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In addition to all the issues throughout the world, earnings were poor on many key stocks. Ford Motor Company (NYSE:F) is getting crushed, down 15% while Amazon.com, Inc. (NASDAQ:AMZN) is down 10%. All this combined, is making for a drastic drop in the markets. This monster drop may be the start of something bigger. It has the potential to start a correction in this market of 10%. Watch the news this weekend. In addition, join the Research Center to get all the market analysis, guidance, swing trades and education. Try the free trial!
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
A poll of UK consumers has revealed an "astonishing collapse" in confidence that fuels fears that Britain is heading for a double-dip recession.
The GfK NOP consumer confidence index dropped eight points this month to -29, with a spectacular drop in the number of people saying they planned to make a major purchase.
http://www.guardian.co.uk/business/2011/jan/28/uk-consumer-confidence-index-plummets
http://www.marketwatch.com/story/tokyo-shares-extend-losses-on-sp-downgrade-2011-01-27
If there is one thing that we here at InTheMoneyStocks have said for a long time, it is to never short a dull market. This saying is an old market adage that fits well for the current times. Nearly every single trading day the market will pullback on heavy volume and once the light volume begins or takes over, all of the major stock indexes will rally higher. Should the heavy volume come back into the market place then the market will usually decline, however, that is a very rare event these days. Most scalp traders can sell short stocks in the early part of the day when the volume is relatively high. Once the volume drys up or begins to decline the major indexes go into helium mode and float higher.
The reasons behind this resistance comes in multiple parts. First, the markets are overbought and have not had even a minor pull back in three months. Around Thanksgiving, the SPY sat at $117.75. That would mean an approximate 10.5% move straight up. In addition, from the 2010 lows, the SPY is up 28%. That is truly an amazing move. While the markets seem tired, the Federal Reserve is tirelessly pumping liquidity into the system. There now seems to be an epic battle between the reality of a correction needed and the Federal Reserve propping.
Some of the biggest movers today are stocks that reported earnings. Caterpillar Inc. (NYSE:CAT) reported stellar growth and earnings numbers and is trading higher at $96.03, +0.28 (+0.29%). The stock made a new 52 week high today at $97.79. However, the weakness now hitting the markets has brought it in. Amazon.com, Inc. (NASDAQ:AMZN) is also surging higher ahead of earnings today, after the market closes. They are expected to report earnings between $0.88 and $0.95 per share.
As the market drops, the driver is the Dollar as it pushes up. As the Dollar pushes up, commodities and commodity stocks are pulling back. Gold and oil are both nicely lower on the day. To get more market analysis, guidance, swing trades and education, join the Research Center. Take a free trial today!
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
This is a becoming a major concern for the Federal Reserve. Their massive stimulus is pushing the economy slightly higher but not to the extent that it could last without the stimulus. Housing is still at the dead lows, jobs continue to be scarce and not growing. The Federal Reserve is stuck between a rock and hard place. If they stop pumping money into the system, the U.S. and possibly the world will fall back into a deep recession and if they continue non stop pumping money, inflation will rip higher. There is no easy answer here and they are in trouble. Do they continue with QE-3, QE-4 and so on? Do they stop pumping the money into the system and have the market fall back down and consumers stop spending?
Talk about a mess and a half. The bottom line is this, as swing traders, we will be playing this market thousands of times in each direction over the next few years. It has been a great start to the new year, it will be a great year. Join the Research Center now. Take the free trial and make some money!
Gareth Soloway
Chief Market Strategist
www.InTheMoneyStocks.com
