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It continues to be amazing to watch this market be controlled. So quickly the sellers vanish and the light volume allows for the market to float higher. Earnings from Exxon Mobil Corporation (NYSE:XOM) helped as they beat on revenue and earnings per share. The one small hiccup was their tax rate, which came in much lower than expected, increasing earnings per share. However, the stock is trading nicely higher today at $79.77, +0.78 (+0.99%).
After a strong Dollar move on Friday, it has fallen back sharply. The Dollar was up on Friday as scared investors ran to it because of the problems in Egypt. As said earlier, that is a distant memory and as the Dollar drops, the markets float higher. The PowerShares DB US Dollar Index Bullish (NYSE:UUP) is trading at $22.36, -0.13 (-0.58%).
The markets await major news later this week on jobs. The Unemployment Rate and Non Farm Payrolls will be reported on Friday, February 4th, 2011 at 8:30am ET. This will be something the markets will look to for direction.
While things are quiet today, smart investors and traders must be constantly watching Egypt and the whole region. Egypt is key because they control the Suez Canal. This is a major shipping route for the whole region and much of the world. Should things get dramatically worse, fear would boil over again and cause the Dollar to spike, sending the markets down again. Longs or shorts are available in this market. However, to do this right, each trader or investor must truly understand the chart dynamics. If you do, money can be made on both sides of the market. To get more market analysis, guidance, swing trades and education, join the Research Center. Get the free trial now.
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
Rarely will the major stock market indexes such as the S&P 500 Index, the NASDAQ Composite, and the Dow Jones Industrial Average decline sharply ahead of the weekend. However, the market declined sharply on higher volume last Friday. Traders and investors should not write that type of decline off so fast. This is a market that is being inflated every single day by massive cash reserves from the Fed's quantitative easing program. Traders have been buying almost every dip on a daily basis. Eventually, stock markets need to have pullbacks. If stock markets do not pullback at some point they will simply be on a collision coarse when the manipulation stops. Look what happened in 2007 and later in 2008 to all the major indexes.
This morning Alpha Natural Resources Inc.(NYSE:ANR) has bought out Massey Energy Co.(NYSE:MEE). This news should be bullish short term for the coal sector in the market. Traders should keep an eye on stocks such as Peabody Energy Corp.(NYSE:BTU), James River Coal Co.(NASDAQ:JRCC), and Patriot Coal Corp.(NYSE:PCX). These stocks could trade higher in sympathy to the Massey Energy takeover. The Market vectors Coal ETF(NYSE:KOL) can also see a positive reaction to the news and may very well trade higher today.
As for the overall market indexes it is prudent to allow this market to prove itself. Anytime markets sell off from highs on volume traders should expect that the selling may not end so quickly. Therefore, despite this mornings sharp gap higher the early rally may not last very long. There is usually a bigger reason for declines in the market when they occur on heavy volume.
Jan. 18 (Bloomberg) -- U.S. stocks are within a week of “a significant market top” that is likely to precede a drop of at least 11 percent in the Standard & Poor’s 500 Index, said Tom DeMark, creator of a set of market-timing indicators.
http://www.businessweek.com/news/2011-01-19/u-s-stocks-near-significant-top-tom-demark-says.html
It could well be argued that Egypt's political upheaval may only go so far in impacting G7 equity markets and that in the long-term, these markets will once again pick up due to their own internal demand dynamics as well as demand from emerging markets. But increasingly correlated global markets require the RIGHT TIME and RIGHT PLACE to peak and start to sell-off. Ive explained last Monday that it would be highly unlikely for the Dow-30 to end the week high, because such a development would have made it 9 consecutive weekly gain, something not seen since 1995.
Joseph Schumpeter was a Harvard economist and president of the Econometric Society (1940-41). He was author of the two-volume tome Business Cycles (McGraw-Hill 1939). Schumpeter's cycle research is of particular interest because he was one of the first to attempt to integrate sociological understanding into economic trends. He also presented an integrated approach to cycles that presented the Kondratieff long wave as a larger scale of the smaller cycles. InBusiness Cycles, he introduced a theoretical model for how all the various cycles fit together.
Uncle Ben and his POMO to blame for the riots in Egypt .........all that dollar bashing has caused food inflation!!
