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Tuesday, April 17th, 2012
9:00am (EST)
The market ended mixed on Monday as the Dow held its gains while the S&P and Nasdaq finished in the red but off their lows for the day. This doesn’t sound too bad on the surface but the major averages are forming some awful bearish charts so let’s go over the numbers and what we are seeing.
The Dow gained 72 points, or 0.56%, to finish at 12,921. The blue-chip traded to a high of 12,986 but the peak was a point below last Thursday’s high and 13,000 has been a brick wall. The low for the day was 12,850 which is just above short-term support but the continued failure at 13K is a sign of weakness until cleared.
The S&P 500 fell three-quarters of a point, or 0.05%, to end at 1,369. The index traded to a high of 1,379 at the open which was just above resistance at 1,375. The low for the day was 1,365 which keeps 1,350 in play. We talked about the importance of the bears getting a win on Monday, albeit small, it was still a negative close for the index. This was the first time the S&P closed down on back-to-back Friday/ Monday’s. Although the market was closed for Good Friday, we counted the negative close on the Thursday before. This was good evidence going forward.
The Nasdaq fell double-deuces, or 0.76%, to settle at 2,988. The pop back above 3,000 was short-lived as the index traded down to 2,975 about an hour into the session. Although the talking heads were saying Google and Apple can be blamed for much of the weakness, we also have to remember these 2 Tech giants led the bulls’ charge higher for 6 months. Tech is now at its mid-March lows and if 2,973 is taken out a test to 2,950-2,900 could come quickly.
The S&P Volatility Index (VIX, 19.55, flat) traded above 20 again, to 20.42, while the low was 18.60. The major indexes have made lower highs and lower lows for much of April while the VIX is making higher highs and higher lows. Both are bearish signals.
Earnings kick into second gear this week and although companies are beating Wall Street’s estimates for the most part, many firms are missing on their revenue results. There were few earnings warnings coming into the season and we should get a clearer picture this week which sectors are thriving and which ones could suffer on an economic slowdown.
The scales have been tipping in the bears favor but we still have to guard against snap-back rallies, dead cat bounces, and a possible trading range. The bears still have another layer or two of support they must crack but so far our put options trades have been doing extremely well.
We could have a busy morning as we are looking to take profits in a few trades that could hit triple-digit returns. We continue to feel this next few months are going to offer some exciting opportunities so stay locked-and-loaded on possible NEW TRADES as well.
Futures are showing a decent pop at the open as Dow futures are up 63 points to 12,913 while the S&P 500 futures are higher by 7 points to 1,370. The Nasdaq 100 futures are advancing 12 points to 2,675. Subscribers, check the Members Area for the updates.
Tags: earnings warnings, GOOG, S&P Volatility Index, VIX
Posted in Hot Stocks | Comments Off
Monday, April 16th, 2012
1:30pm (EST)
The market is mixed as we head into the second half of trading as the blue-chips are up while both the S&P 500 and Tech are trending lower. Futures were pointing towards a nice pop at the open but the Nasdaq has been weak for much of the session after a positive open. Apple (AAPL, $587.49, down $17.74) and Google (GOOG, $606.29, down $18.31) were leading the Tech sector lower, as both try to hold down the $600 level.
As far as economic news, Retail Sales rose 0.8% in the month of March. Excluding autos and gasoline, the core reading was up 0.7%, versus forecasts for an increase of 0.5%. The Empire Manufacturing Index came in at 6.56, which was well below expectations for a print of 18 while the Housing Market Index for April came in at 25, versus expectations for a reading of 29. And finally, Business inventories were up 0.6% in February, matching expectations.
Citigroup (C, $34.07, up $0.66) is up 2% after reporting better-than-expected earnings but missing on sales. The company reported a profit of $1.11 a share on revenue of $19.4 billion. Wall Street was expecting $1 a share on revenue of $19.8 billion.
As we head to press, the Dow is up 90 points to 12,939 while the S&P is up less than a point to 1,370. The Nasdaq is down 21 points to 2,990.
One of our current trades was stopped out today. Lululemon Athletica (LULU, $73.02, down $0.49) traded higher at the open and our Hard Stop was triggered. We made a nice 25% return in under 2 weeks and we may be back to play this name again, soon. Subscribers, check the Members Area for the updates.
Tags: AAPL, C earnings, GOOG
Posted in Apple, Economic News, Google | Comments Off
Monday, April 16th, 2012
9:00am (EST)
“While we should get the pullback we have planned on, we still have to guard for a snap-back rebound because the Fed could be in play again. Many believe the Fed wasn’t going to act on another round of quantitative easing because the economy was “recovering” but the latest headlines are painting a different picture.
The important clues to watch for will be the major support levels we have just covered. If they hold, and the Fed does do something, then the pullback could be mild. If the bears gather enough momentum and crack several layers of support while the Fed sits idle, then we will be on the verge of a trend change.” (4/8/2012 Weekly Wrap/ Monday Morning Outlook)
The bears had to wait 3 days to slow down the bulls momentum but Monday’s open was worth it for those who are short the market like us. The major indexes opened to a sea of red and spent all session trying to hold down the second wave of support. The first wave was cracked during the prior week which our chart work showed but the bulls were able to hold off the onslaught just long enough to be saved by the closing bell. Although the market finished slightly off their lows and above our near-term support targets for the session, Tech didn’t as the Nasdaq closed below 3,050.
Tuesday’s session was a follow thru as the bears were able to push the second wave of support and then some as the Dow closed below 12,800 while the S&P tested 1,350. The major indexes were on the verge of totally collapsing as each was down 3%-4% for the month following the 2% pullback.
The talking heads were thanking Alcoa (AA, $9.85, down $0.32) for better-than-expected earnings following their report after Tuesday’s close as the market made an expected bounce on Wednesday. Alcoa’s surprise was nice but it wasn’t the catalyst for the rally, it was a simple bounce off support. We closed 6 winning puts trades in the morning as we figured a test to resistance, which was prior support, was coming.
Typically, after a break of a strong uptrend, a stock or the market will go back and test the rising channel that had been broken. These types of patterns are known as bear flags or dead cat bounces so we knew there could a continuation on Thursday as the bulls made up less than half of Tuesday’s losses.
Futures were pointing towards a huge open on Thursday before the unemployment figures were released but were hammered after Initial Claims rose by 13,000. It didn’t matter though as the market soared and reclaimed some support following a 1+% gain across the board. The rally lasted throughout the day as Wall Street eagerly awaited Google’s (GOOG, $624.60, down $26.41) quarterly results and the hope of a better-than expected China GDP (Gross Domestic Product) number which was expected to come in at 8.4%. There was Wall Street water cooler talk that China’s GDP number could come in at 9% or better.
Well, one-out-of-two came true as Google beat estimates (but missed on revenue by a smidge) while China disappointed as GDP came in at 8.1%, down from 8.9%. Futures were down heavy before Friday’s opening bell which was exactly what we wanted to see as we have been loading up on put options over the past few weeks.
Tags: AA earnings, coa, GOOG, Google earnings
Posted in Hot Stocks | Comments Off
Tuesday, April 10th, 2012
12:15pm (EST)
The bulls made a slight push higher at the open but the gains were marginal before the major indexes turned negative. The Nasdaq and the S&P tried to get the Dow going but the blue-chips are rapidly approaching a triple-digit loss as we head into the second half of trading.
Economic news has been light with Wholesale Inventories showing an increase of 0.9% for the month of February. Wall Street was looking for an increase of 0.5%.
Some of the uneasiness can be blamed on 1Q earnings season which unofficially begins today after the closing bell. Analysts have been saying for weeks that most companies will report lousy numbers and there have been a few pre-announcements by some companies who will miss the bar.
Alcoa (AA, $9.38, down $0.21) still has the honor of unofficially kicking things off and will announce their numbers minutes after the sessions ends with a conference call scheduled for 5:00pm (EST). Wall Street has penciled a loss of 4 cents a share on revenue of $5.8 billion, on average. The is a chance for a surprise as the range calls for a loss as high as 12 cents a share versus a profit of 7 cents a share.
Last time out the company posted mixed results as they missed their earnings per share number but beat revenue estimates. Shares have been range bound for 2012, trading in the $9-$10 area and the 52-week low is $8.45. Alcoa is down nearly 50% from a 52-week high of $17.96 and some will argue much of the bad news has been priced into the stock. However, if the company comes in with a wider-than-expected loss, shares could test 52-week lows.
We will be watching Alcoa’s numbers but we are more interested in Google’s (GOOG, $632.62, up $1.78) report which is due out after Wednesday’s close, and, JPMorgan Chase (JPM, $43.11, down $0.78) which will confess Friday morning.
As we hit the turn, the Dow is down 131 points to 12,798 (Bingo!) while the S&P is lower by 17 points to 1,365. The Nasdaq down 42 points to 3,005. While it may be hard for our non subscribers to believe we are rooting for a continued decline, our subscribers know the deal. We loaded up on put options and all of them are doing super swell today.
We are taking profits on another triple-digit winner that is up 136% so pay attention to the trade instructions. Subscribers, check the Members Area for the details.
Tags: AA earnings, Dow support, GOOG, goog earnings, JPM
Posted in Earnings, Market Analysis, Market Commentary | Comments Off
Monday, January 23rd, 2012
9:00am (EST)
Well, Europe didn’t flare up and 4Q earnings came in halfway decent for some, not so good for others. These were the 2 catalysts that we said would move the market higher or lower last week and the results favored the bulls who were able to push another layer of resistance.
It was a shortened week for the market but the indexes moved higher on Tuesday following good news out of China but gave back half the gains after the Financial sector ended mixed. Citigroup (C, $29.64, up $0.31) and Wells Fargo (WFC, $30.54, up $0.39) missed and beat Wall Street’s estimates after announcing earnings to start the week.
There was follow through on Wednesday as the major averages ended the session with 1% pops, on average. eBay (EBAY, $31.93, up $0.42) posted better-than-expected results on the strength of their PayPal business which is going gang-busters globally.
We were expecting a flat to down Thursday as we weren’t sure what kind of numbers the jobs market would post before the bell and a number of Tech’s heavy-hitters were reporting earnings after the close. Thankfully, Initial Claims fell to their lowest level (351,000) in 4 years which put the bulls in a good mood and took some of the pressure off of Tech – which ended up leading the way higher. Bank of America (BAC, $7.07, up $0.11) gave the Financial stocks a lift after beating expectations.
Friday’s action was all about “old” Tech versus “new” Tech as Google (GOOG, $585.99, down $53.58), Intel (INTC, $26.38, up $0.75), International Business Machines (IBM, $188.52, up $0.08) and Microsoft (MSFT, $29.71, up $1.59) weighed-in with their numbers, which were good for the most part. The ugly duckling was Google which dropped 8% after missing Wall Street’s estimates. Intel, IBM and Microsoft accounted for 78 blue-chip points.
As a result, the Dow gained 96 points, or 0.8%, to end at 12,720. The blue-chips dipped to a low of 12,620 at the open but held new short-term support at 12,600 which was prior resistance. We could not have called this much better as we said a break above 12,600 would lead to a test up to 12,750-12,800…(read more)
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Tags: c, eBay, GOOG, IBM, INTC, MSFT, wfc
Posted in Earnings, Market Analysis, Market Commentary | Comments Off
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Bears Going for 5th Straight Session Win
Tuesday, April 10th, 2012
12:15pm (EST)
The bulls made a slight push higher at the open but the gains were marginal before the major indexes turned negative. The Nasdaq and the S&P tried to get the Dow going but the blue-chips are rapidly approaching a triple-digit loss as we head into the second half of trading.
Economic news has been light with Wholesale Inventories showing an increase of 0.9% for the month of February. Wall Street was looking for an increase of 0.5%.
Some of the uneasiness can be blamed on 1Q earnings season which unofficially begins today after the closing bell. Analysts have been saying for weeks that most companies will report lousy numbers and there have been a few pre-announcements by some companies who will miss the bar.
Alcoa (AA, $9.38, down $0.21) still has the honor of unofficially kicking things off and will announce their numbers minutes after the sessions ends with a conference call scheduled for 5:00pm (EST). Wall Street has penciled a loss of 4 cents a share on revenue of $5.8 billion, on average. The is a chance for a surprise as the range calls for a loss as high as 12 cents a share versus a profit of 7 cents a share.
Last time out the company posted mixed results as they missed their earnings per share number but beat revenue estimates. Shares have been range bound for 2012, trading in the $9-$10 area and the 52-week low is $8.45. Alcoa is down nearly 50% from a 52-week high of $17.96 and some will argue much of the bad news has been priced into the stock. However, if the company comes in with a wider-than-expected loss, shares could test 52-week lows.
We will be watching Alcoa’s numbers but we are more interested in Google’s (GOOG, $632.62, up $1.78) report which is due out after Wednesday’s close, and, JPMorgan Chase (JPM, $43.11, down $0.78) which will confess Friday morning.
As we hit the turn, the Dow is down 131 points to 12,798 (Bingo!) while the S&P is lower by 17 points to 1,365. The Nasdaq down 42 points to 3,005. While it may be hard for our non subscribers to believe we are rooting for a continued decline, our subscribers know the deal. We loaded up on put options and all of them are doing super swell today.
We are taking profits on another triple-digit winner that is up 136% so pay attention to the trade instructions. Subscribers, check the Members Area for the details.
Tags: AA earnings, Dow support, GOOG, goog earnings, JPM
Posted in Earnings, Market Analysis, Market Commentary | Comments Off