Members this morning reminding them that there’s no point in having disaster hedges if you don’t use that money to buy on the dips, though. Yesterday we added downside, leveraged plays on SDS (2) and DXD and our focus short was on NFLX (last week it was MA, and that went very well) along with our usual DIA Mattress play. That shifted us a bit negative as we failed to hold our watch levels and now we are sadly looking all the way down to those low closes of: Dow 9,686, S&P 1,022, Nasdaq 2,081, NYSE 6,434, Russell 590, SOX 332 and Transports 1,905 as a possible re-test if things get really ugly.
On July 3rd I laid out “5 Plays that Make 500% if the Market Falls” and, fortunately, we didn’t need them as we took off on Monday but they are still good plays and a little cheaper now than they were when we last tested our bottoms. If you are not well-protected – I strongly suggest you read this post and at least be ready to initiate a hedge if we can’t turn this morning around. As with most day’s lately – it’s all about copper and the $3 line…
That being said, I do think we will turn this morning around eventually - because IBM is down $7 and the Dow moves about 8 points per $1 of component value so that’s hitting the Dow for 56 points all by itself. IBM’s earnings were great but revs missed, in large part due to currency issues. BRIC revenues were up 22% for the company, despite the crap exchange rate.
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Categories: Phil's Stock World Tags: ATHR, BAC, BK, BRIC, DXD, IBM, JPM, NE, NFLX, PEP, PKG, SDS, STLD, TUP, TXN, UNH, WFC, WFT, WHR, ZION
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
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
This week should be another interesting one, but it’s hard to say whether it can match the market’s behavior last week when it donned rose-colored glasses to view four days of mixed economic data.
Last week there were negative reports from the Treasury budget, trade balance, initial jobless claims, industrial production and consumer sentiment. On the other hand, we had positive reports from retail sales, business inventories, building permits and housing starts. Perhaps the most important report was the CPI, and it came in right on the nose, telling us we still do not have to fear inflation . . . at least not yet.
The rosy outlook was helped by last week’s corporate reports. Granted, things got off to a slow start with a glum outlook from Alcoa (AA), but by far and away, most reports were much better than expected, including JP Morgan Chase (JPM), United Parcel Service (UPS), Yum! Brands (YUM), Bank of America (BAC), General Electric (GE), and Advanced Micro Devices (AMD) with its unexpectedly excellent report. So far so good for the corporate side. Read more…
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Categories: What the Market Wants Tags: AA, AMD, ATW, BAC, GE, GME, GS, IBM, JPM, sectors, SYA, UPS, WCRX, YUM
Last week brought us murk and fog in an otherwise bright New Year. All style/caps were down for the week, though not drastically. The worst was Small-cap Growth (- 1.12%); the best was Large-cap Growth (-0.6%); and the rest crowded between these uninspiring returns. But given the tremendous amount of cash on the sidelines, the market seems unlikely to turn disastrous.
It could have been worse. Alcoa (NYSE: AA), Monsanto (NYSE: MON) and Chevron (NYSE: CVX) disappointed badly early in the week, although Intel (Nasdaq: INTC) brought in pleasing numbers later in the week. Government statistics were for the most part dismal — worse-than-expected numbers for trade balance (-36.4 B), initial job claims (+11,000 to 444,000) and retail sales (-0.3%). Even consumer sentiment was poor (flat, actually, at 72.8 vs. December’s final 72.5), probably a reflection of the other disappointing statistics. Only the consumer price index (CPI) was encouraging, increasing just 0.1% in December, after a 0.4% rise in November. Although Europe is beginning to struggle with inflation, the U.S. isn’t having that problem yet. Read more…
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Categories: What the Market Wants Tags: AA, AMED, BCO, C, CIG, CVX, GOOG, IBM, INTC, MANT CIG, MON, SYNA, TEL
David Brown
(Monday, October 19, 2009 5:45 pm PDT) On Monday of last week, I posed the question whether the market was about to break out or top off, and for most of the week breaking out seemed the likelier outcome. The plethora of positive earnings, together with better-than-expected revenue from a number of major players — Google (Nasdaq: GOOG); JP Morgan (NYSE: JPM); Intel (Nasdaq: INTC), among others — fueled the market onward with the Dow crossing 10,000 and the S&P 500 approaching 1,100. Read more…
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Categories: What the Market Wants Tags: AAPL, BAC, CEP, energy sector, financial sector, FVE, GE, GOOG, IAAC, IBM, INTC, JPM, sectors, VISN