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1:05pm (EST)
There was little doubt the market was going to test resistance levels again today as futures were showing a strong start to the session. Most of the good news came from across the pond as a number of European banks reported better-than-expected earnings and strong PMI data had Wall Street giddy.
The bulls also got a lift after the ISM number came in above expectations. The Institute for Supply Management reported its manufacturing index fell to 55.5% in July from 56.2% in June. Analysts were looking for a reading of 55.0% and anything over 50% indicates growth. Another sprinkle of good news came when construction spending for June showed an increase of 0.1% versus the 0.8% decline that had been forecast.
As a result, the Dow is enjoying a 176 point pop, or 1.7% and is at 10,642. The S&P 500 is up by 21 points, or 1.9%, and is trading at 1,122. The Nasdaq is higher by 34 points, or 1.5%, and was last seen at 2,288.
The Dow has pushed past the 10,600 level and is eyeing 10,800 but we are more concerned with the S&P 500 and Nasdaq as they give a better snapshot of a wider range of industries.
We said in our Weekly Wrap that the upside would be 2,300-2,350 for the Nasdaq and 1,125-1,150 for the S&P and as you can see we are once again right at the first wave of resistance. Perhaps the game-changer will be Friday’s unemployment figures but until the bulls break through it’s hard to jump on their back. It’s also frustrating to side with the bears as they have wasted some good opportunities to get back to middle ground.
One stock going through the same pressures as the market is Research In Motion (RIMM, $56.63, down $0.90). Shares were rallying ahead of Tuesday’s launch of their new, touch smartphone, but are down today after the Mideast said it might suspend use of the device over security concerns.
To make a long story short, the company has until mid-October to come up with a fix for securing encrypted messages but the countries only account for 3% of its total subscriber base. However, if the new BlackBerry 9800 Slider fails to impress users and the threat of other countries following suit with a ban, then RIMM could be in trouble.
There is room for two or three dominate smartphone makers/ providers in the space and RIMM will likely settle for third place once the dust settles. Apple (AAPL, $262.25, up $5.00) and Google’s (GOOG, $491.33, up $6.48) toys are head-and-shoulders above RIMM’s devices and the company is simply playing catch-up.
We have a lot to cover in our Members Area so let’s get on it. We will be back in the morning with another full update so stay tuned.
Apple (AAPL) Showcasing New Products
Wednesday, September 1st, 2010
12:30pm (EST)
The bulls used some overseas news to stage a big rally this morning while economic reports continue to come in mixed here in the US. Futures were pointing towards a strong open after China and Australia reported growth in their economies while a better-than-expected ISM number here at home added some extra gravy.
China’s said its manufacturing sector rose in August for the first time in four months while Australia’s economy grew by the fastest pace in three years during the second quarter. Meanwhile, America’s Institute for Supply Management’s manufacturing index grew to 56.3 in August from 55.5 in July. Wall Street had been expecting a decline to 53.0.
The rally has been a head scratcher for the bears given that the ADP report said private employers cut 10,000 jobs in the U.S. last month compared to a gain of 37,000 jobs in July. This doesn’t bode well for Friday’s “official” report on unemployment but the bulls don’t care. They are partying today.
The Dow is currently up 234 points, or 2.3%, and is at 10,248 while the S&P 500 is higher by 29 points, or 2.7%, to 1,077. The Nasdaq is showing a gain of 56 points, or 2.7%, and is at 2,170.
Resistance levels are Dow 10,200; S&P 500 1,070; and Nasdaq 2,150. These levels have obviously been “stretched” and we will have to see how the gains hold up into the close.
In corporate news, Apple (AAPL, $250.45, up $7.35) will be giving Wall Street an update on its product line and investors will be able to watch the event in real-time streaming video over the internet. We are expecting the company to announce an upgrade for the iPod touch which could include a camera with the same touch screen and operating system as the new iPhone4.
There is also chatter the company could roll-out a newer version of its iTV at a price of $99 which could jump start sales. It’s no secret Apple is negotiating with the big cable and TV studios for the right to rent their shows on iTunes which continues to grow at an incredible pace.
We will be back in the morning with a full update but are expecting Friday to be insane. The ADP report is usually a good indicator on what the numbers for unemployment are going to look like and the bulls could get sideswiped if they aren’t careful. On the other hand, today’s rally has been enough for the bulls to break key resistance levels and if they hold, the market could continue to rally no matter what Friday’s numbers are.
The key thing missing in today’s rally is the lack of volume…
Tags: AAPL, Apple, option picks, stock options trading
Posted in Apple, Market Analysis, Market Commentary | Comments Off