By Nicholas Santiago on July 12th, 2010 3:20pm Eastern Time
Tonight will mark the start of earnings season when the leading aluminum company Alcoa Inc (NYSE:AA) reports earnings after the bell. Many traders and investors are now suspecting since the April decline in the major indexes that the bar has been lowered for corporate earnings. This is certainly true for many of the leading stocks. However, a very strong case could be made that it is all about the strength in the U.S. Dollar that determines where the stock market goes after earnings. Remember when the dollar declines the stock market indexes usually inflate and when the dollar rallies the opposite happens as the stock market indexes deflate. Take a look at today's action for example. The U.S. Dollar is trading higher by 0.23 to $84.20 and most leading commodity stocks are trading lower. Stock such as U.S. Steel Corp (NYSE:X), AK Steel Holdings Corp (NYSE:AKS), and Cliffs Natural Resources Inc (NYSE:CLF) are all trading sharply lower.
Many traders and investors will agree that this inverse U.S. Dollar and stock market relationship will effect commodity stocks, however, it will not effect technology stocks. That is not necessarily true. The markets all seem to trade together. At times certain sectors or industry groups will trade in their own world, however, the bulk of the sectors will trade in tandem with each other.
Intel Corp (NASDAQ:INTC) will report tomorrow after the bell and this will be the next important earnings release. Regardless of what the company reports and says the reaction from the market will likely be determined by the strength in the U.S. Dollar. Should the dollar continue to slide it is likely that the major stock market indexes will continue to inflate. Watch for the opposite effect to occur should the dollar pop or bounce. At this point I'm not sure that earnings really make much of a difference for the overall market indexes as the movement in the U.S. Dollar really inflates and deflates everything.
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By Nicholas Santiago on July 12th, 2010 3:20pm Eastern Time
Tonight will mark the start of earnings season when the leading aluminum company Alcoa Inc (NYSE:AA) reports earnings after the bell. Many traders and investors are now suspecting since the April decline in the major indexes that the bar has been lowered for corporate earnings. This is certainly true for many of the leading stocks. However, a very strong case could be made that it is all about the strength in the U.S. Dollar that determines where the stock market goes after earnings. Remember when the dollar declines the stock market indexes usually inflate and when the dollar rallies the opposite happens as the stock market indexes deflate. Take a look at today's action for example. The U.S. Dollar is trading higher by 0.23 to $84.20 and most leading commodity stocks are trading lower. Stock such as U.S. Steel Corp (NYSE:X), AK Steel Holdings Corp (NYSE:AKS), and Cliffs Natural Resources Inc (NYSE:CLF) are all trading sharply lower.
Many traders and investors will agree that this inverse U.S. Dollar and stock market relationship will effect commodity stocks, however, it will not effect technology stocks. That is not necessarily true. The markets all seem to trade together. At times certain sectors or industry groups will trade in their own world, however, the bulk of the sectors will trade in tandem with each other.
Intel Corp (NASDAQ:INTC) will report tomorrow after the bell and this will be the next important earnings release. Regardless of what the company reports and says the reaction from the market will likely be determined by the strength in the U.S. Dollar. Should the dollar continue to slide it is likely that the major stock market indexes will continue to inflate. Watch for the opposite effect to occur should the dollar pop or bounce. At this point I'm not sure that earnings really make much of a difference for the overall market indexes as the movement in the U.S. Dollar really inflates and deflates everything.
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STERLING DROPS by S&P's remarks that it is maintaining its negative outlook on the UK and that further rise in UK public debt burden would bge incompatible with AAA rating. *** EURJPY HOT CHART IS NOW READY *** http://bit.ly/9wr4nfRead more…
By Nicholas Santiago on July 12th, 2010 10:33am Eastern Time
Last week the major market indexes staged a firecracker of a rally finishing up 5.00 percent for the week. While almost every sector participated in this move higher it was the financial stocks that helped lift the major indexes.
J.P. Morgan Chase & Co (NYSE: JPM) is considered the leading large major bank stock in the market. This stock traded as low as $35.16 on July 1st as the market was tumbling lower. J.P. Morgan Chase & Co is now trading as high $39.00 this morning. This is near term resistance for the stock as price is currently trading into the daily 50 moving average. This financial giant will also have very strong resistance around the $40.50 level in the near term.
The Bank of America Corp (NYSE:BAC) chart looks very similar to the J.P. Morgan Chase & Co chart. This stock also found a low on July 1st at $13.50 a share. This stock is now trading into it's daily 20 moving average at $15.12. While this area is minor resistance on the daily chart the stronger resistance levels for the stock will be around $15.75 and $16.25.
Morgan Stanley (NYSE:MS) has rallied over the past five trading days into it's daily 20 moving average. While this former leading investment bank turned bank holding company is trading at minor resistance the stronger resistance is a bit higher. The major daily resistance levels for Morgan Stanley is $26.00 and $27.00 in the near term. Should the major market indexes hold up these important resistance these levels should come into play.
The major financial stocks are still facing some headwinds as the financial reform bill gets finalized in Washington. However, it is important to remember that these large major banks can borrow money from the Federal Reserve at basically zero percent and trade, buy treasuries, and maintain their credit card businesses. Therefore, they really do not need to make loans to make money these days. While these leading financial stocks have rallied sharply off the lows their upside should be limited in the near term.
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By Gareth Soloway on July 12th, 2010 11:48am Eastern Time
After a monster rally last week, the markets seem to be pulling back slightly on extremely light volume. The SPDR S&P 500 ETF (NYSE:SPY) is down half of one percent on the day. Last week the markets surged for a five percent gain. This coincided with the upcoming options expiration this week and earnings announcements from companies like Alcoa Inc. (NYSE:AA), Intel Corporation (NASDAQ:INTC), Google Inc. (NASDAQ:GOOG), JPMorgan Chase & Co. (NYSE:JPM), Bank of America Corporation (NYSE:BAC),General Electric Company (NYSE:GE).
Options expiration is notorious for running the markets the opposite way of the crowd. In the last month, prior to last week, the markets had been hammered relentlessly. The SPY had dropped from $113.00 to $101.00 in just two weeks. Needless to say, the retail investor was panicking and buying puts like crazy from institutional sellers. Knowing the game as it is played, the institution will never pay off all those puts thus running the markets the opposite way into options expiration. By pushing the markets up and bringing those puts out of the money, the institutions can profit by the puts expiring worthless, keeping the premiums as pure profit. This is a classic event.
Earnings from Alcoa Inc. will be reported after the market closes today. Look for a number in the realm of $0.05 - $0.10 for the quarter. Revenue will also be key to analyze the slow down in the global economy due to the European default impact last quarter. Tomorrow after the market closes, Intel Corp. will report earnings. Look for earnings in the range of $0.45 per share. Watch the margins and revenue numbers as well as the future outlook. Wall Street will be very interested in the outlook with fear the global scene is beginning a double dip recession. To get more information, analysis, guidance, swing trade calls and education, join the Research Center.
Gareth Soloway
Chief Market Strategist
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THIS WEEK's US Q2 EARNINGS EXPECTATIONS: MONDAY: Alcoa $0.14 from -$0.26, CSX $0.95 from $0.72 TUESDAY: Intel $0.43 from -$0.07 THURSDAY: AMD $0.07 from -$0.49, Google $6.55 from $5.36, JPM Q2 $0/73 from $0.28 FRIDAY: BoA $0.21 from $0.33, Citigroup $0.05 from $0.49, GE $0.27 from $0.26. ***AUDCAD risks extending decliens towards 0.89 not necessarily due to struggling equities but particularly improving sentiment in CAD following Friday's stellar job report ***
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LONDON (Dow Jones)--U.S. oil major Exxon has sought clearance from Washington DC to examine a takeover bid for BP PLC (BP.LN), according to the Sunday Times.
According to oil industry sources, the ...
http://online.wsj.com/article/BT-CO-20100711-702773.htmlRead more…
