By Gareth Soloway on April 26th, 2010 1:11pm Eastern Time
A pinch of earnings, a dash of mergers and acquisitions and the market is showing us a stereotypical Monday. Monday's for the last two to three months have been known to be light on volume and generally flat to positive. Today the volume is light and of course, that is keeping the markets steady on the flat line.
Earnings from companies like Caterpillar Inc. (NYSE:CAT) and Whirlpool Corporation (NYSE:WHR) were positive for the market. Caterpillar is a key component of the DOW, so needless to say, that is a very beneficial play to have higher today for the markets. Not so great earnings from BlackRock, Inc. (NYSE:BLK) are one of the small negatives today, but the market seems to be shrugging it off on the back of extremely light volume. Always remember, light volume helps the markets on the upside as it shows lack of institutional involvement which means the average retail investors, Joe Blow, is out there excited about a recovery that the media and the President have been pumping, therefore buying the market. Joe Blow is generally late to the party.
Interestingly enough, a bear flag is in formation on the SPDR S&P 500 ETF (NYSE:SPY). While normally, this technical pattern has a high probability of playing on to the downside, the volume environment is not conducive to it and may cause it to fail. Generally, in the last three months, bear flags work out about 40% of the time while bull flags work out 90% of the time. I would continue to believe these odds are true for the current pattern.
Jackson Hewitt Tax Service Inc. (NYSE:JTX) continues to run higher today, now up almost 20% from the alert I gave on Friday at $1.66 (view Research Center - Hot Charts & Alerts). The analysis I did was based off a hedge fund buyer, great bull flag on the daily chart (90% of success) and a huge amount of shorts that may cover on any squeeze.
After the close today, Texas Instruments Incorporated (NYSE:TXN) reports earnings. Analysts estimates are coming in around $0.51 per share. Market expectations however, are slightly higher at $0.54 per share.
Gareth Soloway
Chief Market Strategist
InTheMoneyStocks.com
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