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Bears Gaining Momentum

9:00am (EST)

The bulls got a nasty wake-up call yesterday as the bears punished the market and are gathering strength to do some more damage.

The Dow ended Thursday with a loss of 144 points, or 1.4%, to close at 10,271.  All 30 stocks that make up the Dow finished in the red as the index touched a low of 10,202.  We mentioned support would come in at 10,200 but that level is likely to be taken out today, if not, next week.

djia082010

The S&P 500 fell 19 points, or 1.7%, to settle at 1,075 and found support right at our 1,070 target.  However, it now appears 1,050 will come into play with a possible test down to 1,000 again.

The Nasdaq declined 37 points, or 1.7%, and closed at 2,178.  The index touched a low of 2,168 and it appears the next stops will be 2,150 and then 2,050.

As far as today, the market won’t have any economic news to deal with and earnings are light.

Dell (DELL, $12.04, down $0.15) announced after the closing bell on Thursday and told Wall Street they earned $545 million, or $0.28 a share.  In the year ago period, Dell earned $472 million, or $0.24 a share.  Revenue rose to $15.5 billion, from $12.8 billion, which topped the $15.2 billion analysts had predicted.

dell082010

Not a bad quarter on the surface, but Dell’s gross profit margins fell and shares are 2% lower in pre-market trading. 

Elsewhere, Hewlett-Packard (HPQ, $40.76, down $0.60) reported earnings of $1.8 billion, or $0.75 a share, versus $1.7 billion, or $0.69 a share, a year ago.  Excluding items, the company would have earned $1.08 a share which matched analysts’ estimates.  Revenue came in slightly ahead of expectations at $30.7 billion, up from $27.6 billion a year ago.

hpq082010

For the full year, HP expects to match the 4.50 a share Wall Street expects, and have revenue of over $125 billion, slightly higher than the $124.9 billion analysts have on the board.

Despite the relatively decent quarters, futures are pointing towards a lower open.  Dow futures are down 37 points to 10,198 while the S&P 500 futures are off by 4 points to 1,067.  The Nasdaq 100 futures are lower by 5 points, to 1,814. 

Of course, we want the market to go lower because we are leveraged to the short side.  Many of our current trades should get another pop this morning.  Subscribers, check the Members Area for the updates.

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This entry was posted on Friday, August 20th, 2010 at 9:05 AM and is filed under Earnings, Market Analysis. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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    Rick, I purchased 10 contracts of the Nike March 85 puts Thursday afternoon for $2.00. Thing is, I was upset because the puts went down to $1.60 or so before the market closed. Well, needless to say Nike didn’t impress Wall Street and when I turned on the computer this morning the puts were worth $7.10! Sold them for a $5,100 profit!. Thanks again, you are the MAN. Chuck J-

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