On Monday, we heard that Apple CEO Steve Jobs was going to take a six-month medical leave of absence. On Tuesday, after the closing bell, Apple announced another smashing quarter with great earnings and revenue. On Wednesday, Apple stock got hit with the classic "sell the news" earnings aftermath sell-off.
The decline actually began with the Jobs press release on Tuesday morning, but after earning were released and the stock was initially rebounding, it opened lower on Wednesday and dragged the rest of the NASDAQ down 40 points. Though Apple has only lost 10 points over the past two days, the damage is being felt in other big tech names such as Cisco (CSCO), Dell (DELL), Amazon (AMZN) and Google (GOOG). Of course, it's far too early to tell, but, considering the way stocks have appreciated over the past 4 1/2 months, this could be the beginning of a significant correction, one probably overdue and timed perfectly for post-earnings profit-taking. As usual, the smart money may be getting out while the getting is good.
With tech sliding, the rest of the market didn't fare well, though major industrials on the Dow maintained a sense of stability. Another point of focus should be stock options, which expire on Friday. After that, markets could be in for a free-for-all.
Dow 11,825.29, -12.64 (0.11%)
NASDAQ 2,725.36, -40.49 (1.46%)
S&P 500 1,281.92, -13.10 (1.01%)
NYSE Composite 8,104.92, -85.99 (1.05%)
Losers beat gainers by an unhealthy margin, 5161-1411, indicating that the decline, though well-masked on Apple's move, was certainly not contained to tech stocks alone. On the NASDAQ, there were 147 new highs, but just 12 new lows. The NYSE reported 186 new highs and a mere 22 new lows, though the high-low indicator is somewhat of a lagging one, especially after a huge rally such as that seen since September. It will take a while for new highs to fall off in the case of a real correction and an even longer time period for fresh new lows to be plumbed. Volume was at its best level of the week, another disturbing data point.
NASDAQ Volume 2,106,258,500.00
NYSE Volume 5,298,377,000
Crude oil was relatively flat, dipping 52 cents on the front-end futures contract, to $90.86. Gold gained late in the day, up $2.70, to $1370.40 at last look. Silver continued to slide, however, down 12 cents, to $28.76.
Thursday will be a big day for earnings, with nearly 100 companies reporting, including big names such as Capital One (COF), Southwest Airlines (LUV), Morgan Stanley (MS), Coach (COH), Freeport-McMoRan (FCX) and Advanced Micro Devices (AMD).
Stay tuned. This may become interesting again.
Wednesday, January 19, 2011
Tuesday, January 18, 2011
Fed Leaves Big Tip
On Tuesday, the Federal Reserve purchased $1.74 billion in Treasury inflation-protected securities, otherwise known as TIPS, in an outright purchase as part of the $600+ billion QE2 program. The extra gobs of money created a nifty rise in securities - doesn't it always? - as the major stock indices rose to new highs. It is looking like January will see a positive "January Effect," a term that will be bandied about over the next two weeks if the markets are able to hold onto the gains made thus far or improve upon them.
The January Effect, as it is known to traders, is the theoretical assumption that as the markets go in January, so will they go the remainder of the year. This gauge is supposedly right something along the lines of 85% of the time if January is positive. Over the past two years - both of which saw falling equity prices - the "effect" was not seen, as both 2009 and 2010 turned in impressive upside performances.
While it might not correlate to downside Januaries, two consecutive years of non-conformation raises the issue of whether Fed meddling has rendered all "old" measures of anticipated returns nil. With this January off like gangbusters, what is the chance of ending the year lower? Well, we've got 11 more months to find out, but, if the Fed continues its inflationary policies, stocks will most likely end the year higher, if only to keep pace with the "moderate" inflation, which could turn into "unwieldy" in the second half of the year or sooner.
Wall Street is certainly having its way on the easy money train of late, and while it's probably not too late to jump on the bandwagon for some quick-turn profits, there still is considerable risk, even though nobody will admit to it.
Upward we go, as earnings this week will flow like mother's milk.
Dow 11,837.93, +50.55 (0.43%)
NASDAQ 2,765.85, +10.55 (0.38%)
S&P 500 1,295.02, +1.78 (0.14%)
NYSE Composite 8,190.91, +16.79 (0.21%)
Considering today's gains, the A/D line did not come in heavily on the side of advancers, which nonetheless beat decliners, 3464-3073. On the NASDAQ, new highs overwhelmed new lows, 269-12. On the NYSE, the beat was not quite as robust, with new highs checking in at 304, against 47 new lows. Volume was fairly strong, but not solid enough from which to draw any conclusions about future direction.
NASDAQ Volume 2,032,031,375
NYSE Volume 5,828,719,500
The front-end (February) crude oil contract on the NYMEX was nearly flat, losing 16 cents, to $91.38. Oil remains at elevated levels. Gold rebounded from last week's drubbing, picking up $7.70, to $1,368.20, with silver adding 58 cents, to $28.91.
There doesn't seem to be any downside to buying equities these days. Even in the case of Apple (APPL), where founder and CEO Steve Jobs announced a six-month medical leave of absence, the stock fell more than 7 points during the session, but recovered back most of that in after-hours trading as the company posted numbers in excess of Street estimates. IBM also reported and beat, while Citigroup announced a 50% miss (.04 cents on expectations of .08) prior to the opening bell.
The January Effect, as it is known to traders, is the theoretical assumption that as the markets go in January, so will they go the remainder of the year. This gauge is supposedly right something along the lines of 85% of the time if January is positive. Over the past two years - both of which saw falling equity prices - the "effect" was not seen, as both 2009 and 2010 turned in impressive upside performances.
While it might not correlate to downside Januaries, two consecutive years of non-conformation raises the issue of whether Fed meddling has rendered all "old" measures of anticipated returns nil. With this January off like gangbusters, what is the chance of ending the year lower? Well, we've got 11 more months to find out, but, if the Fed continues its inflationary policies, stocks will most likely end the year higher, if only to keep pace with the "moderate" inflation, which could turn into "unwieldy" in the second half of the year or sooner.
Wall Street is certainly having its way on the easy money train of late, and while it's probably not too late to jump on the bandwagon for some quick-turn profits, there still is considerable risk, even though nobody will admit to it.
Upward we go, as earnings this week will flow like mother's milk.
Dow 11,837.93, +50.55 (0.43%)
NASDAQ 2,765.85, +10.55 (0.38%)
S&P 500 1,295.02, +1.78 (0.14%)
NYSE Composite 8,190.91, +16.79 (0.21%)
Considering today's gains, the A/D line did not come in heavily on the side of advancers, which nonetheless beat decliners, 3464-3073. On the NASDAQ, new highs overwhelmed new lows, 269-12. On the NYSE, the beat was not quite as robust, with new highs checking in at 304, against 47 new lows. Volume was fairly strong, but not solid enough from which to draw any conclusions about future direction.
NASDAQ Volume 2,032,031,375
NYSE Volume 5,828,719,500
The front-end (February) crude oil contract on the NYMEX was nearly flat, losing 16 cents, to $91.38. Oil remains at elevated levels. Gold rebounded from last week's drubbing, picking up $7.70, to $1,368.20, with silver adding 58 cents, to $28.91.
There doesn't seem to be any downside to buying equities these days. Even in the case of Apple (APPL), where founder and CEO Steve Jobs announced a six-month medical leave of absence, the stock fell more than 7 points during the session, but recovered back most of that in after-hours trading as the company posted numbers in excess of Street estimates. IBM also reported and beat, while Citigroup announced a 50% miss (.04 cents on expectations of .08) prior to the opening bell.
Friday, January 14, 2011
Stocks Extend Gains for 7th Straight Week
In its latest POMO, the Fed purchased another $7.3 billion in bonds from the Primary Dealers on Friday, which, of course, made buying yesterday's dip the right move for equity traders.
Stocks rallied sharply off a quiet beginning, with all major indices getting a diagonal lift throughout the day. The market has now overextended an already extended position, as new highs were hit in all the majors. Those calling for a pull-back thus far have been sorely disappointed and probably are feeling a bit embarrassed at doubting the power of the Fed and fiat money created out of thin air.
Leading the way were bank and computer chip firms after JP Morgan Chase (JPM) and Intel (INTC) both reported earnings better-than street estimates.
Investors took December retail sales (up 0.5%), capacity utilization (76%) and industrial production (+0.8%) as positive signs that the recovery was continuing apace. A higher-than-normal CPI, which came in at 0.5%, did little to contain the enthusiasm.
Dow 11,787.38, +55.48 (0.47%)
NASDAQ 2,755.30, +20.01 (0.73%)
S&P 500 1,293.24, +9.48 (0.74%)
NYSE Composite 8,174.12, +54.69 (0.67%)
Advancing issues far outpaced decliners, 3972-2547. There were 233 new highs and 112 new lows on the NASDAQ; On the NYSE, there were 234 new highs and 153 new lows, the lows dominated by Municipal Bond funds, which have been hard hit in the aftermath of Meredith Whitney's call that there will be hundreds of municipal defaults this year. Nobody seems to be doubting her as states and cities struggle with bloated budgets and slim tax receipts.
Volume was at its best level of the week, a fitting conclusion to a week characterized by high drama and low reactions.
NASDAQ Volume 2,030,708,125.00
NYSE Volume 5,228,476,000
Oil tacked on a 14 cent gain, to $91.54, but the precious metals were savaged again. Gold traded down $26.50, to $1,360.50, its lowest level in some months, while silver was whipsawed lower by 94 cents, coming in at $28.32. The level of complacency in all trading areas - outside of the muni bond complex - is stunning. There simply is no risk aversion, a recipe for disaster, which the Fed has so far been able to contain.
Stocks rallied sharply off a quiet beginning, with all major indices getting a diagonal lift throughout the day. The market has now overextended an already extended position, as new highs were hit in all the majors. Those calling for a pull-back thus far have been sorely disappointed and probably are feeling a bit embarrassed at doubting the power of the Fed and fiat money created out of thin air.
Leading the way were bank and computer chip firms after JP Morgan Chase (JPM) and Intel (INTC) both reported earnings better-than street estimates.
Investors took December retail sales (up 0.5%), capacity utilization (76%) and industrial production (+0.8%) as positive signs that the recovery was continuing apace. A higher-than-normal CPI, which came in at 0.5%, did little to contain the enthusiasm.
Dow 11,787.38, +55.48 (0.47%)
NASDAQ 2,755.30, +20.01 (0.73%)
S&P 500 1,293.24, +9.48 (0.74%)
NYSE Composite 8,174.12, +54.69 (0.67%)
Advancing issues far outpaced decliners, 3972-2547. There were 233 new highs and 112 new lows on the NASDAQ; On the NYSE, there were 234 new highs and 153 new lows, the lows dominated by Municipal Bond funds, which have been hard hit in the aftermath of Meredith Whitney's call that there will be hundreds of municipal defaults this year. Nobody seems to be doubting her as states and cities struggle with bloated budgets and slim tax receipts.
Volume was at its best level of the week, a fitting conclusion to a week characterized by high drama and low reactions.
NASDAQ Volume 2,030,708,125.00
NYSE Volume 5,228,476,000
Oil tacked on a 14 cent gain, to $91.54, but the precious metals were savaged again. Gold traded down $26.50, to $1,360.50, its lowest level in some months, while silver was whipsawed lower by 94 cents, coming in at $28.32. The level of complacency in all trading areas - outside of the muni bond complex - is stunning. There simply is no risk aversion, a recipe for disaster, which the Fed has so far been able to contain.
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