For the most part, investors cheered second quarter results from a wide swath of companies, sending the Dow Jones Industrials and other major indices to 2008 highs. The NASDAQ reached levels not seen since last October, while the S&P 500 careened back to its November 2008 levels.
Even though it was a down day for the NASDAQ - highly influenced by poor showings by Microsoft and Amazon after the close Thursday - that index ended a 12-day winning streak.
Dow 9,093.24, +23.95 (0.26%)
NASDAQ 1,965.96, -7.64 (0.39%)
S&P 500 979.26, +2.97 (0.30%)
NYSE Composite 6,337.46, +34.94 (0.55%)
For Friday, gainers led losers, 3818-2532. New highs cooled off after yesterday's exceptional showing, but still led new lows by a healthy, 2-1 margin, 164-82. Volume tapered off, with trading back to slow midsummer levels.
NYSE Volume 1,024,974,000
NASDAQ Volume 2,267,459,000
Commodities were again all over the map. September crude gained 89 cents, to $68.05, while gold fell $1.70 after a nice run-up, to end the week at $953.10. Silver was a winner, gaining another 11 cents, to $13.88, a magical level at which US silver coins are worth 10 times their face value. Both gold and silver once again seem poised to take off for new heights, though they've been in this territory before and rallies have been squelched by bouts of selling. with the US greenback under increasing pressure, however, this could be the moment for the precious metals to finally proclaim their value both as investments and hedges. Far and away, the precious metals have been the most stable investments this year, and since they are still in bull markets, there's little reason to believe they won't end the year shining.
The week was most impressive due to the relatively small number of companies posting poor second quarter results and next week may represent the last gasp of the long - now 5 month - rally. Within a rugged trading environment, wherein stocks and entire indices can turn on a dime, quick turnaround trades have been the best ally of most investors. The continued low volume indicates that the market is conducive to day-trading and that many players of all sizes are still sitting on the sidelines or have already been wiped out.
Next week is the highlight of the earnings season and also the end of another month. With the July employment report due out on August 7, there's ample reason to take profits and run, though the true high risk-takers may continue to hold, hoping that the incipient bear market rally erupts into a full-blown bull. The evidence for that happening is still a matter of great conjecture and clouded by a diversity of opinions and economic reports.
Best advice is to hang tight and hope for the best, though short term trading remains the obvious choice to avoid major losses. Wall Street has never resembled a casino more than at the current time. There are updrafts and downdrafts which could swing stocks in either direction. In such a context, apathy could be one's worst enemy and fear a grand ally.
Friday, July 24, 2009
Thursday, July 23, 2009
Revisiting Dow Theory As Industirals Reach '09 High
The midsummer rally caught fire on Thursday, as investors were encouraged by strong results from a wide range of companies, including Ford Motor Company (F), which announced better-than-expected earnings for the second quarter.
Also buoying the buyers was the third straight month of higher existing home sales, as reported by the National Association of Realtors (NAR). Not only were there more homes sold in June than in the previous month, but the number of foreclosure sales and short sales were of a smaller percentage than had been previously seen. The trade association also reported that the existing supply of homes for sale had fallen to just over 9 months.
3M (MMM) beat expectations, McDonald's (MCD) and American Express (AXP) missed. Amazon (AMZN), the world's largest online retailer, saw higher sales volume for the quarter but lower earnings, reporting 32 cents per share on $4.65 billion in sales. The stock was higher during regular trading hours, but had taken a $6.5% hit after hours.
Also after the close, Capital One (COF), a major credit card issuer, posted a $275.5 million loss as delinquencies continued to wrack the company's profits. They lost 65 cents per share in the quarter compared with a profit of $1.21 per share in the same period a year ago.
Another significant company reporting after the bell was Microsoft (MSFT), which missed both sales and earnings targets by wide margins. The global software, gaming and internet giant is being affected not only by the downturn in the economy, but by hardball competition from the likes of Google.
However, most of the trading day was cheery, with the Dow Jones Industrials exceeding its previous high from January 2nd, an initial sign of a possible new bull market emerging. However, the transportation index (DJT) failed to confirm, closing at 3506.12, far below the January 6 high of 3717.26. The mixed results after the bell, juxtaposed with the Dow's closing high and non-confirmation, sets up an interesting close for the week on Friday. As opposed to the nearly 300 companies which reported on Thursday, Friday will pale by comparison, with fewer than 80 companies scheduled to release earnings, none of them major firms.
Dow 9,069.29, +188.03 (2.12%)
NASDAQ 1,973.60, +47.22 (2.45%)
S&P 500 976.29, +22.22 (2.33%)
NYSE Composite 6,302.52, +151.12 (2.46%)
The good news is that the NASDAQ rally has now reached 12 straight sessions, and the majority of companies reporting are turning profits and many are beating expectations. On the day, advancing issues trampled decliners, 5206-1305 and new highs catapulted past new lows, 272-112. The number of new highs for the day was the most in nearly 2 years, a remarkable number. Volume also offered an encouraging signal, with a massive number of shares traded on the NASDAQ and a solid showing for the NYSE as well.
NYSE Volume 1,396,542,000
NASDAQ Volume 3,083,885,000
Commodities responded with mostly higher futures prices, especially oil, which gained $1.76, to $67.16. Gold was up another $1.50, to $954.80, while silver continued to rally off recent lows, up 7 cents, to $13.77.
While the economy may still be a little wobbly, the worst may indeed be behind us. However, investors are still skittish over stocks following last year's October surprise, the worst spate of stock selling since the Great Depression. Whether or not the transportation index will confirm a new bull market remains a distant outlook and how far investors will stretch their gains through the earnings season will also bear close attention.
Also buoying the buyers was the third straight month of higher existing home sales, as reported by the National Association of Realtors (NAR). Not only were there more homes sold in June than in the previous month, but the number of foreclosure sales and short sales were of a smaller percentage than had been previously seen. The trade association also reported that the existing supply of homes for sale had fallen to just over 9 months.
3M (MMM) beat expectations, McDonald's (MCD) and American Express (AXP) missed. Amazon (AMZN), the world's largest online retailer, saw higher sales volume for the quarter but lower earnings, reporting 32 cents per share on $4.65 billion in sales. The stock was higher during regular trading hours, but had taken a $6.5% hit after hours.
Also after the close, Capital One (COF), a major credit card issuer, posted a $275.5 million loss as delinquencies continued to wrack the company's profits. They lost 65 cents per share in the quarter compared with a profit of $1.21 per share in the same period a year ago.
Another significant company reporting after the bell was Microsoft (MSFT), which missed both sales and earnings targets by wide margins. The global software, gaming and internet giant is being affected not only by the downturn in the economy, but by hardball competition from the likes of Google.
However, most of the trading day was cheery, with the Dow Jones Industrials exceeding its previous high from January 2nd, an initial sign of a possible new bull market emerging. However, the transportation index (DJT) failed to confirm, closing at 3506.12, far below the January 6 high of 3717.26. The mixed results after the bell, juxtaposed with the Dow's closing high and non-confirmation, sets up an interesting close for the week on Friday. As opposed to the nearly 300 companies which reported on Thursday, Friday will pale by comparison, with fewer than 80 companies scheduled to release earnings, none of them major firms.
Dow 9,069.29, +188.03 (2.12%)
NASDAQ 1,973.60, +47.22 (2.45%)
S&P 500 976.29, +22.22 (2.33%)
NYSE Composite 6,302.52, +151.12 (2.46%)
The good news is that the NASDAQ rally has now reached 12 straight sessions, and the majority of companies reporting are turning profits and many are beating expectations. On the day, advancing issues trampled decliners, 5206-1305 and new highs catapulted past new lows, 272-112. The number of new highs for the day was the most in nearly 2 years, a remarkable number. Volume also offered an encouraging signal, with a massive number of shares traded on the NASDAQ and a solid showing for the NYSE as well.
NYSE Volume 1,396,542,000
NASDAQ Volume 3,083,885,000
Commodities responded with mostly higher futures prices, especially oil, which gained $1.76, to $67.16. Gold was up another $1.50, to $954.80, while silver continued to rally off recent lows, up 7 cents, to $13.77.
While the economy may still be a little wobbly, the worst may indeed be behind us. However, investors are still skittish over stocks following last year's October surprise, the worst spate of stock selling since the Great Depression. Whether or not the transportation index will confirm a new bull market remains a distant outlook and how far investors will stretch their gains through the earnings season will also bear close attention.
Wednesday, July 22, 2009
NASDAQ Extends Streak, Earnings Up and Down
Editor's Note: I sincerely apologize for the last two days in which I have not posted as I regularly do. Unfortunately, events of the past few days have completely overwhelmed my usual habits, as my father passed away on Thursday of last week and the wake (Monday), funeral (Tuesday) and other family affairs have been very time-consuming. It is my sincere hope to get back onto my regular schedule as of today.
The markets continue to gyrate around second quarter earnings news and reports from a wide variety of companies. While the majority of companies have met or exceeded - mostly-lowered - expectations, a number of major firms have posted shoddy numbers, reflecting the struggles being felt across the US economy.
By the close, the only index posting a gain was the NASDAQ, extending its own winning streak to twelve days. The Dow ended an eight-day run of positive finishes with a modest loss.
That the NASDAQ has been a best-performer over the past few weeks should come as no surprise. Many of the companies comprising the index are younger and leaner, without many of the legacy costs and high debt loads usually associated with the companies on the Dow, for instance.
Apple (AAPL) and Starbucks (SBUX), both listed on the NASDAQ reported solid earnings for the quarter, while Advanced Micro Devices (AMD) and Wells-Fargo (WFC), two NYSE stocks, posted steep losses for the quarter.
Dow 8,881.26, -34.68 (0.39%)
NASDAQ 1,926.38, +10.18 (0.53%)
S&P 500 954.07, +0.51 (0.05%)
NYSE Composite 6,151.40, -2.99 (0.05%)
Market internals were in-line with the headline numbers. Advancers finished well ahead of losing issues, 3779-2585, while new highs continued their winning streak over new lows, finishing ahead, 142-96. Volume was very strong on the NASDAQ, but continued to slump on the NYSE, barely making it past the benchmark of 1 billion shares traded.
NYSE Volume 1,079,660,000
NASDAQ Volume 2,371,615,000
Commodities traded all over the map. September crude finished 21 cents lower, at $65.40, while the metal shone, with gold gaining $6.40, to $953.30 and silver up 22 cents to $13.70. Grains and livestock were mixed.
Earnings reports will keep investors on their toes Thursday, with nearly 300 companies reporting. Some of the bigger names include United Parcel Service (UPS), Raytheon (RTN), KLA-Tencor (KLAC), 3M (MMM), Burlington Northern (BNI), Capital One (COF), Credit Suisse (CS), McDonald's (MCD) and Microsoft (MSFT).
The markets continue to gyrate around second quarter earnings news and reports from a wide variety of companies. While the majority of companies have met or exceeded - mostly-lowered - expectations, a number of major firms have posted shoddy numbers, reflecting the struggles being felt across the US economy.
By the close, the only index posting a gain was the NASDAQ, extending its own winning streak to twelve days. The Dow ended an eight-day run of positive finishes with a modest loss.
That the NASDAQ has been a best-performer over the past few weeks should come as no surprise. Many of the companies comprising the index are younger and leaner, without many of the legacy costs and high debt loads usually associated with the companies on the Dow, for instance.
Apple (AAPL) and Starbucks (SBUX), both listed on the NASDAQ reported solid earnings for the quarter, while Advanced Micro Devices (AMD) and Wells-Fargo (WFC), two NYSE stocks, posted steep losses for the quarter.
Dow 8,881.26, -34.68 (0.39%)
NASDAQ 1,926.38, +10.18 (0.53%)
S&P 500 954.07, +0.51 (0.05%)
NYSE Composite 6,151.40, -2.99 (0.05%)
Market internals were in-line with the headline numbers. Advancers finished well ahead of losing issues, 3779-2585, while new highs continued their winning streak over new lows, finishing ahead, 142-96. Volume was very strong on the NASDAQ, but continued to slump on the NYSE, barely making it past the benchmark of 1 billion shares traded.
NYSE Volume 1,079,660,000
NASDAQ Volume 2,371,615,000
Commodities traded all over the map. September crude finished 21 cents lower, at $65.40, while the metal shone, with gold gaining $6.40, to $953.30 and silver up 22 cents to $13.70. Grains and livestock were mixed.
Earnings reports will keep investors on their toes Thursday, with nearly 300 companies reporting. Some of the bigger names include United Parcel Service (UPS), Raytheon (RTN), KLA-Tencor (KLAC), 3M (MMM), Burlington Northern (BNI), Capital One (COF), Credit Suisse (CS), McDonald's (MCD) and Microsoft (MSFT).
Friday, July 17, 2009
Split Friday, Positive Week for Stocks
Earnings results were just good enough - from Bank of America and Citigroup's weakness, to IBM and Google's strength - to push stocks modestly into positive territory for the day on two exchanges and marginally in the red on two others. The general ambivalence displayed by the day's trading is indicative of another topping out, or, at least a weekend resting point, as the Dow has rung up gains for 5 straight sessions, the NASDAQ, 6. It's a winning streak worthy of note and one that put an end to 4 consecutive losing weeks.
Over the past five sessions the Dow has tacked on an impressive 597 points, the NASDAQ perked up 130; the S&P gained 61 and the NYSE Composite added 411. For all the talk about there being no recovery in sight, the first wave of corporate earnings provided enough positive vibe to send the markets off on a nice upward run.
The question still remains as to whether the gains are sustainable, though given the early returns, the companies being traded seem to have adjusted to a new set of economic circumstances. While earnings are still down from what they were a year ago, so are stock prices. Investors are weighing the current results against an uncertain future, but remain positive, though skeptical. At least there seems to be little worry about a complete melt-down a la last fall.
Dow 8,743.94, +32.12 (0.37%)
NASDAQ 1,886.61, +1.58 (0.08%)
S&P 500 940.38, -0.36 (0.04%)
NYSE Composite 6,038.11, -4.94 (0.08%)
On the day, declining issues narrowly beat advancers, 3376-2936, but new highs bested new lows, 103-71. Volume remained down, though not down to levels of previous sessions, but close. The low level of trading velocity continues to be a topic overlooked by the mainstream financial press. Sluggish trading is a clear sign that investors ate still skittish and widely risk-averse. The vast majority of trades are of the short-term variety, more akin to gambling than traditional investing.
NYSE Volume 1,290,375,000
NASDAQ Volume 1,890,890,000
Commodity traders were also encouraged, sending crude futures higher again, up $1.48, to $63.50. Gold brought an additional $2.10 per ounce, at $937.50. Silver tacked on 17 cents, to close at $13.40.
The coming two weeks will be chock full of earnings hits and misses, though the general indications are that most companies have avoided all-out bust scenarios and may be looking to avoid returning to near-term bottoms from March. The US and world economies have stumbled badly, but they're still functioning, albeit at a decreased capacity.
Over the past five sessions the Dow has tacked on an impressive 597 points, the NASDAQ perked up 130; the S&P gained 61 and the NYSE Composite added 411. For all the talk about there being no recovery in sight, the first wave of corporate earnings provided enough positive vibe to send the markets off on a nice upward run.
The question still remains as to whether the gains are sustainable, though given the early returns, the companies being traded seem to have adjusted to a new set of economic circumstances. While earnings are still down from what they were a year ago, so are stock prices. Investors are weighing the current results against an uncertain future, but remain positive, though skeptical. At least there seems to be little worry about a complete melt-down a la last fall.
Dow 8,743.94, +32.12 (0.37%)
NASDAQ 1,886.61, +1.58 (0.08%)
S&P 500 940.38, -0.36 (0.04%)
NYSE Composite 6,038.11, -4.94 (0.08%)
On the day, declining issues narrowly beat advancers, 3376-2936, but new highs bested new lows, 103-71. Volume remained down, though not down to levels of previous sessions, but close. The low level of trading velocity continues to be a topic overlooked by the mainstream financial press. Sluggish trading is a clear sign that investors ate still skittish and widely risk-averse. The vast majority of trades are of the short-term variety, more akin to gambling than traditional investing.
NYSE Volume 1,290,375,000
NASDAQ Volume 1,890,890,000
Commodity traders were also encouraged, sending crude futures higher again, up $1.48, to $63.50. Gold brought an additional $2.10 per ounce, at $937.50. Silver tacked on 17 cents, to close at $13.40.
The coming two weeks will be chock full of earnings hits and misses, though the general indications are that most companies have avoided all-out bust scenarios and may be looking to avoid returning to near-term bottoms from March. The US and world economies have stumbled badly, but they're still functioning, albeit at a decreased capacity.
Sorry for the Delay...
Stocks were up yesterday, but I was unable to report, as personal events took precedence over my work routine.
Nick Gagliano, my father, 84 years old, passed away overnight. I discovered him early Thursday morning, and, as any of you who have dealt with a family death know, spent the rest of the day consoling and being consoled by other family members, friends and neighbors.
My father was an investor, trader, and options player. It was he who introduced me to the world of finance and stocks. Not always the most prudent investor, he made some very savvy trades in his day. He was a survivor of the Great Depression, a WWII veteran, an attorney, a good and honest man. During the recent downturn in the fall of 2008, he, for once, had followed my advice and was out of the market. He will be missed by many, none more than this writer. He joins his wife of 55 years, Molly, who passed away in 2003.
I will try to keep up with events in the markets as much as possible over the next few days.
For the record, here are the results from Tuesday:
Dow 8,711.82, +95.61 (1.11%)
NASDAQ 1,885.03, +22.13 (1.30%)
S&P 500 940.74, +8.06 (0.84%)
NYSE Compos 6,043.05, +49.89 (0.78%)
Advancing issues did better than decliners, 4232-2045. There were 100 new highs to 74 new lows. Volume moderated back toward the low end, though the rally is now four days on the Dow and five for the NASDAQ.
NYSE Volume 1,144,284,500
NASDAQ Volume 1,908,150,750
Current commodity prices:
Crude oil: $62.02
Gold: $935.40
Silver: $13.24
One note on JP Morgan Chase (JPM) results, earning 28 cents per share in the second quarter, as analysts were seeking 4 cents per share profit, is that the estimate had been lowered dramatically over the past 30 days, from as high as 39 cents per share. Since the quarter was very robust, the bank received a good deal of government largess and the FASB allowed the banks to employ mark-to-market accounting in their reporting, it was no wonder that Morgan was gushing with fresh capital.
These bank earnings are more than just a little suspicious.
Nick Gagliano, my father, 84 years old, passed away overnight. I discovered him early Thursday morning, and, as any of you who have dealt with a family death know, spent the rest of the day consoling and being consoled by other family members, friends and neighbors.
My father was an investor, trader, and options player. It was he who introduced me to the world of finance and stocks. Not always the most prudent investor, he made some very savvy trades in his day. He was a survivor of the Great Depression, a WWII veteran, an attorney, a good and honest man. During the recent downturn in the fall of 2008, he, for once, had followed my advice and was out of the market. He will be missed by many, none more than this writer. He joins his wife of 55 years, Molly, who passed away in 2003.
I will try to keep up with events in the markets as much as possible over the next few days.
For the record, here are the results from Tuesday:
Dow 8,711.82, +95.61 (1.11%)
NASDAQ 1,885.03, +22.13 (1.30%)
S&P 500 940.74, +8.06 (0.84%)
NYSE Compos 6,043.05, +49.89 (0.78%)
Advancing issues did better than decliners, 4232-2045. There were 100 new highs to 74 new lows. Volume moderated back toward the low end, though the rally is now four days on the Dow and five for the NASDAQ.
NYSE Volume 1,144,284,500
NASDAQ Volume 1,908,150,750
Current commodity prices:
Crude oil: $62.02
Gold: $935.40
Silver: $13.24
One note on JP Morgan Chase (JPM) results, earning 28 cents per share in the second quarter, as analysts were seeking 4 cents per share profit, is that the estimate had been lowered dramatically over the past 30 days, from as high as 39 cents per share. Since the quarter was very robust, the bank received a good deal of government largess and the FASB allowed the banks to employ mark-to-market accounting in their reporting, it was no wonder that Morgan was gushing with fresh capital.
These bank earnings are more than just a little suspicious.
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