The upcoming BoE decision (12:00 GMT) is expected leave rates unchanged at 0.5%, but the announcement regarding quantitative easing could be a more complex. The probability of renewing QE (which was concluded last week) at this months meeting is under 20%. Inflation is clearly surpassing the BoEs 2% target but slowing bank lending reflects sluggish capital formation despite the 200 bln in asset purchases. Watch out for a statement on whether the Monetary Policy Committee leaves the door open for future QE easing, in which case broad GBP losses may ensue. Yes, inflation is above target, but thats what the BoE warned to be a short-term phenomenon 2 months ago. Dont expect GBPUSD to reverse its downtrend (capped at 1.6050) before Fridays jobs report. Post-BoE risks remain slated to the downside, $1.5820 in focus.
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LONDON (Reuters) - Royal Dutch Shell Plc posted a 75 percent fall in fourth quarter profits to $1.18 billion, as it was punished for its strong positions in the ailing natural gas and refining businesses.
http://uk.reuters.com/article/idUKTRE6130XJ20100204Read more…
By ITMS News on February 3rd, 2010 5:09pm Eastern Time
Visa Q1 Class A net income $1.02 vs 74c. Q1 operating rev. $1.96 bln vs $1.74 bln. Evening shares trading up 0.9%:
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By Nicholas Santiago on February 3rd, 2010 2:44pm Eastern Time
The Dow Jones Transportation Average(NYSE:IYT) is trading sharply lower today as a couple of leading trucking stocks had a negative reaction after their earnings report. The transportation index is extremely important to follow. This index is the barometer of business when it is all said and done. Most professional traders will want to know what the transportation index is doing everyday. Generally, if this index is strong the market is strong and when it is weak the market is weak. Many times when you see the market higher on the day and the transports are weak this is a signal of overall weakness in the market. The opposite of that is true when the market is weak and the transportation index is strong it is prudent to not look for too much to the downside in the market.
Today Ryder System Inc(NYSE:R), and C.H. Robinson Worldwide(Nasdaq:CHRW) both reported earnings that were worst than expected and the stocks are reacting poorly today. Ryder posted a profit of $8.2 million, or 15 cents a share, down from $10.6 million, or 19 cents a share, a year earlier. The revenue also fell to $1.25 billion from $1.34 billion. Their guidance was also lower than expected going forward.
Meanwhile, C.H. Robinson Worldwide reported earnings that were not much better. CHRW reported a profit of $87.7 million, or 52 cents a share, Slightly lower than $88.8 million, or 52 cents a share from a year ago. However, the revenue reported was slightly higher by $2.01 billion from $1.96 billion. They also noted that their margin comparisons will be challenging going forward.
While these stocks were downgraded from several major firms today it is telling us that 2010 could lead to challenging times ahead. If the transportation average cannot lead the markets higher who can? Since the mid- January market high the Baltic Dry index has declined sharply and this is telling us that the transport average is important for the entire global economy. The Baltic Dry Index is a number issued daily by the London-based Baltic Exchange. Not restricted to Baltic Sea countries, the Index tracks worldwide international shipping prices of various dry bulk cargoes.
Nicholas Santiago
Chief Market Strategist
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The 22k decline in Jan ADP is the smallest loss since February 2008, serving to bolster the US data-driven argument for prolonged USD gains, muting criticism that recent USD advances had predominantly emerged on bad news outside the US. USD has another chance to regain composure after a 2-day retreat ahead of the Jan services ISM (15:00 GMT) which is expected to hit as high as 51 from 49.8 in Dec. Especially pertinent for FX, bond & equities will be the EMPLOYMENT COMPONENT of the services ISM, which improved to 43.6 in Dec from 41.7 in Nov and faces improved chances of further nearing the 50 figure. A break above 45.0 would be the highest since Jul 2008, thereby triggering upward revisions in the forecasts for Fridays NFP (exp +50). Watch 10 yr yield nearing 3.70% resistance which helps USDJPY above 91. Gold still fails to break above 1123-25 resistance, which will be needed to prevent retreat below 1070. PLEASE VOTE (if you have not done so) http://shortyawards.com/alaidiRead more…
By TRADER X on February 3rd, 2010 3:14pm Eastern Time
The U.S. Dollar is higher on the day. This positive day for the dollar comes after a two day decline. While the dollar is not proportional it is reactionary. Please note that every down tick on the dollar intraday gives the SPY a lift in the market.
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By ITMS News on February 3rd, 2010 4:40pm Eastern Time
Cisco Systems reported fiscal second quarter earnings of $1.85 billion, or 32 cents a share compared to a profit of $1.5 billion or 26cents a share a year ago.
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By InTheMoneyStocks.com on February 3rd, 2010 11:58am Eastern Time
The markets continue to inch lower today coming into a little support at $109.50 on the SPDR S&P 500 ETF ( NYSE:SPY). This level is a minor support but could cause a little bounce. After that, the major level of support is at the 200 moving average at $109.10 level.
The markets are lower on a stronger dollar. With that stronger dollar comes a fade in commodies and commodity stocks. These stocks have run up 10% in the last few days on the back of a huge oil bounce. A small pullback was due.
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Here are two charts, one showing more detailed wave counts and how this rally is expected to play out...The second chart shows this in the greater scheme of things.
Looks like we have had the 5 waves off the top to complete the BIG CIRCLED 1....So this rally is corrective.Corrective Rallies usually have 3 wave structures labeled A-B-C.If internal structure of A is 5 waves... we can expect a "zig zag" pattern (feel free to google "elliott wave zig zag")There seems to be a rather clear 5 waves in the A, so I expect a Zig Zag to further highs.
The bigger picture shows the potential for a big "Head & Shoulders" pattern.If we see this "Zig Zag" that is expected...The bigger picture will look like the chart above.Also we would need a move higher to look like a reasonable "retest" of the previous major trendline (has had 5 touches and kept the market up since July 2008).Thirdly, The "Box" between 5375-5400 should be treated like a "GAP".... this is because we had a fierce sell off here, and this area was NEVER touched again since the decline from 5600... you can see that it want straight through it and never looked back....The parameters of the Box also correspond to previous resistance lines on the potential "left shoulder"...so this area looks very significant.Time Span expectation for this Rally: 1-1.5 weeks.
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By TRADER X on February 2nd, 2010 3:43pm Eastern Time
The makeup for a two day stock market rally has been seen on all the technicals. Yesterday and today the market has rallied as the Volatility index declined, the U.S. Dollar weakened, and the volume has been very light. This is the perfect recipe for the markets to rally. Everything simply just re-inflates. This is the exact combination that gave the stock market a sharp rally in 2009. Will it last? Can the market inflate itself back to health? We shall see.
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By InTheMoneyStocks.com on February 2nd, 2010 12:40pm Eastern Time
The key to the market going up is simply a weaker dollar. Friday, the dollar, PowerShares DB US Dollar Index Bullish (NYSE:UUP) slammed into the 200 moving average resistance point. This clearly showed a turning point near term on the dollar to the downside. Monday the markets rallied as the dollar pulled back off the 200ma. Today again the dollar is falling and sure enough, the markets are moving higher.
Commodity stocks have been the big catalyst to this market surge. Stocks like Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX), Southern Copper Corporation (NYSE:PCU), Exxon Mobil Corporation (NYSE:XOM) have all taken off for two consecutive days. Many of the top commodity stocks have a direct link with the DOW or S&P 500 thus when they move up, the markets move higher. Not only has the dollar falling back been a big help to the bounce but Exxon Mobil reported solid earnings Monday morning. Exxon Mobil is up almost $3.00 from its Friday close. That is a solid move. Per my article yesterday Top 10: Commodity Stocks Bouncing Off Major Support, these all were mentioned and even given out late last week!
Watch for this commodity move higher to run out of steam later this week. Look for the overall market to be wild and be a short term swing traders heaven.
Gareth Soloway
Chief Market Strategist
InTheMoneyStocks.com
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By TRADER X on February 2nd, 2010 9:37am Eastern Time
The U.S. Dollar index is lower to start the day. This has given the indexes a slight bid higher to start the day. Remember when the dollar trades lower most commodities continue to inflate. When the dollar trades higher most commodities deflate. The dollar is still very important and must be monitored everyday.
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By ITMS News on February 2nd, 2010 8:07am Eastern Time
United Parcel Services (UPS) reported fourth quarter earnings of 75 cents a share which was above the 74 cents analysts had estimated. However it was down from 83 cents a year ago. Sales were $12.38 billion down from $12.70 billion a year ago.
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By Nicholas Santiago on February 1st, 2010 3:35pm Eastern Time
The major indexes are all catching a bid trading sharply higher on the day. This is the type of action that we have seen from the March 2009 lows. The Dow Jones Industrial Average (NYSE:DIA, DJI), SPX 500 (NYSE:SPY), NASDAQ (Nasdaq:QQQQ), and the Russell 2000 (NYSE:IWM) seem to climb when two major factors are present.
The first factor that we recognize is the light volume. For most of 2009 a case can be made by simply looking at any chart of the SPDR Trust (NYSE:SPY) that the market rallied higher on light volume, and sold off on very heavy volume. Healthy markets historically increase on high volume and decrease or pullback on light volume. This has not been the case throughout the 2009 rally as the opposite occurred. Today is much like the rally days of last year as the market is trading higher on much lighter volume than we have seen recently over the past few weeks.
The secondary factor that usually takes place in order to see a rally from my observation is a weak U.S. Dollar. Throughout the 2009 rally the U.S. Dollar declined into early December. From the March 2009 high to the December 2009 low the dollar declined over 17 percent. Today we see the market trading higher as the U.S. dollar is weak and trading lower on the day.
When the dollar is weak and the volume is light we usually have a positive trading day in the market. Therefore, when the volume is heavy and the dollar is strong the market generally declines. This looks to be due to an inflation effect that takes place. Every commodity gets inflated when the worlds reserve currency (U.S. Dollar) moves lower. Commodities and inflationary stocks all trade higher on the weak dollar. Anything inflationary such as oil, gold, copper, silver, iron, and agriculture all benefit from the declining dollar. So it is safe to say when volume is light and the dollar is weak it is prudent to use caution on the short side as the market will usually rally.
Nicholas Santiago
Chief Market Strategist
www.InTheMoneyStocks.com
