By Gareth Soloway on April 8th, 2010 11:58am Eastern Time
The markets are slightly lower for the second day in a row. Global jitters are showing themselves again with Greece. At 8:30am ET, Jobless Claims were released. They showed a jump to 460,000. Expectations were for 442,000. This negative news did not have a major impact on the markets. Overall, the markets seem to be taking the recent non stop rally to heart. It has been a meteoric rise and without continued great news, the markets look like they need to pause or pull back.
Apple Inc. (NASDAQ:AAPL) is trading lower on the day, down $1.70 (-.70%). Apple Inc. continues to hammer into the $240.00 resistance level. The IPAD has been released, the run has happened, now where does Apple go from here? Also, word that Hewlett-Packard Company (NYSE:HPQ) is releasing an IPAD like device with a built in camera, USB and more, called the Slate, means competitors are quickly matching Apple's products.
Financial firm Goldman Sachs Group, Inc. (NYSE:GS) is having a very strong day. Goldman Sachs jumped yesterday when the market was weak and is continuing its run today. The stock is up 1.35%. Recently, Goldman Sachs has been one of the weaker financial stocks compared to rivals JPMorgan Chase & Co. (NYSE:JPM) and Wells Fargo & Company (NYSE:WFC). Goldman Sachs is known for their trading prowess unlike JPM and WFC who are known as more pure banks. With little talk of bank regulation in the near future, Goldman Sachs seems to be rebounding.
Amazon.com, Inc. (Public, NASDAQ:AMZN) is also having a fantastic day. Same store sales reported today for some retailers. They were robust to say the least. In addition, earnings reports from Family Dollar Stores, Inc. (NYSE:FDO), Bed Bath & Beyond Inc. (Public, NASDAQ:BBBY) and Hot Topic, Inc. (NASDAQ:HOTT) were glowing. This shows that the consumer is buying like the good old days. While the consumer is buying, this Chief Market Strategist feels it is just pent up demand over the last two years that is now finally being released. The great earnings should continue, but be aware that six months from now consumer spending may stall. To explain this further, think of someone who wanted to replace all the windows in their house two years ago, but the economy was just too bad. Now those windows are just horrible and with things looking a little better, that consumer is now at a point where they must do it. My fear would be, once this is done, could consumer spending fall back off? This is not something that will show up for at least six months though, in my opinion.
Gareth Soloway
Chief Market Strategist
InTheMoneyStocks.com
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By Nicholas Santiago on April 8th, 2010 1:35pm Eastern Time
The volume in the market since the March 2009 rally began has been extremely light. There have been days when the volume has picked up, however, the large majority of the time the volume has been unusually light. Many investors will make the case that there are a lot less players in the game since the panic of 2008 as many hedge funds went out of business . While this may be true, the major players are still in the game and even bigger than they were before. Companies such as J.P. Morgan Chase & Co (NYSE:JPM), Wells Fargo & Co (NYSE:WFC), Bank of America Corp (NYSE:BAC), Goldman Sachs Group (NYSE:GS), and Morgan Stanley (NYSE:MS) are all bigger than ever and probably the companies that account for the bulk of the volume in the stock market right now.
Since the Federal Reserve Banks minutes were released on April 6th, 2010 the market was told that the Fed funds rate (overnight lending rate to the large banks) will remain at zero percent for an extended period of time. Therefore, these major large banks can borrow money at zero and buy treasuries and equities to make profits at no risk. They no longer need to lend money to consumers or businesses in order to make a profit. When you think about it, why they want to take on that risk with ten percent unemployment, and a housing crisis when they have a sure thing already?
Anyone that trades these markets regularly will notice certain patterns unfold almost on a daily basis. The first pattern that is obvious and happens nearly everyday is the U.S. Dollar weakens shortly after the stock market opens at the New York Stock Exchange. This intra-day decline gives the stock market a lift higher as most commodity and inflationary stocks will rise. Come to think of it, everything seems to rise when the dollar declines intra-day. The second pattern that we see is that stocks such as Exxon Mobil Corp (NYSE:XOM) will catch a bid when the stock market is falling and looks close to breaking an important technical level that could lead to further downside. Similar action will take place very often with Goldman Sachs and J.P. Morgan.
There is an old market adage that states 'never short a dull market'. This adage has never been so true over the past eight weeks. As long as this market trades higher on light volume it does not take much to move this market higher. Watch these leading stocks closely. When they catch a bid it is likely that the stock market will catch a bid. Until the stock market can get some decent volume this is how it will remain.
Nicholas Santiago
Chief Market Strategist
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By InTheMoneyStocks.com on April 7th, 2010 1:03pm Eastern Time
As we all know, the homebuilder stocks lead the decline in the stock market fall of 2007 – 2008. These stocks actually topped out in late 2005, and have been in a bear market ever since. Companies such as Toll Brothers Inc. (NYSE:TOL) have rallied more than 40% off their 2009 lows. Meanwhile, stocks such as Lennar Corp. (NYSE:LEN) bottomed in late 2008, and are now higher by more than 300% off its lows. The SPDR S&P Homebuilders ETF (NYSE:XHB) which includes homebuilders and other companies such as Home Depot, Inc. (NYSE:HD) is higher by nearly 20% since November 2008. These are dramatic and outstanding moves higher, however, compared to the rally in the markets since March 6th, 2009 they are basically on par with everything else.
Everyday, some analyst or economist says that housing has bottomed, while others will say that housing has not. The fact is that there have been countless stimulus programs trying to keep this sector propped up. For example, the new home buyer $8000.00 tax credit is a major incentive for people to step in and buy a home. There is even a $6500.00 tax credit for for existing homeowners to buy a new house. Then there is the modified home loan program to try and keep people from walking away from their current homes that they are under water on. Even with all of these programs the foreclosure market continues to grow at an alarming rate. Let us not forget about the shadow foreclosures that are out there as well. These are homes that the banks are not allowing to go into foreclosure just yet. RealtyTrac says there are about 600,000 of these so called shadow foreclosed homes in the United States that are yet to hit the marketplace.
Does this look like an area or sector in the market that someone would want to invest in? Sure there are trades in the homebuilders from time to time for savvy traders and investors, however, who in their right mind would want to own a homebuilder as an investment for the long term? The only time this sector would even become an attractive long term hold will be when the government stops propping the sector up and lets these houses get priced by normal supply and demand. The same will unfortunately be said for the entire economy.
Nicholas Santiago
Chief Market Strategist
www.InTheMoneyStocks.com
To get more in-depth analysis, along with exact entries/exits, swing trades, and scalp trades, join our Research Center or Intra Day Stock Chat NOW and join the ranks of the Pros!
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By Trader X on April 7th, 2010 3:19pm Eastern Time
The SPY have sold off today from a very oversold technical position. Earlier today around 1:00 pm EST the SPY rallied as the 10 Year T-note yields dropped. This afternoon yields and stocks are lower into the final hour of the day. This is a change in character and should be watched closely over the next few days.
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By Gareth Soloway on April 7th, 2010 11:48am Eastern Time
The official start of earnings season is next week. Be ready for a wild ride! The last few weeks in the markets have been plagued with extremely light volume. This is partly due to the holidays recently and lack of participation by institutions. However, a large part of the light volume has been because Wall Street is awaiting earnings season. It has arrived.
If you remember, the last correction of 9% in the markets was in mid January. That coincided beautifully with earnings season as well. Volume was solid, averaging 200 million on the SPDR S&P 500 ETF (NYSE:SPY). For those of you that are members, you are well aware that I believe that light volume keeps the markets propped up, while heavy volume will drop it. Over 200 million on the SPY is heavy, while under 200 million is light. To give you a little idea about current volume, the last few days, the SPY has had trouble getting more than 100 million in volume. That is unbelievably light.
So here we go. Earnings season starts next week. Will the market correct again like in January? Perhaps, we see fresh highs and the DOW well above 11,000?
After the market closes on Monday, Alcoa Inc. (NYSE:AA) reports earnings. Consensus earnings estimates are for the company to make $0.13 per share but the whisper number is much higher at $0.23 per share. They will need to come close to the whisper number to continue their move higher.
Tuesday has a big earnings announcement as well. Intel Corporation (NASDAQ:INTC) will report. Consensus estimates for Intel Corp. are $0.38 per share but the whisper number is slightly higher at $0.41.
Wednesday sees JPMorgan Chase & Co. (NYSE:JPM) report earnings. Consensus estimates are for a profit of $0.64 per share. The whisper number is again above the estimates at $0.78 per share. JPMorgan has had a meteoric rise in the last two months. Something to truly marvel at. Can the continue to outperform?
On Thursday Google Inc. (NASDAQ:GOOG) reports. Estimates are for a profit of $5.80 per share. The whisper number is in that range. Many will be looking for any further comments about China and future growth expectations.
This is just a taste of the earnings that will be announced next week. The key with these earnings announcements will be the volume that it causes. That will create volatility and action. Most likely there will be a solid move next week. Be ready for it. I will be swing trading and day trading it with my Research Center and Intra Day Stock Chat subscribers. We welcome you to come join the growing ranks of amazing, educated investors.
Gareth Soloway
Chief Market Strategist
InTheMoneyStocks.com
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ONE REASON WE MUST WATCH GOLDs rally is that it is surging to second consecutive daily record high in EURO TERMS (GOLD/EUR), now at 855, while GOLD IN YEN TERMS is testing the January 11 high of Yen 107,000, which may suggest a topping formation in the metal as has been the case each time it neared record highs against non-USD currencies. GOLD/USD hits $1140, which is just below the Mar 3 high of 1145. Those who have access to GOLD vs. AUD, the metal is testing the previous failed points of AUD 1230, seen on Mar 28, 17 and 16.
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