Calendar
Thursday 07/29/10
07.29.10 Range Bound at 02:37 PM EST Once again the markets are just drifting in a narrow trading range as they test each others convictions.
Nothing to do but stand aside until the next surge.
Lots of nice setups, but we won't nibble till we get better defined.
Henry Ford
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Wednesday 07/28/10
07.28.10 MORNING UPDATE at 12:13 PM EST Not a lot going on here with the indices just below major resistance. Prices have been on both sides of the board this morning and about the best that can be said is that shorts are getting little traction from pockets of bad news, like the decrease in durable goods orders.
So far we are on track for the best monthly gains since 2002 as per the talking heads on CNBC....I haven't had a chance to verify this, but it's just a number anyway and of no real import.
Earnings and guidance are still leading the charge and at this point we look in pretty good shape for this "Summer Rally' to continue. I expect it will take some number of attempts to get past near term resistance, but once through nothing to hold it back.
Go wash your socks or paint the lawn (We are still under water shortages in Southern California and the green spray trucks are hitting the streets to cover up the brown patchwork). Sign of the times I guess.
Henry Ford
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Tuesday 07/27/10
07.27.10 First Hour update at 10:40 AM EST For those of you who have been following the Volatility Index short trade with me, the VIX opened at 21.89 this morning and we took our profits and ran. It has been quite a see-saw ride for this trade but it finally paid off.
We have had 6 up days on the indices and are up against previous resistance on the SP500 at 1117.51 on a closing basis. We hit 1120.95 this morning before retreating and it may take a few attempts or even a little pullback to break through. After that there is no resistance until we reach the 100 day moving average at around 1129.
As of Tuesday, July 27th:
The blended earnings growth rate (estimated & reported) for the S&P 500 for Q2 2010 is 34.2% versus an estimated earnings growth rate of 24.9% for Q3 2010. As of April 1st, the earnings growth rate was at 22.7%. Of the 204 (41%) S&P 500 companies who have reported Q2 results, 78% beat estimates, 10% were in-line, and 12% were below estimates. (Data provided by Thomson Reuters)
Henry Ford
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Monday 07/26/10
07.26.10 Market Update at 03:01 PM EST Markets have taken on a positive intermediate term bias.
Will have an update later tonight on what to do now.
We still want to be cautious but breaking through 1105 SP500 was a key area.
Henry
Henry Ford
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Thursday 07/22/10
07.22.10 PRE-MARKET at 09:30 AM EST The Yo-Yo wars continue....Earnings trump Bernanake..
Yesterday's late day Bernanke swoon didn't carry over in the European markets last night as good earnings continued to bouy the pre-markets.
The upside headliners included AT&T (T) and big names out of the health care sector -- Baxter (BAX), Bristol-Myers (BMY), and Eli Lilly (LLY).
Reporting companies noted that while they remain cautious about the global economic recovery, they are encouraged about improving end-market conditions. The net result: raised earnings and revenue forecasts.
CAT (CAT), UPS (UPS) and 3M (MMM) all bested and upped the ante for the full year. The upside assisted by margin gains on a more rational pricing environment and volume. The questions looking ahead surround currency headwinds, European outlook, and pricing.
Tech sector earnings continue on a positive swing, although software remains quite weak. Semis and wireless were strong and eBay's (EBAY) performance is being viewed positively on decent core organic growth.
Henry Ford
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Wednesday 07/21/10
07.21.10 MARKET CLOSE at 11:21 AM EST They just had to invite that party-pooper Bernanke to congress today to cheer everybody up didn't they.
Worse than that, since the markets hate uncertainty, that had to be his message...
The economy is "Unusually Uncertain" was the keynote of his responses today. This from the self-proclaimed and widely hailed historian of recessions, depressions, crashes and lowered expections. Apparently his helicopter ran out of freshly printed dollars...back to the mint.
While we didn't retrace ALL of yesterday's gains (on the SP500), it was enough to get the shorts excited again and the bulls frustrated.
Meanwhile back at the ranch, techies like Netgear, Xilinx, F5, Amphenol and the like all guided higher..continuing the push towards an exceptional earnings season. Of the 100 (20%) S&P 500 companies who have reported Q2 results, 76% beat estimates, 13% were in-line, and 11% were below estimates. Not bad for a faltering economy.
Henry Ford
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07.21.10 PRE-MARKET UPDATE at 09:22 AM EST Yesterday's reversal was remarkable in its strength and timing. After a DOW opening down more than 200 points on disappointing news from IBM (they missed on growth, not earnings), a late day rally had the shorts throwing in the towel and we ended the day with a 75 point gain..
The reversal was across the board after what had seemed to be a gloom and doom scenario with the dreaded "Head and Shoulders" pattern weighing heavy on trader's psyches. Unfortunately, when patterns are that obvious they are usually wrong.
S&P futures vs fair value: +5.30. Nasdaq futures vs fair value: +15.00. Momentum from the prior session’s advance has helped give a lift to stock futures. A deluge of better-than-expected earnings reports appear to have helped the move. Among those that have beaten expectations are Apple (AAPL), United Technologies (UTX), Coca Cola (KO), US Bancorp (USB), Wells Fargo (WFC), and Yahoo! (YHOO).
Henry Ford
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Tuesday 07/20/10
07.20.10 Market Open at 09:56 AM EST Big miss last night on IBM which took the markets down 50 points on the open.
Retail sales are up 7 percent but investor sentiment is weighing heavy on the markets. This is the first big miss of the earnings season and tarnishes the strong positive reports we have had so far in this reporting period.
Not all the earnings news was bad, but markets sold off quickly on the big DOW miss. Healthcare giant Johnson & Johnson posted a 7.5 percent increase in second-quarter income despite ongoing recalls of popular nonprescription medicines keeping sales flat.
Harley Davidson is up 8% with an earnings beat in early trading.
PepsiCo reported a quarterly profit above analysts' expectations.
Goldman beat on earnings estimates but came in light on revenue.
In the first half hour of trading we have seen the initial downward surge ease off. Will be back at 10:30 and we will review the initial hour of trading.
10:30 ET UPDATE;
Markets have seen a bit of a rebound off of the lows. The major indices left a downward gap at the open (most clearly seen on a 60 minute candlestick chart of the SPY) and we have managed to claw back about half of the initial loss. The VIX is up only .47 at 26.44 on a day that should see it up into the mid 30's.
Still need more time, but it looks like this morning's IBM news is slowly being absorbed. Be back after the New York lunch hour.
Henry Ford
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Monday 07/19/10
07.19.10 Afternoon Market update at 02:54 PM EST Markets are absorbing the expirations selloff today with most sectors advancing.
AAPL seeing profit-taking before tomorrow's earnings report.
This is an important week for earnings and it is anticipated that we will continue with the besting of estimates.
While it is still early, the blended earnings growth rate (estimated & reported) for the S&P 500 for Q2 2010 is 30.2% versus an estimated earnings growth rate of 25% for Q3 2010. As of April 1st, the earnings growth rate was at 22.7%. Of the 51 (10.2%) S&P 500 companies who have reported Q4 results, 76% beat estimates, 12% were in-line, and 12% were below estimates. (Data provided by Thomson Reuters)
Henry Ford
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Friday 07/16/10
07.16.10 MORNING UPDATE at 11:20 AM EST Today we are paying for the lack of volatility during expirations week that was missing this time around.
This morning the cause du jour was the Michigan Sentiment report that came in at 66 vs. and expected 74. That was enough to offset the BP good fortune as well as the settlement from Goldman Sachs...The Government is crowing that it made GS "fess up and pay the piper" with a better than half a billion dollar fine...except..that amount equals 14 days of profits for the mega banker....BIG DEAL.
The prospect of Financial Regulation coming out of Congress has financial stocks on the run as well, even though there are so many loopholes and exceptions that they can just work their way around the problems like they always have...
Do I sound skeptical? Not really I just subscribe to the theory that "seeing is disbelieving!"
Thank goodnes today is July 16 and in 15 days congress will go on their summer break and give all of us a break.
Here is a piece I wrote a couple of years ago which is true now more than ever as it got me to thinking about the relationship between Markets and Congress once again. For those of you who missed it the first time around...
A few years ago I found a fascinating bit of trivia that seems to be supported by a paper that you can download HERE..."Congress and the Stock Market"
I'll give you the short version....
As Will Rogers said:
"This country has come to feel the same when Congress is in session as we do when a baby gets hold of a hammer.
It's just a question of how much damage he can do with it before we take it away from him."
In the paper it notes that if $1.00 were invested in the DOW, in January of 1897, and withdrawn when Congress was "in" session ... (If you invest in the DOW when Congress is OUT of session, and in cash when it's IN session)....(noting Will Rogers' comment), then by the year 2000 you'd have a portfolio worth $216.10 and ...
If you only invested when Congress was in session and went to cash when they went boondoggling on the other hand...
You'd end up with $2.00
Markets love it when Congress cannot enact new laws, pass new taxes, or spend your money as evidenced by this phenom. Some people also ascribe the rising markets in election years to the same theory and there would seem to be substance. With both parties paralyzed going into the election because they don't want to take any risks that would offend voters, there is little that Wall Street has to worry about.
Henry Ford
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Thursday 07/15/10
07.15.10 Morning Update at 11:43 AM EST Yesterday was a bit of a yo-yo with shorts initially under pressure until the buyers dried up.
A late day climb led to about a net day with no real impetus either way.
Underneath the hood, we had a distribution day with every sector on our PCI showing distribution.
This is the last day before monthly expirations,so expect the last hour to see increased volatility as traders set up their positions for tomorrow's open.
Other than that, relax and understand that after 6 straight up days markets became overbought and need a bit of a breather before attempting to break through resistance again.
AAPL's presser on the iPhone 4 should bring some psychological resolution before next week's earnings report. Worst case it would cost Apple less than a dollar to give every iPhone owner a free bumper case. With a retail of $30 they would come off as doing the right thing with little downside.
Henry Ford
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Wednesday 07/14/10
07.14.10 PRE-MARKET at 08:49 AM EST Markets managed to maintain a 6th positive day yesterday, quite a feat for an expirations week, particularly in July.
Earnings continued to surprise with CSX upbeat outlook yesterday.
We are right at the 50 day moving average of the SP500 and quickly approaching the 200 day, the most important psychological level.
Another day like yesterday and we could be above it.
For those who have hedges in place, we will be looking to remove those hedges above 1105 .....Should we make another retracement we would remove them down around 1050. I don't see any case for a drop below that level in the forseable future.
The "Death Cross" of the 50 day below the 200 day moving average actually looked like a market reversal point and re-establishing that level will be another important milestone for the bulls.
Shorts look like they are going to continue to be pressured to cover today and that should provide a positive bias despite expirations week.
Henry Ford
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Tuesday 07/13/10
07.13.10 Earnings Surprise at 01:07 PM EST Alcoa came in with an earnings surprise last night and it was enough to get 29 of 30 SP500 stocks moving positively this morning.
INTC will report tonight and we believe they will keep the run going despite the fact that this is a big expirations week for options and futures that normally would see day to day volatility.
We are approaching some pretty stiff resistance levels and being this positive so early in the earnings reporting period makes a real problem for the shorts which may be responsible for today's rally as they feel the pinch to cover their positions.
AAPL is taking a hit on the Consumer Reports evaluation of the antenna problem, but acknowledged that it is still the best phone out there.
AAPL has earnings on Monday which WILL be a blowout. Normally there is profit-taking after the earnings announcement, this time we may see the reverse and actually see a strong rally once the concentration shifts.
BP is close to making its next attempt at shutting in the well in the next day or two and of course success would change the complexion of the drillers even though the Feds are moving to put a moratorium on drilling until November.
It is going to be an interesting week.
Henry Ford
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Monday 07/12/10
RENEW NOW ....We are giving away free Apple iPads!! at 01:47 PM EST To say thanks to you and all Pitbull Investor subscribers, we're giving away iPads!
For the next month, we will be sending out up to 10 free APPLE iPads to the lucky winners of our random drawings from subscribers who order or renew a One Year or Lifetime Service!
For every 10 Yearly service subscriptions we will send out 1 iPad. That means that you will have a 1 in 10 chance of browsing our site with your own shiny new iPad. Sign up for a lifetime service and your odds go up to 30%. You will have a 3 in 10 chance of winning your iPad.
There will be consolation prizes as well from some of Henry's TickerTape art creations and lots of other goodies.
Order now and join in the fun.
Warm regards and Good Luck!
Henry
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Henry Ford
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07.12.10 MORNING UPDATE at 11:35 AM EST After a couple of days of nice gains it would be natural to see a bit of a consolidation as we begin earnings season.
Alcoa comes out tonight and their earnings are expected to be dismal, so the only surprise will be if they don't do as bad as everyone expects.
This is a transition week as the emphasis shifts from Economic Reports to Earnings as the primary driver for prices.We are seeing some movement on the PCI with sectors moving back into positive footings, but we haven't seen any movement on the part of the ETFs we track yet.
I have a buy list of stocks I will share with you as the week goes on and risk positions improve.
Henry Ford
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Friday 07/09/10
07.09.10 MORNING MARKET UPDATE at 10:47 AM EST Nice rally over the last two days so we should be looking for a bit of a rest here.
Earnings is upon us and I do believe we will have another strong season, but as I have said, it is the GUIDANCE that will now be more important than ever. Industry sentiment about the coming 2 quarters will take on just as much importance as the current statement of quarterly earnings.
Henry Ford
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Thursday 07/08/10
07.08.10 MORNING UPDATE at 11:12 AM EST A small gap up this morning which took the SP500 hourly chart within 22 cents of that downside gap we have been watching from last week.
Yesterday saw excellent price action along with some short covering on the part of the bears.
I expect that in the next couple of days we could see a test of the 1050 level on the SP500 and perhaps even the 1040, but I believe we have set a bottom before earnings season.
Will remove my hedges if we are going to close above 1040 today which looks likely.
The action yesterday "broke" the head and shoulders pattern that has been the key concentration of the bears. They are still promoting the "death cross" of the 50ma below the 200 day moving average, and this will continue to be their concentration until that is broken to the upside. From my standpoint, the true rally doesn't begin until we cross the 200 day MA which comes in currently at about 1111. That will be the point where any remaining bears will be forced to throw in the towel and capitulate.
Will be out of touch this morning, so do your part and keep things where they are...
Henry Ford
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Wednesday 07/07/10
07.07.10 MORNING UPDATE at 11:49 AM EST Yesterday started out on a positive note, but quickly gave up 150 point gain on the DOW but by the end of the day managed to squeak out a 50 point gain.
This morning we are seeing a similar rally which has actually exceeded yesterday's close, but of course what is important is that we close at this level. Intraday numbers mean very little in the scheme of things.
We are in the lull period before earnings season. AA and some of the key industrials will be the first to report and the numbers are expected to be terrible, but that is the way it was last quarter and the quarter before. By the end of last quarter 86% of companies in the SP500 reported that they had met or exceeded expectations with fully 80% of them beating. I expect to see the same this quarter.
The guidance is the the main driver for future prices however, and this is where the focus should be throughout the earnings season.
We will be focusing on those companies that are cash rich and project progressive gains for the next few quarters. As these are released we will do the analysis and pass it along.
We passed a key resistance line this morning at 1040 on the SP500, but remember it doesn't count until we can see a firm close.
Henry Ford
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Monday 07/05/10
JULY 4TH WEEKEND UPDATE at 02:54 PM EST As expected, volume came in extremely light on Friday due to the extended Holiday weekend and downward pressure picked up late in the day.
The SP500 sold off another 4.74 points while the DOW dipped 46 and the QQQQ about 1/4% for the day.
Despite the pullbacks, in looking at our PCI chart, you can see that there was underlying strength as evidenced by the "Sea of Green" in the daily accumulation/distribution column and buyers were coming in and purchasing at the ask price indicating they were willing to "pay up" in order to acquire stocks.
What is even more indicative is that virtually all of the major sectors now are showing bottoming technicals as they moved in unison to oversold levels.
Here ia a chart of the SP500 with traditional overbought/oversold indicators:
Notice that virtually all have apparently bottomed with the action of the last week and despite the continued selling on Friday have now turned up. I never like to look at a single indicator to call market turns and I have a general disdain for technical indicators that use moving averages (read...all of them). At times like these it is hard to ignore the preponderance of evidence.
As further evidence look at the Friday action on the VIX. With a continuation of the selloff, the index actually reversed on the day.
Technically the SP500 could correct to the 975 area, but for me that would be a time to take profits on the current hedges and prepare for a recovery rally going into earnings season. We still have another week and a half before earnings begin in earnest, so there is plenty of time a capitulation on the part of the bears.
So, whether it happens tomorrow or next week, the stage is set for a recovery. Earnings should once again be strong and ultimately that is the engine for higher prices.
First resistance for SP500 comes in at 1051, then 1077,1100 and 1105,
Supports remain 1000,993 and 975. There is no support below those levels till we get to 946, then 879.
This week has a limited calendar due to the shortened holiday trading schedule:
Henry Ford
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Friday 07/02/10
07.02.10 MORNING UPDATE at 11:05 AM EST Muted trading this morning as traders prepare for the long weekend ahead.
Yesterday's selloff allowed bears to do some short covering which evidenced itself in the late afternoon bounce in the last hour of trading.
Seasonality has been a bust this season defying all of the odds.
News that nonfarm payrolls for June fell by a sharper-than-expected 125,000, but the unemployment rate retreated more than expected to 9.5%. The report has been the focal point of market participants this morning, primarily due to the signals and implications it carries for the broader economy, but also because there hasn’t been much other news of consequence. The mixed report leaves traders feeling the same way.
Expect volume to dry up the rest of the day as local traders begin to slip away for the weekend.
Volatility can pick up but it is not indicative of any long lasting trends.
Make sure your hedges are in place.
We will exit the hedges and take a profit around 975 on the SP500 or remove them to allow longer term positions to gain profits around 1150 whichever comes first.
Enjoy the 4th...anything of import today and I will add to this message.
Henry Ford
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Thursday 07/01/10
07.01.10 PRE-MARKET at 09:15 AM EST Yesterday decisively broke the back of the 1140 SP500 support, so we are in defensive mode..
One day does not confirm the break, so we need to see another close below that level.
Hedges should have begun to kick in here and we will be looking for evidence this trend will continue to add to hedges if necessary.
Stock futures have made their way to the neutral line as the euro extends its rally to now sport a 1.3% gain against the dollar. Its strength comes in the wake of the decision by European Central Bank to lend billions in six-day notes to ease today’s expiration of 12-month notes and Spain successfully auctioned off a few billion euros worth of five-year notes.
While this didn't help the europeon markets it did allay some of our market's fears about rampant defaults in the Eurozone.
Today has a historically favorable seasonality, but that didn't help us the last few days. 17 of the last 20 years have been positive for July 1. Best case would be a reversal above that 1040 line indicating a possible capitulation yesterday, but we aren't going to bank on it.
Henry Ford
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